United States
                       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 December 28, 2002
                                       or
[ ] Annual Report Pursuant to Section 13 or 15(d) of the Securities  Exchange
Act of 1934 for the Transition Period From      To
                                          ------  -------

                           Commission File No. 1-14967

                                  WICKES INC.
                                  -----------
             (Exact name of registrant as specified in its charter)

               Delaware                                 36-3554758
      (State of Incorporation)                (IRS Employer Identification No.)

             706 North Deerpath Drive, Vernon Hills, Illinois 60061
                    (Address of principal executive offices)
                                 (847) 367-3400
              (Registrant's telephone number, including area code)

          Securities Registered Pursuant to Section 12 (b) of the Act:
                                      None

          Securities Registered Pursuant to Section 12 (g) of the Act:
                    Common Stock, par value of $.01 per share

     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 [ ]

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

     Indicated by check mark whether the registrant is an accelerated  filer (as
defined in the Exchange Act Rule 12b-2). Yes [ ] No [X]

     As of February 28, 2003,  the  Registrant  had  8,307,984  shares of Common
Stock, par value $.01 per share, outstanding,  and the aggregate market value of
outstanding  voting stock  (based on the last sale price on the Nasdaq  SmallCap
Market of Common  Stock on that date) held by  nonaffiliates  was  approximately
$1,310,000  (includes  the  market  value of all such stock  other  than  shares
beneficially owned by 10% stockholders, executive officers and directors).

                       DOCUMENTS INCORPORATED BY REFERENCE
                       -----------------------------------

     Portions of the  Registrant's  Proxy  Statement in connection with its 2003
Annual  Meeting of  Stockholders,  are  incorporated  by reference into Part III
hereof, as more specifically described herein.




<PAGE>2


<TABLE>


                                    TABLE OF CONTENTS
                                    -----------------                                Page No.
                                         PART I                                      --------
                                         ------
<S>      <C>                                                                         <C>


Item 1.    Business......................................................................3
Item 2.    Properties...................................................................20
Item 3.    Legal Proceedings............................................................21
Item 4.    Submission of Matters To a Vote
                of Security Holders.....................................................22


                                     PART II
                                     -------

Item 5.    Market For Registrant's Common Equity
                and Related Stockholder Matters.........................................23
Item 6.    Selected Financial Data......................................................24
Item 7.    Management's Discussion and Analysis
                of Financial Condition and Results
                of Operations...........................................................28
Item 7A.   Quantitative and Qualitative Disclosures
                About Market Risk.......................................................45
Item 8.    Financial Statements and Supplementary Data..................................45
Item 9.    Changes In and Disagreements With Accountants
                On Accounting and Financial Disclosure..................................45


                                    PART III
                                    --------

Item 10.   Directors and Executive Officers
                of the Registrant.......................................................46
Item 11.   Executive Compensation.......................................................46
Item 12.   Security Ownership of Certain Beneficial Owners
                and Management and Related Stockholder Matters..........................46
Item 13.   Certain Relationships and Related Transactions...............................46
Item 14.   Controls and Procedures......................................................46

                                     PART IV
                                     -------

Item 15.   Exhibits, Financial Statement Schedules,
                and Reports on Form 8-K.................................................47

SIGNATURES..............................................................................49

</TABLE>

<PAGE>3



                                     PART I
                                     ------

Item 1.  BUSINESS.
------------------

     Wickes Inc.  ("Wickes") and its  subsidiaries  (Wickes and its subsidiaries
are collectively referred to as "the Company")are a leading supplier of building
materials and  manufacturer  of building  components in the United  States.  The
Company sells its products and services  primarily to residential and commercial
building  professionals,  repair and remodeling  ("R&R")  contractors  and, to a
lesser extent, project do-it-yourself consumers ("DIY's") involved in major home
improvement  projects.  At December 28, 2002, the Company  operated 58 sales and
distribution  facilities,  as well as 13 component manufacturing facilities that
produce and distribute roof and floor trusses,  framed wall panels, and pre-hung
door units  principally in the Midwest,  Northeast,  and Southern regions of the
United States.


Background
----------

     The Company was formed in 1987 as a Delaware corporation. In June 1997, the
Company  changed  its  corporate  name to  "Wickes  Inc."  The  Company  has and
continues to conduct its primary operations under the "Wickes Lumber" name.

     In April 1988, the Company  completed the  acquisition of the Wickes Lumber
Company,  which  opened its first lumber and building  materials  operations  in
1952,  from  Wickes  Companies,  Inc.  The  acquisition  included  223 sales and
distribution centers and 10 component  manufacturing  facilities.  In subsequent
periods the Company  modified its  operations  to reduce its number of sales and
distribution  centers to the current 58 and to strategically  grow its component
manufacturing capabilities to 13 locations.

     For further  information,  including  information  on the sale of assets to
Lanoga Corporation on December 16, 2002, see "Business Strategy".  Also see Item
7 for information on the restructuring of the Company's debt.


Industry Overview
-----------------

     According  to  the  Home  Improvement   Research   Institute  ("HIRI")  (an
independent research  organization for manufacturers,  retailers and wholesalers
allied to the home improvement  industry),  sales of home  improvement  products
(defined as lumber, building materials,  hardware, paint, plumbing,  electrical,
tools,  floor  coverings,  glass,  wallpaper,  and  lawn  and  garden  products)
associated with the  maintenance and repair of residential  housing and new home
construction  were  estimated  to  be  $307.3  billion  in  2002.  Despite  some
consolidation over the last ten years,  particularly in metropolitan  areas, the
building material industry remains highly fragmented.  The Company believes that
no building material supplier  accounted for more than 19.0% of the total market
in 2002.
<PAGE>4

     In general, building material suppliers concentrate their marketing efforts
either on building  professionals or consumers.  Professional-oriented  building
material  suppliers,  such  as the  Company,  tend  to  focus  on  single-family
residential  contractors,  R&R  contractors,  project DIY's and, to some extent,
commercial  contractors.  These  suppliers  compete  principally on the basis of
price, service,  product assortment,  scheduled job-site delivery,  manufactured
building    components   and   trade   credit    availability.    In   contrast,
consumer-oriented  building material  retailers target the mass consumer market,
where  competition  is  based  principally  on  price,  merchandising,   product
assortment,  location  and  advertising.  Consumer-oriented  warehouse  and home
center  retailers  typically do not offer as wide a range of  services,  such as
specialist advice, trade credit, manufactured building components, and scheduled
job-site delivery, as do professional-oriented building material suppliers.

     Industry  sales are  significantly  linked to the level of  activity in the
residential  building  industry,  which tends to be cyclical and seasonal due to
weather.  New  residential  construction  is  determined  largely  by  household
formations,  interest  rates,  housing  affordability,  availability of mortgage
financing,  regional demographics,  consumer confidence, job growth, and general
economic  conditions.  According to the U.S. Bureau of the Census,  U.S. housing
starts were 1.62 million in 1998, 1.66 million in 1999, 1.57 million in 2000 and
1.60 million in 2001,  and  estimated to be 1.65 million in 2002.  The Blue Chip
Economic Indicators  Consensus Forecast,  dated February 10, 2003, projects 2003
housing starts to be 1.63 million,  down  approximately 1.2% from housing starts
in 2002. In 2002, housing starts in the Company's primary  geographical  market,
the Midwest,  are estimated to have  increased  4.2% over housing starts in that
region in 2001. The Company's two other geographical  markets, the Northeast and
South,  experienced  increases in 2002 housing  starts of an estimated  2.3% and
4.4%,  respectively,  from housing starts in the prior fiscal year.  Nationally,
single family housing starts, which generate the majority of the Company's sales
to building professionals, increased by 5.8% to 1.33 million starts in 2002 from
1.27 million starts in 2001.

     Repair  and  remodeling  expenditures  tend to be less  cyclical  than  new
residential construction.  These expenditures generally are undertaken with less
regard  to  economic  conditions,   but  both  repair  and  remodeling  projects
(including  projects undertaken by DIY's) tend to increase with increasing sales
of both existing and newly constructed residences.  HIRI estimates that sales of
home  improvement  products to repair and remodeling  professionals  represented
$56.7  billion,  or  approximately  18.5% of total  2002  sales of the  building
material supply industry, while direct sales to DIY's amounted to $144.0 billion
or 46.9% of such sales.

<PAGE>5



Business Strategy
-----------------

     General
     -------

     The Company's  mission is to be the premier provider of building  materials
and  services  and  manufacturer  of  value-added  building  components  to  the
professional segments of the building and construction industry.

     The Company targets five customer groups: the production or volume builder;
the custom builder; the tradesman;  the repair and remodeler; and the commercial
developer.  Its marketing  approach  encompasses three channels of distribution:
large metropolitan areas or "Major Markets",  smaller rural and semi-rural areas
or "Conventional Markets", and commercial,  direct ship and turnkey construction
or "Wickes Direct". In Major Markets, the Company serves the national, regional,
and  large  local  builder  with a  total  solutions  approach  and  specialized
services. In Conventional Markets, the Company provides the smaller builder with
tailored products and services. In Wickes Direct, the Company provides materials
flow and logistics management services to commercial customers. The Company also
serves building professionals through its network of 13 component  manufacturing
facilities  that produce  value-added,  wood framed wall panels,  roof and floor
truss systems, and pre-hung interior and exterior doors.

     In the latter  part of 2001,  the  Company's  management  team  developed a
comprehensive  strategic plan aimed to reorganize operations,  focus on its core
business,  improve  productivity,  reduce  debt,  and  establish a longer  term,
sustainable  capital structure.  This plan was rolled out during fiscal 2002. To
date,   management  believes  the  Company  made  significant   progress  toward
accomplishing its objectives.

     Since the inception of the  aforementioned  strategic plan,  management has
streamlined its operations,  improved  efficiencies,  and sold its non-strategic
assets  thereby  eliminating a significant  amount of its rural retail  oriented
locations,  which were more vulnerable to competitive pressures.  The Company is
now focusing its business on its core professional contractor and volume builder
customers,   where  Wickes  maintains  competitive  advantages.  The  successful
implementation  of  management's  plans has  enabled  the  Company to reduce its
long-term  debt from  approximately  $202.4  million as of December 29, 2001, to
approximately $95.5 million as of December 28, 2002.

     In 2002, the Company implemented a reorganization initiative that developed
a process of continuous  improvement whereby strategic initiatives are monitored
and adjusted over time. Through this process the Company has relaunched a number
of its  previous  initiatives  including  tool  rental,  installed  products and
manufactured components. In addition,  Wickes' management team has developed and
implemented sales planning tools and technology to support efforts to retain and
<PAGE>6


grow customer  relations and to better  support its recently  reorganized  sales
management  structure.  Wickes' management is also requiring the operating units
to adhere  to  stricter  standards  in  safety,  customer  profitability,  labor
productivity  and working asset  turnover,  that it believes will form the basis
for a successful building materials business going forward.

     On December  16,  2002,  the  Company  successfully  completed  the sale of
substantially  all of the assets of its  operations  in  Wisconsin  and Northern
Michigan to Lanoga  Corporation (the "Lanoga Sale"),  for  approximately  $104.7
million, including assumed liabilities of approximately $18 million. Included in
the  transaction  were 14 sales and  distribution  centers  and three  component
plants in  Wisconsin,  and 17 sales and  distribution  centers and one component
plant  in  Michigan.   This  transaction   comprised  the  majority  of  Wickes'
Conventional  Market  locations.  These sites  generated  combined  net sales of
approximately  $272  million  in  2002  (see  also  Note 3 to  the  Consolidated
Financial  Statements).  The funds provided by this  transaction  were primarily
used  to  pay  down  a  substantial  portion  of  the  Company's  senior  credit
facilities,  leaving  approximately  $31 million  outstanding as of December 28,
2002. The Lanoga Sale was part of Wickes' strategic  decision to focus on larger
demographic markets,  where it can better serve its professional  contractor and
volume builder customers. While a portion of the Lanoga Sale served professional
contractors,  the locations were more rural, less scalable,  and included retail
sales from  do-it-yourself  consumers.  As a result,  management  concluded that
these  locations no longer fit the Company's  strategic  direction and were more
vulnerable to competitive pressures.

     In furtherance of the reorganization  initiative,  Wickes has redefined its
operational presence from previously  independent  operating units into customer
focused activities organized by sales and distribution territories.  In order to
better execute each activity,  the Company has appointed  Directors of Sales and
Directors  of  Distribution  for each  market  area to  provide  leadership  and
execution expertise for each discipline.  This has allowed the Company to better
focus its efforts to improve  under-performing  stores.  The primary benefits of
this redefined operating structure include a stronger focus on sales management,
significantly  improved  efficiency in materials  management  and  distribution,
improved  safety  awareness,  and better use of Company  assets,  such as better
defined job descriptions and responsibilities, compensation plans, and reporting
relationships. Management believes this new approach is driving work behavior to
a  new  higher  standard  where  all  efforts  are  directed  at   strengthening
responsiveness to customers.  Management has also piloted centralized estimating
concepts to assist sales  representatives  in better  servicing  customers while
taking steps to reengineer its sales activities to promote increased sales force
productivity by reducing time consuming administrative tasks.

<PAGE>7




     Major Markets
     -------------

     The Company operates in 20 Major Markets,  which are served by 26 sales and
distribution facilities.  In this market group, the Company targets the national
top 400  builders,  both  regional  and large local  builders  with  specialized
services and a total solutions approach. These facilities are designed,  stocked
and  staffed  to meet the  needs of the  particular  markets  in which  they are
located.  Major  Markets also are served by all of the  Company's  manufacturing
facilities.

     Major Markets generally are large  metropolitan areas with favorable growth
projections and are  characterized by the active presence of national,  regional
and large local builders. The Company believes that the building supply industry
in these Major Markets remains heavily  fragmented.  The Company's Major Markets
program  seeks to  provide  the large  builder  with  specialized  products  and
services that integrate  various methods of  distribution.  The Company provides
these programs and services on a "virtual  store" basis,  that is,  products and
services may be provided from multiple  facilities serving the Major Market on a
coordinated  basis with centralized  customer  contact and support.  The Company
invests  significant  efforts to redefine  and improve  customer  service with a
comprehensive,  total solutions package of core building materials, supply chain
management, material flow and logistics management.

     Conventional Markets
     --------------------

     At  December  28,  2002,  the Company  operated  32 sales and  distribution
facilities  in small,  rural  Conventional  Markets,  where  Wickes  targets the
smaller building professionals such as single-family residential contractors and
R&R contractors with tailored  products and services.  Wickes provides a service
offering mix that includes tool rental,  specialized delivery,  and installation
services.  The  Company  typically  is the  market  leader in these  fragmented,
relatively  slow growth markets of  populations  generally  below  100,000.  The
Company  believes it  possesses a  significant  competitive  advantage  in rural
markets  and  small  communities   where  it  primarily   competes  with  local,
independent lumberyards and regional building chains.

     Wickes Direct
     -------------

     Wickes  Direct  focuses on the large volume needs of  commercial  builders,
much of which are shipped  directly from the  manufacturer to the customer's job
site.  This marketing  group  concentrates  on five specific types of commercial
wood projects: assisted care facilities, extended care facilities, hotels/motels
(three stories and under),  restaurants,  and multi-family  housing selling from
both Major Markets and Conventional  Markets facilities.  In addition to selling
building  materials and  engineered  wood  components,  Wickes  Direct  provides
building design, value-added engineering processes,  estimating,  logistics, and
material  delivery  services  to large  customers  anywhere  in the  world,  all
accomplished  without the need for a physical  facility  close to the  customer.
Wickes Direct has project sales  specialists  that focus  exclusively on selling
<PAGE>8


building solutions to the commercial  developers.  Wickes Construction Services,
launched in 2000, is a hybrid  construction  group that provides turnkey framing
services,  bids,  contracts,  and takeoffs,  and provides installation labor and
general contractor services for Wickes Direct customers.

     Manufacturing Components
     ------------------------

     At  December  28,  2002,  the  Company  owned  and  operated  13  component
manufacturing   facilities   that   supplied  the   Company's   customers   with
higher-margin,  value-added  products such as framed wall panels, roof and floor
trusses,  and pre-hung interior and exterior doors.  These facilities include 12
stand-alone  operations  as well as one  additional  operation  that shares real
estate with one of the Company's sales and distribution facilities.  Value-added
component  manufacturing is an important element  supporting the Company's Major
Markets, Conventional Markets and Wickes Direct. In Major Markets, manufacturing
provides  key  support  to  Wickes'  position  as  a  value-added   partner.  In
Conventional  Markets,  trusses,  panels,  and pre-hung  doors are sold to local
builders. For Wickes Direct,  manufactured components,  particularly framed wall
panels,  provide an important  value-added  element.  The Company  believes that
these  engineered  products  improve  customer service and provide an attractive
alternative  to  job-site  construction.  In  2002,  2001  and  2000,  excluding
discontinued  operations,  the  Company  internally  manufactured  approximately
54.6%,  62.7%  and  61.4%,  respectively,   of  its  total  building  components
distributed. Total building components distributed were 9.9%, 10.4%, and 9.9% of
total  sales in 2002,  2001,  and  2000,  respectively,  excluding  discontinued
operations.

     Other Initiatives
     -----------------

     The  Company's  tool rental  program  was  developed  to rent  specialized,
professional  quality  tools and equipment to customers in need of equipment for
unique or short-term projects.  The program is designed to attract new customers
as well  as to  provide  the  Company  with an  opportunity  to  supply  current
customers  with a  greater  portion  of their  total  construction  needs and to
enhance  building  materials  sales from new  customers  interested  in the tool
rental program. The program is in place in 18 sales and distribution facilities.

     The Company's  installed  insulation  program consists of specially trained
installation crews using specialized equipment and vehicles to install blown and
batt insulation in new construction or major renovations.  Installed  insulation
is one of the  value-added  services that the Company  believes it provides on a
cost-effective  basis to meet its  customers'  needs.  The installed  insulation
program is operating in 34 sales and distribution facilities at the end of 2002.

     In 2000,  the Company  initiated  installed  siding and gutter  programs to
further service its Major Markets and Conventional Markets strategies.  Like the
installed  insulation  program,  siding and gutters are installed with specially
trained crews equipped with specialized tools and vehicles.  At the end of 2002,
the  Company  had 13  installed  siding  and 4  installed  gutter  locations  in
operation.

<PAGE>9

     The Company has  developed an Internet and  software  strategy  designed to
provide  enhanced  service  levels  to its  customers.  Employed  correctly  and
integrated  properly,  Internet and software technology will broaden the base of
products offered and the ability to service new and existing  customers over the
long-term.  The Company has entered into several  agreements  with  companies to
provide Internet based services to the construction  industry. In addition,  the
Company  utilizes  a  software  package  ("BuilderCentral  2000(TM)"),  which is
designed to provide professional  building contractors with an enterprise system
to manage their construction projects.

     In March 2000, the Company entered into an agreement with Buildscape, Inc.,
an entity then affiliated with Riverside  Group,  Inc. and Imagine  Investments,
Inc. In July 2002, Dow Chemical  Company  acquired 100% ownership of Buildscape.
Pursuant  to this  agreement,  the  Company  and  Buildscape,  Inc.  are jointly
conducting  an  Internet  distribution  program.  Buildscape(R)  is an  Internet
service  designed  for  builders  that  allows the  Company's  customers  to buy
products and materials from Wickes and other  suppliers.  It provides  real-time
online access to the professional  builders' specific Wickes price list, bill of
materials and trade account.  It also provides job management tools to help keep
projects  on time and on  budget.  Additionally,  the  system is  accessible  by
wireless devices.  Wickes' sales through the Buildscape site were $13.1 million,
$23.8 million and zero in 2002, 2001, and 2000 respectively.


Markets
-------

     The Company operates in 20 Major Markets,  which are served by 26 sales and
distribution  facilities  and  8  manufacturing  facilities.  The  Company  also
operates 32 sales and distribution facilities and 5 manufacturing  facilities in
Conventional Markets. For a further discussion of Major Markets and Conventional
Markets see "Business Strategy."

     Geographical Distribution
     -------------------------

     The Company's 58 sales and distribution facilities are located in 19 states
in the Midwest,  Northeast and South.  The Company's 13 component  manufacturing
operations  also are  located in certain of these  states and in  Delaware.  The
Company believes that its geographic  diversity  generally lessens the impact of
economic  downturns and adverse  weather  conditions in any one of the Company's
geographic  markets.  The following  table sets forth certain  information  with
respect to the locations of the Company's sales and  distribution  facilities as
of December 28, 2002:
<PAGE>10

<TABLE>


<S>        <C>                                   <C>                                      <C>


            Midwest                                 Northeast                               South
-----------------------------------     -----------------------------------     -------------------------------
                    Number of                                   Number of                          Number of
                    Sales and                                   Sales and                          Sales and
                  Distribution                                Distribution                       Distribution
  State            Facilities               State              Facilities           State         Facilities
  -----           ------------              -----             -------------         -----        -------------
Michigan                 11             Pennsylvania                 4          Alabama                  3
                                        New York                     3          Kentucky                 3
Indiana                  10             Maine                        1
Ohio                      5             New Hampshire                2          Florida                  2
Illinois                  3             Connecticut                  1
Colorado                  3             New Jersey                   1          North Carolina           2
                                        Massachusetts                1          Georgia                  1
                                        Maryland                     1
                                                                                Tennessee                1

        Total            32                     Total               14                   Total          12
                         ==                                         ==                                  ==

</TABLE>


     Facilities Opened, Closed and Consolidated
     ------------------------------------------

     In 2000 one plant was added to supplement our Wisconsin market. During 2001
the Company closed distribution centers in Allentown,  PA and Aurora, IL, closed
a plant in Cookeville,  TN, closed and  consolidated  its Niles, MI distribution
center into its Mishawauka,  IN distribution  center and acquired a distribution
center in Kenvil,  NJ to relocate its  Succasunna,  NJ distribution  center.  In
first  quarter  2002,  the  Company  sold 4  distribution  centers;  Pearl,  MS,
Pascagoula,  MS, Baton Rouge, LA, Wilkes Barre, PA, and one manufacturing plant,
Ocean Springs,  MS, and closed one distribution  center in Kokomo, IN. In second
quarter  2002,  the Company sold two  distribution  centers,  Harlingen,  TX and
McAllen,  TX. In third quarter 2002, the Company closed one distribution  center
in Grand Rapids, MI, and one manufacturing plant in Indianapolis,  IN. In fourth
quarter  2002,  the Company  sold 31  distribution  centers and 4  manufacturing
plants in the  Lanoga  Sale.  In  addition  the  Company  sold its  distribution
facility in Bangor, ME in the fourth quarter of 2002.

     The  following  table  reconciles  the  number  of sales  and  distribution
facilities and component  manufacturing  facilities operated by the Company from
December 25, 1999 through February 28, 2003.

<PAGE>11


                                           Sales and                Component
                                          Distribution            Manufacturing
                                           Facilities               Facilities
                                           ----------              ------------
As of December 25, 1999                        101                      18

     Expansion                                                           1
     Acquisition                                --                      --
                                              -----                    ----
As of December 30, 2000                        101*                     19

     Acquisition                                 1                      --
     Closings                                   (2)                     (1)
     Consolidations                             (2)                     --
                                              -----                    ----
As of December 29, 2001                         98*                     18

     Sold                                      (38)                     (5)
     Closings                                  ( -)                     --
     Consolidations                             (2)                     (1)
                                              -----                    ----
As of December 28, 2002                         58*                     12

     Sold                                       --                      --
     Closings                                   --                      --
     Consolidations                             (6)                     (1)
                                              -----                    ----
As of February 28, 2003                         52                      11

*As of the fiscal  year-end for 2002,  2001 and 2000,  respectively,  there were
one, nine and nine  additional  component  manufacturing  facilities  located in
existing sales and distribution facilities.


Customers
---------

     The  Company  has a  broad  base of  customers,  with  no  single  customer
accounting  for more  than  2.7% of net  sales in  2002.  In 2002,  87.9% of the
Company's sales, including discontinued  operations,  were on trade credit, with
the  remaining  12.1% as cash and credit  card  transactions.  In 2001 and 2000,
87.1% and 86.9%, of the Company's sales, respectively, were on trade credit.

     Home Builders
     -------------

     The Company's primary customers are single-family  home builders.  In 2002,
all home  builder  customers  accounted  for 66.7% of the  Company's  net sales,
compared  with 64.9% and 62.9% in 2001 and 2000,  respectively.  The majority of
the Company's sales to these customers are of high-volume  commodity items, such
as lumber, building materials, and manufactured housing components.  The Company
will  continue  its focus on this  customer  group,  offering  new  products and
developing additional services to meet their needs.

<PAGE>12

     Commercial / Multi-family Contractors
     -------------------------------------

     Wickes Direct  concentrates on sales to commercial  contractors  (primarily
those engaged in constructing motels, restaurants,  nursing homes, extended stay
facilities,  and similar  projects) and  multi-family  residential  contractors.
Sales to these customers are made on a direct ship basis, as well as through the
Company's sales and distribution  facilities.  In 2002, sales to these customers
accounted for  approximately  17.6% of the Company's sales,  compared with 19.0%
and 20.8% in 2001 and 2000,  respectively.  The Wickes Direct program is closely
integrated with the Company's component manufacturing operations.

     Repair & Remodelers
     -------------------

     In 2002, R&R customers  accounted for  approximately  8.8% of the Company's
sales,  compared with 8.7% in both 2001 and 2000. The R&R segment  consists of a
broad  spectrum of customers,  from part-time  handymen to large,  sophisticated
business enterprises.  Some R&R contractors are involved exclusively with single
product  application,  such  as  roofing,  siding,  or  insulation,  while  some
specialize in  remodeling  jobs,  such as kitchen or bathroom  remodeling or the
construction of decks,  garages, or full room additions.  The Company offers the
product and project expertise, special order capability,  design assistance, and
credit terms to serve the widely varying needs of this diverse market.

     DIY's
     -----

     Sales to DIY's (both project and convenience) represented about 6.9% of the
Company's  sales  in  2002,  compared  with  7.4%  and  7.6% in 2001  and  2000,
respectively.  The percentage of sales to DIY's varies widely from one sales and
distribution  facility  to  another,  based  primarily  on the  degree  of local
competition  from warehouse and home center  retailers.  The Company's sales and
distribution  facilities  do not have the large retail  selling  spaces or broad
product  assortments of the major warehouse or home center retailers.  For small
purchases,  the  facilities'  showrooms  serve as a  convenience  rather  than a
destination  store.  Consequently,  the Company's focus on consumer  business is
toward  project  DIY's -- customers  who are involved in major  projects such as
building decks and storage buildings or remodeling kitchens and baths.

<PAGE>13





Sales and Marketing
-------------------

     The Company employs a number of marketing  initiatives designed to increase
sales and to support the Company's  goal of being the dominant force in the sale
of lumber and other building materials to building  professionals in each of its
markets.

     Building Professional
     ---------------------

     The  Company   seeks  to  establish   long-term   relationships   with  its
professional  customers by providing a higher level of customer  assistance  and
services than are generally available at independently-owned building centers or
large warehouse and home center retailers.

     The  Company  provides  a wide  range  of  customer  services  to  building
professionals,  including expert assistance,  technical  support,  trade credit,
scheduled job-site  delivery,  manufacture of customized  components,  installed
sales,  specialized equipment,  logistical and material flow design and support,
and other special  services.  Building  professionals  generally select building
material  suppliers based on price,  job-site  delivery,  quality and breadth of
product lines, reliability of inventory levels, and the availability of credit.

     For a  description  of the programs  designed  for and the  emphasis  being
applied to professional  customers in Major Markets,  see " Business  Strategy -
Major Markets."

     In both  Conventional and Major Markets,  the Company's primary link to the
building  professional market is its experienced sales staff. As of February 28,
2003 the Company's 181 outside sales representatives  ("OSR's") are commissioned
sales persons who work with  professional  customers on an on-going basis at the
contractors'  job sites and offices.  Typically,  a sale to a contractor is made
through a competitive  bid prepared by the OSR from plans made  available by the
contractor.  From these plans, the OSR or sales support  associate  prepares and
provides to the  contractor a bid and a complete  list,  or  "take-off,"  of the
materials  required to complete the project.  Preparation of a take-off requires
significant time and effort by trained and experienced sales representatives and
support associates.  The Company has equipped most of its sales and distribution
facilities  with a  computerized  system  that  significantly  reduces  the time
required to prepare take-offs.  In addition,  this system instantly recalculates
changes and  automatically  includes  add-on  products  needed to  complete  the
project, which generally improves  productivity,  sales and margins. The ability
of  the  OSR to  provide  prompt  and  accurate  take-offs,  to  arrange  timely
deliveries,  and to provide  additional  products or services as necessary is an
important  element of the Company's  marketing  strategy and  distinguishes  the
Company from many of its competitors.

     As of February 28, 2003 the Company  employed 79 specialty  salespeople  in
its sales and distribution  facilities who provide expert advice to customers in
project design,  product selection and  applications.  A staff of 19 trained R&R

<PAGE>14

sales specialists offer special services to R&R contractors,  equivalent to that
accorded home builders.  In many of its sales and distribution  facilities,  the
Company  maintains  separate R&R offices.  The Company currently has kitchen and
bath  departments  in most of its sales and  distribution  facilities  and has a
staff of 41 kitchen  and bath  specialists.  The Company  also  employs 19 sales
specialists in other departments.

     The  Company  extends  credit,  generally  due on the 10th day of the month
following the sale, to qualified and approved  contractors.  Approximately 87.9%
of the  Company's  sales during 2002 were on credit,  with the  remaining  12.1%
consisting of cash or credit card sales. Overall credit policy is established at
the corporate  level,  with each sales and  distribution  facility manager and a
district  credit manager  responsible for the  administration  and collection of
accounts.  The accounts generally are not  collateralized,  except to the extent
the Company is able to take advantage of the favorable  materialmen's  lien laws
of most states applicable in the case of delinquent accounts.

     The Company operates a large fleet of trucks and other vehicles,  including
vehicles  specialized for the delivery of certain of the Company's products.  As
of February 28, 2003, the fleet included approximately 176 heavy duty trucks, 54
of which  provide  roof-top  or  second  story  delivery  and 49 other  vehicles
equipped with truck mounted forklifts. In addition, the Company's fleet includes
199 medium duty trucks, 272 light duty trucks and automobiles, 313 forklifts, 72
specialized  millwork  delivery  vehicles,  and 44 vehicles  equipped to install
blown insulation.

     Over the past several years, the Company has installed and will continue to
increase its base of computer-aided design hardware and software.  These systems
include  design  and  take-off  software  for  kitchens,  decks,   outbuildings,
additions and houses.  With these tools, sales  representatives  and specialists
are able to provide customers with  professional-quality  plans, in an efficient
manner.

     In 1997,  the Company began an equipment  rental program at 25 of its sales
and distribution facilities.  Under this program, the Company rents specialized,
professional  quality  tools and equipment to customers in need of equipment for
unique or short-term projects. This program is currently established in 18 sales
and   distribution   facilities   and  is  currently   undergoing   an  internal
reengineering  to  reestablish   operating   standards  and  income   benchmarks
consistent with overall company objectives.

     In 1997, the Company also began its installed  insulation program.  Through
the  use  of  specialized  equipment  and  vehicles  and  its  specially-trained
installation  crews,  the Company  installs blown and batt  insulation in new or
existing construction. This program is now in place in 34 sales and distribution
facilities and is also being  reengineered  to reestablish  standards and income
benchmarks consistent with overall company objectives.

<PAGE>15

     In 2000,  the Company  initiated its installed  aluminum  siding and gutter
programs  in several of its sales and  distribution  centers.  Currently,  it is
operating 13 installed  siding and four installed gutter programs with continued
plans for expansion.

     DIY's
     -----

     Most sales and distribution facilities,  primarily building centers located
in Conventional  Markets, also pursue sales to project DIY's through their staff
of  specially-trained  inside  sales  representatives  and  specialists.   These
representatives  provide  professional  advice to consumers for home improvement
projects  and  assist  these  customers  in  designing  specific  projects  with
sophisticated  computer  design  software.  The sales  representatives  also can
provide a  comprehensive  list of  materials  and  detailed  drawings  to assist
customers in completing their projects.  The Company believes that project DIY's
are  attracted to its sales and  distribution  facilities  by this high level of
service.

     The Company's  showrooms  generally feature product  presentations  such as
kitchen,   bath,  door  and  window   displays.   The  showrooms  are  regularly
re-merchandised  to reflect  product  trends,  service  improvements  and market
requirements.

     While the  Company's  product  offerings  in hardlines  generally  are more
limited  than its  consumer-oriented  competitors,  the Company  stocks a larger
selection of commodity products and offers a special order program for custom or
specialty products.  The Company emphasizes project packages,  which include all
materials  and detailed  instructions  for the  assembly of the larger  projects
frequently undertaken by project DIY's.

     The  Company's  internet  site on the World Wide Web  provides  information
about Wickes' services and products,  facilitates doing business with customers,
allows customers to look up their own  transactional  information,  and features
extensive links to suppliers and other industry  references.  The Company's home
page can be found on the web at: http://www.wickes.com.

     The Company  advertises in trade journals and produces  specialized  direct
mail promotional  materials  designed to attract specific target customers.  The
Company does some select newspaper advertising,  which may include circulars and
run-of-press advertisements.  It also has numerous product displays in its sales
and distribution facilities to highlight special products and services.

     To increase  customer loyalty and strengthen  customer  relationships,  the
Company, in many cases with vendor support, sponsors or participates in numerous
special marketing activities,  such as trade show events,  informational product
seminars, various outings, and professional builder trips.

<PAGE>16

Products
--------

     To provide its customers with the quality products needed to build, remodel
and repair  residential  and  commercial  properties,  the Company offers a wide
variety  of  building  products  and the  ability to  special  order  additional
products.  The Company  believes that these special order services are extremely
important to its customers,  particularly  the building  professional.  In 2002,
approximately  40% of the Company's sales,  including  discontinued  operations,
were of special order items,  compared with 37% in 2001 and 35% in 2000. Each of
the Company's sales and distribution  facilities tailors its product mix to meet
the demands of its local market.

     The Company categorizes its product sales (excluding Tool Rental, Installed
Programs and other  service-related  revenues),  which  aggregate  approximately
93.8%,  93.6%  and  94.9% of the  Company's  net  sales in 2002,  2001 and 2000,
respectively,  into three groups. These include Wood Products (lumber,  plywood,
treated lumber,  sheathing, wood siding, roof and floor trusses, wall panels and
specialty lumber);  Building Products (roofing,  vinyl siding,  doors,  drywall,
windows,  mouldings, and insulation);  and Hardlines (hardware products,  paint,
tools,  kitchen and bathroom cabinets,  plumbing products,  electrical products,
light fixtures and floor  coverings).  Wood  Products,  Building  Products,  and
Hardlines  represented  53.3%,  36.5%, and 10.2% of the Company's  product sales
respectively, for 2002 and 56.2%, 34.4%, and 9.4% for 2001, respectively.


Manufacturing
-------------

     The Company operates 13 component manufacturing  facilities that supply the
Company's customers with higher-margin, value-added products such as framed wall
panels, roof and floor trusses,  and pre-hung interior and exterior doors. These
facilities include 12 stand-alone  operations and one additional  operation that
shares real estate with one of the Company's sales and distribution  facilities.
These  manufacturing  operations  enable  the  Company to serve the needs of its
professional  customers for such quality,  custom-made  products.  In 2002,  the
Company manufactured  approximately (excluding discontinued operations) 54.6% of
the framed wall panels,  roof and floor trusses,  and pre-hung doors sold by the
Company,  compared  with 62.7% in 2001 and 61.4% in 2000.  The Company  believes
that  these  value-added,  engineered  manufactured  products  improve  customer
service and provide an attractive alternative to job-site construction.

<PAGE>17




Suppliers and Purchasing
------------------------

     The  Company  purchases  its  products  from  numerous  vendors.  The great
majority of commodity items are purchased directly from mills and manufacturers,
while the remaining  products are purchased from a combination of manufacturers,
wholesalers and other  intermediaries.  No single vendor accounted for more than
6.8% of the Company's  purchases in 2002 and the Company is not  dependent  upon
any  single  vendor  for  any  material  product.   The  Company  believes  that
alternative sources of supply are readily available for substantially all of the
products it offers.

     The majority of the Company's  commodity purchases are made on the basis of
individual purchase orders rather than longer-term supply contracts.  In certain
product lines,  though,  the Company has  negotiated  some  advantageous  volume
pricing  agreements  for a portion  of the  product  line's  purchases.  Because
approximately  51% of the  Company's  annual  sales  consist of  commodity  wood
products,  drywall and manufactured housing components, all of which are subject
to price  volatility,  the  Company  attempts to match its  inventory  levels to
short-term  demand in order to minimize its exposure to price  fluctuations.  In
addition,  the Company  periodically  enters  into  futures  contracts  to hedge
longer-term  pricing  commitments.   The  Company  has  developed  an  effective
coordinated  purchasing  program that allows it to minimize costs through volume
purchases,  and the Company  believes that it has greater  purchasing power than
many of its smaller, local independent competitors. The Company seeks to develop
close  relationships with its suppliers in order to obtain favorable pricing and
service arrangements.

     The Company's  computerized  inventory tracking and forecasting  system is
designed to track and maintain  appropriate levels of products at each sales and
distribution  facility.  These systems have  increased  the Company's  operating
efficiencies by providing an automated inventory replenishment system.

     The Company  receives its product by truck and rail. The Company has active
rail sidings at 28 of its sales and distribution and  manufacturing  facilities,
enabling  suppliers to ship products  purchased by the Company directly to these
facilities by rail.


Seasonality
-----------

     Historically,  the Company's  first quarter and,  occasionally,  its fourth
quarter are adversely affected by weather patterns in the Midwest and Northeast,
that result in seasonal  decreases in levels of  construction  activity in these
areas. The extent of such decreases in activity is a function of the severity of
winter weather conditions.  See "Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations."

<PAGE>18

Competition
-----------

     The building material industry is highly competitive. Due to the fragmented
nature of the industry, the Company's competitive environment varies by location
and by customer segment.  Reduced levels of construction  activity and commodity
price volatility have, in the past,  resulted in intense price competition among
building material suppliers that has, at times, adversely affected the Company's
gross margins.

     Within the building  professionals  market,  the Company competes primarily
with local  independent  lumber yards and regional and local  building  material
chains.  Building  professionals  generally select building  material  suppliers
based on price,  job site  delivery,  quality  and  breadth  of  product  lines,
reliability of inventory  levels,  and the  availability of credit.  The Company
believes that it competes favorably on each of these bases. The Company believes
that it has a  significant  competitive  advantage  in rural  markets  and small
communities (i.e. Conventional Markets),  where it primarily competes with local
independent  lumber yards and regional  building  material  chains.  To a lesser
extent, the Company also competes in these markets with national building center
chains and warehouse and home center  retailers,  which  generally  locate their
units in more densely  populated  areas. In Major Markets,  the Company believes
that its total  package of products  and  services  and its ability to serve the
large builder provide it with a competitive advantage.


Environmental and Product Liability Matters
-------------------------------------------

     Many of the  sales  and  distribution  facilities  presently  and  formerly
operated  by the Company at one time  contained  underground  petroleum  storage
tanks.  All such tanks known to the Company and located on  facilities  owned or
operated  by the  Company  have  been  filled  or  removed  in  accordance  with
applicable environmental laws in effect at the time. As a result of reviews made
in connection with the sale or possible sale of certain facilities,  the Company
has found petroleum  contamination  of soil and ground water on several of these
sites and has taken, and expects to take, remedial actions with respect thereto.
In addition,  it is possible that similar  contamination may exist on properties
no longer owned or operated by the Company, the remediation of which the Company
could, under certain circumstances, be held responsible. Since 1988, the Company
has  incurred  approximately  $2.1  million  of  costs,  net  of  insurance  and
regulatory  recoveries,  with respect to the filling or removing of  underground
storage  tanks and related  investigatory  and remedial  actions.  Insignificant
amounts of contamination have been found on excess properties sold over the past
six years.

     The Company is one of many  defendants  in two class  action suits filed in
August of 1996 by  approximately  200  claimants  for  unspecified  damages as a
result of health  problems  claimed to have been caused by  inhalation of silica
dust, a byproduct of concrete  and mortar mix,  allegedly  generated by a cement
plant with which the Company  has no  connection  other than as a customer.  The
Company has entered into a  cost-sharing  agreement  with its insurers,  and any
liability is not expected to be material.

<PAGE>19

     The Company is one of many defendants in approximately 794 actions, each of
which seeks unspecified  damages, in various state courts against  manufacturers
and  building  material  retailers  by  individuals  who claim to have  suffered
injuries  from  products  containing  asbestos.   The  Company  is  aggressively
defending  these  actions and does not believe  that these  actions  will have a
material adverse effect on the Company.  Since 1993, the Company has settled 284
similar actions for insignificant amounts, and another 353 of these actions have
been dismissed. None of these suits have made it to trial.

     The  Company  is  involved  in various  other  legal  proceedings  that are
incidental to the conduct of its business.  Certain of these proceedings involve
potential damages for which the Company's insurance coverage may be unavailable.
While the Company  does not believe  that any of these  proceedings  will have a
material adverse effect on the Company's financial  position,  annual results of
operations or liquidity, there can be no such assurance.

     For  information   concerning   certain  litigation   concerning   products
containing asbestos or silica dust, see "Item 3. Legal Proceedings."

     Although  the Company has not  expended  material  amounts in the past with
respect to the foregoing and expenditures in the most recent six years have been
significantly  reduced,  there can be no assurances  that these matters will not
give rise to  additional  compliance  or other  costs that could have a material
adverse effect on the Company.


Employees
---------

     As of February 28,  2003,  the Company had 1,991  employees,  of whom 1,889
were employed on a full-time basis. The number of employees generally fluctuates
with the seasonal nature of the Company's business. The Company believes that it
has maintained satisfactory relations with its employees.  None of the Company's
employees are covered by a collective bargaining agreement.


Safety
------

     Wickes  is  committed  to the  safety  and  well  being  of its  employees,
customers  and  the  communities  it  serves.  One  of the  cornerstones  of the
Company's safety program is "Build on Safety," an innovative  employee  training
and awareness program, launched in April 2001, that established safety standards
and processes for all aspects of the  Company's  business.  The program has also
provided  critical  safety  training for every manager and  employee.  "Build on
Safety" has helped integrate safety into Wickes' corporate culture.
<PAGE>20


Trademarks and Patents
----------------------

     The Company has no material patents, trademarks,  licenses,  franchises, or
concessions  other than the name  "Wickes  Lumber",  the  "Flying W"  trademark,
"BuilderCentral2000" and "Frame-A-Home-In-A-Day".
                         -----------------------

This report contains or may incorporate by reference  statements that constitute
"forward-looking  statements".  The words  "expect,"  "estimate,"  "anticipate,"
"predict,"  "believe," and similar  expressions and variations of such words are
intended to identify  forward-looking  statements.  Such statements  appear in a
number of places in this report and include statements regarding intent,  belief
or current expectations with respect to, among other things:

o        the effects of seasonality and cyclicality;
o        the effects of competition;
o        interest rates and the Company's ability to service and comply with the
         terms of its debt covenants;
o        lumber prices;
o        the success of the Company's operational initiatives; and
o        the outcome of current and future legal proceedings involving the
         Company.

Readers  are  cautioned  not to place  undue  reliance  on such  forward-looking
statements.  Such  forward-looking  statements  are not guarantees of our future
performance and involve risks and uncertainties. Readers should carefully review
the factors  discussed in this report and the documents that are incorporated by
reference into this report.


Item 2.  PROPERTIES.
--------------------

     As of December 28, 2002 the Company's 58 sales and distribution  facilities
are located in 19 states,  with 32 in the Midwest, 14 in the Northeast and 12 in
the South.  When combined with its 13 component  manufacturing  operations,  the
Company  operates in 20 states.  See "Item 1.  Business - Markets."  The Company
believes that its  facilities  generally are in good condition and will meet the
Company's needs in the foreseeable future.

     The  Company's  sales  and  distribution  centers  generally  consist  of a
showroom averaging 8,800 square feet and covered storage averaging 37,800 square
feet. The Company's sales and distribution facilities are situated on properties
ranging  from  1.0 to 21.3  acres  and  averaging  9.0  acres.  The  stand-alone
component  manufacturing  facilities  average  42,100  square feet on properties
averaging 9.1 acres.

<PAGE>21

     As of December 28, 2002, the Company owns 47 of its sales and  distribution
facilities;  the remaining 11 sales and distribution  facilities are leased. The
Company also held for sale the assets of four closed  facilities with a net book
value of $1.5 million. In addition to its sales and distribution facilities, the
Company operates 12 stand-alone  component  manufacturing  plants, nine of which
are owned sites and three of which are on leased sites.  One additional plant is
located on a sales and  distribution  facility site. All of the owned properties
are pledged as collateral  under the Company's  Credit  Agreement dated February
26, 2003 and under the Company's senior secured notes.

     For further  information see "Item 7. Management's  Discussion and Analysis
of  Financial  Condition  and  Results of  Operations  -  Liquidity  and Capital
Resources" and Note 9 to the Consolidated Financial Statements.

     The  Company  leases  its  corporate  headquarters,  a portion  of which is
subleased, located at 706 North Deerpath Drive in Vernon Hills, Illinois.


Item 3.  LEGAL PROCEEDINGS.
--------------------------

     The Company is one of many  defendants  in two class  action suits filed in
August of 1996. These cases involve  approximately 200 claimants for unspecified
damages  as a result of  health  problems  claimed  by the  Company's  customer,
claimed  to have been  caused by  inhalation  of silica  dust,  a  byproduct  of
concrete  and mortar mix,  which the Company  acquired  from a cement plant with
which the Company has no connection  other than as a customer  making  purchases
for   resale.    Librado   Amador,   et   al.   v.   Alamo   Concrete   Products
                 ---------------------------------------------------------------
Limited,   Wickes  Lumber Company,  et al., Case No. 16696, was filed in the
------------------------------------------
229th Judicial District Court of  Duval   County,   Texas.  Javier Benavides, et
                                                            --------------------
al. v. Magic Valley Concrete, Inc., Wickes Lumber Company, et al., Case  No.
--------------------------------------------------------------------------------
DC-96-89 was filed in the 229th Judicial  District Court of Starr County, Texas.
--------
The Company has entered into a cost-sharing agreement with its insurers, and any
liability is not expected to be material.

     The Company is one of many defendants in approximately 794 actions, each of
which seeks unspecified  damages, in various state courts against  manufacturers
and  building  material  retailers  by  individuals  who claim to have  suffered
injuries  from  products  containing  asbestos.   The  Company  is  aggressively
defending  these  actions and does not believe  that these  actions  will have a
material adverse effect on the Company.  Since 1993, the Company has settled 284
similar actions for insignificant amounts, and another 353 of these actions have
been dismissed. None of these suits have made it to trial.

     The Company also is involved in various other legal  proceedings  which are
incidental to the conduct of its business.  Certain of these proceedings involve
potential damages for which the Company's insurance coverage may be unavailable.

<PAGE>22

While the Company  does not believe  that any of these  proceedings  will have a
material adverse effect on the Company's financial  position,  annual results of
operations or liquidity, there can be no assurance of this result.

     The Company's  assessment of the matters  described in this Item 3 are made
pursuant to the safe harbor  provisions  of the  Private  Securities  Litigation
Reform Act of 1995 and are inherently subject to uncertainty. The outcome of the
matters  described in this Item 3 may differ from the  Company's  assessment  of
these matters as a result of a number of factors including,  but not limited to:
matters  unknown  to the  Company at the  present  time,  development  of losses
materially  different from the Company's  experience,  the Company's  ability to
prevail  against  its  insurers  with  respect to coverage  issues to date,  the
financial  ability of those insurers and other persons from whom the Company may
be entitled to indemnity, and the unpredictability of matters in litigation.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
-------------------------------------------------------------

     None.


<PAGE>23



                                     PART II
                                     -------

Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
-------------------------------------------------------------------------------

     The Company's Common Stock is authorized for trading on the Nasdaq SmallCap
Market  under the  trading  symbol  "WIKS." As of  February  28, 2003 there were
8,307,984 shares  outstanding held by approximately  120 stockholders of record.
In addition, the Company believes approximately 926 additional stockholders hold
their shares in street name at various brokerage houses.

     The following table sets forth, for the periods indicated, the high and low
sale prices for the  Company's  Common Stock as reported on the Nasdaq  SmallCap
Market System after October 3, 2002,  and on the Nasdaq  National  Market System
prior  to  that  date.  Prices  do not  include  retail  markups,  markdowns  or
commissions.


  Three Months Ended                             High                  Low
  ------------------                             ----                  ---
  Fiscal 2002
  -----------
  March 30                                       $3.28                 $2.35
  June 29                                         2.75                  0.83
  September 28                                    1.80                  0.17
  December 28                                     0.94                  0.28

  Fiscal 2001
  -----------
  March 31                                       $5.00                 $3.00
  June 30                                         4.57                  4.00
  September 29                                    4.44                  2.67
  December 29                                     3.08                  2.37



     On October  11,  2002 the  Company  received  notice  from  Nasdaq that the
Company's common stock has not maintained the minimum per share  requirement for
continued inclusion under Marketplace Rule 4310(c)(4).  Therefore, in accordance
with Marketplace Rule 4310(c)(8)(D),  the Company has been provided 180 calendar
days, or until April 9, 2003, to regain  compliance.  If at anytime before April
9, 2003,  the bid price of the Company's  common stock closes at $1.00 per share
or more for a minimum  of 10  consecutive  trading  days,  Nasdaq  will  provide
written notification that the Company complies with the Rule.

     If  compliance  with this Rule  cannot be  demonstrated  by April 9,  2003,
Nasdaq will determine whether the Company meets the initial listing criteria for
the Nasdaq SmallCap Market under Marketplace Rule 431(c)(2)(A).  If it meets the
initial listing criteria,  Nasdaq will notify the Company that it has granted an
additional 180 calendar day grace period to demonstrate  compliance.  Otherwise,
Nasdaq will provide  written  notification  that the Company may appeal Nasdaq's
determination  to delist its securities to a Listing  Qualifications  Panel. The
Company  believes Nasdaq will grant the additional 180 calendar day grace period
to demonstrate compliance.

<PAGE>24

     The Company did not declare or pay any dividends on Common Stock during the
two fiscal years ended December 28, 2002. There are restrictions included in its
revolving credit facility and trust indenture  related to the Company's  11-5/8%
senior  secured  notes  relating  to the  payment  of  dividends.  See  "Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations" and Note 9 to the Consolidated Financial Statements.

     The following  table  summarizes  the number of stock options  issued,  the
weighted-average  exercised price, and the number of securities  remaining to be
issued under all outstanding equity compensation plans as of December 28, 2002.

<TABLE>
<S>                          <C>           <C>      <C>                  <C>       <C>


                                           Equity Compensation Plan Information
                                           -------------------------------------

                                                                            No. of securities
                               No. of securities to   Weighted avg.         available for future
       Plan                    be issued upon         exercise price of     issuance under equity
       Category                exercise of            outstanding           compensation plans
                               outstanding options,   options, warrants     (excluding securities
                               warrants, etc.         etc.                  reflected in column (a))
       ----------------------- ---------------------- --------------------- --------------------------
                                        (a)                    (b)                    (c)

       Equity compensation
       plans approved by
       security holders               525,866                 6.28                   330,070

       Equity compensation
       plans not approved by
       security holders                  0                      0                       0

       Total                          525,866                 6.28                   330,070

</TABLE>




Item 6.  SELECTED FINANCIAL DATA.
---------------------------------

     The  following  table  presents  selected  financial  data derived from the
audited  consolidated  financial  statements of the Company for each of the five
years in the period ended  December 28, 2002. The following  selected  financial
data should be read in  conjunction  with "Item 7.  Management's  Discussion and
Analysis of Financial  Condition and Results of Operations" and the Consolidated
Financial  Statements and Notes thereto contained  elsewhere in this report. The
table  reflects  business  sold as part of the  Lanoga  Sale as a  component  of
discontinued operations due to an exit from a marketplace.


<PAGE>25

<TABLE>
<S>                               <C>              <C>       <C>            <C>           <C>          <C>

                                           WICKES INC. AND SUBSIDIARIES
                                       SELECTED CONSOLIDATED FINANCIAL DATA
                                 (in thousands, except ratios and per share data)

                                                      Dec. 28,    Dec. 29,     Dec. 30,     Dec. 25,     Dec. 26,
                                                        2002        2001         2000         1999         1998
                                                     ----------- ------------ ------------ -----------  -----------
Income Statement Data:
    Net sales                                           577,731      710,000      726,375     777,244      631,209
    Gross profit                                        114,013      145,614      149,563     153,775      127,625
    Selling, general and administrative expense         112,884      143,587      145,193     132,976      116,791
    Depreciation and amortization                         4,301        5,239        4,710       4,764        3,860
    Provision for doubtful accounts                       1,281          916          727       1,331        2,402
    Impairments (1)                                      12,894            -            -           -            -
    Store closing costs and other charges (2 & 3)         3,554        1,744            -           -        5,932
    Other operating income (4)                           (2,941)      (3,421)     (13,163)     (3,682)      (4,415)
    (Loss) income from continuing operations            (17,960)      (2,451)      12,096      18,386        3,055
    Interest expense (5)                                 16,029       21,787       24,322      23,302       21,632
    Loss from continuing operations before
      income taxes                                      (33,989)     (24,238)     (12,226)     (4,916)     (18,577)
    Income tax (benefit) provision                      (13,503)      (8,648)      (3,745)     (1,418)      (6,494)
    Loss from continuing operations                     (20,486)     (15,590)      (8,481)     (3,498)     (12,083)
    Income from discontinued operations                  29,613        8,516       11,335      11,086       11,118
    Net income(loss)                                      9,127       (7,074)       2,854       7,588         (965)

Per Share Data:
    Loss from continuing operations per common share
      basic and diluted                                   (2.47)       (1.88)       (1.03)      (0.43)       (1.47)
    Income from discontinued operations per
      common share-basic                                   3.57         1.03         1.37        1.35         1.36
    Income from discontinued operations per
      common share-diluted                                 3.52         1.01         1.34        1.33         1.35
    Net income (loss) per common share-basic               1.10        (0.85)        0.35        0.92        (0.12)
    Net income (loss) per common share-diluted             1.08        (0.85)        0.34        0.91        (0.12)
    Weighted average common shares - basic            8,293,261    8,277,190    8,249,774   8,216,265    8,197,542
    Weighted average common shares - diluted          8,416,481    8,403,742    8,466,383   8,330,571    8,248,967

Operating Data:
    Depreciation and amortization                         4,301        5,239        4,710       4,764        3,860
    Deferred financing cost amortization                  1,586        1,449        1,274       1,510        1,447
    Capital expenditures                                  1,883        9,222        7,898       7,216        4,446
    Net cash provided by (used in)
      operating activities                               28,459         (453)          22     (15,372)      (5,450)
    Net cash provided by (used in)
      investing activities                               81,624       (7,397)      (7,486)    (16,281)        (274)
    Net cash (used in) provided by
      financing activities                             (107,626)      (4,860)      (5,478)     27,086          975
    Net cash (used in) provided by
      discontinued operation                             (2,570)      12,662       13,091       4,574        4,738

Balance Sheet data (at period end):
    Working capital-continuing operations (11)           49,456       93,075      107,655     125,751      104,921
    Total assets                                        173,987      297,073      300,936     334,009      292,183
    Total long-term debt, less current maturities        67,363      193,253      200,403     220,742      191,961
    Total stockholders' equity                           36,030       26,771       33,896      30,819       23,148

Other Data:
    Ratio of earnings to fixed charges (6)                (0.69)        0.09         0.81        0.82         0.26
    Interest coverage (7)                                 (0.86)        0.23         0.31        1.12         0.38
    EBITDA (8)                                          (12,417)       4,737        7,157      24,328        7,655
    Cash interest expense (9)                            14,443       20,338       23,048      21,792       20,185
    Same store sales growth (10)                          -9.4%        -2.4%        -7.4%       22.1%         8.5%
    Building centers open at end of period                   58           98          101         101          101

</TABLE>


<PAGE>26



Notes to Selected Consolidated Financial Data

(1)       The Company has recorded an impairment charge of $12.9 million related
          to goodwill and other intangible assets. (See additional discussion in
          Note 4 to the consolidated financial statements.)

(2)       During the first  quarter of 1998,  the Company  implemented  the 1998
          Plan which resulted in the closing or consolidation of eight sales and
          distribution and two manufacturing facilities in February, the sale of
          two sales and distribution facilities in March, and further reductions
          in  headquarters  staffing.  As a result of the 1998 Plan, the Company
          recorded a  restructuring  charge of $5.4 million in the first quarter
          and an additional charge of $0.5 million in the third quarter

(3)       During 2002 and 2001,  the Company  incurred  store  closing costs and
          other charges related to management's  reorganization initiatives that
          resulted in charges of $3.6  million and $1.7  million,  respectively,
          relating to distribution center closing costs and other charges.  (See
          additional discussion in Item 7. Management's  Discussion and Analysis
          and Note 16 to the consolidated financial statements.)

(4)       As  further  explained  in  Note  9  to  the  Consolidated   Financial
          Statements,  on November 21, 2000 the Company  commenced a cash tender
          offer for its outstanding  11-5/8% Senior Subordinated Notes due 2003,
          at a  substantial  discount  from face  value.  The offer  expired  on
          December 20, 2000 and on December 26, 2000, the Company redeemed $36.0
          million  of notes  tendered.  As a  result  of this  transaction,  the
          Company  recorded  a  pre-tax  gain of  $11.1  million,  net of  costs
          associated  with the  transaction.  As  required  by SFAS No.  145 the
          Company   has  changed   the   presentation   of  its  gains  on  debt
          extinguishment  from  extraordinary  items to other operating  income.
          While not required until fiscal 2003, the Company has elected to early
          adopt the  provision of this  statement as encouraged by the Financial
          Accounting  Standards Board.  (See additional  discussion in Note 2 to
          the consolidated financial statements.)

(5)       Interest  expense  includes cash interest  expense and amortization of
          deferred financing costs. (See note 9 below.)

(6)       For  purposes of  computing  this ratio,  earnings  consist of pre-tax
          income (loss) before income taxes  adjusted for fixed  charges.  Fixed
          charges  consist of cash interest  expense,  amortization  of deferred
          financing  costs, and a portion of operating lease rental expense that
          is  representative  of the interest  factor  attributable  to interest
          expense.  Such  earnings were  insufficient  to cover fixed charges by
          $34.0  million,  $24.2 million,  $5.4 million,  $4.9 million and $18.6
          million for the years ended  December  28,  2002,  December  29, 2001,
          December  30,   2000,   December  25,  1999  and  December  26,  1998,
          respectively.

<PAGE>27

(7)       For purposes of computing this ratio,  earnings  consist of EBITDA (as
          defined in note 8 below),  which is divided by cash  interest  expense
          (as defined in note 9 below).


(8)       EBITDA  represents  income (loss) from  continuing  operations  before
          income taxes, interest expense, depreciation and amortization.  EBITDA
          is not presented herein as an alternative measure of operating results
          but rather to provide additional  information  related to debt service
          capability,  and does not  represent  cash  flow from  operations,  as
          defined by GAAP and may not be comparable to similarly titled measures
          reported by other companies.

(9)       Cash interest expense  consists of interest expense less  amortization
          of deferred  financing  costs.  The following  table details  interest
          expense, cash interest expense, and interest paid for each of the five
          years in the period ended December 28, 2002 (in thousands).

<TABLE>

<S>                                      <C>             <C>            <C>            <C>           <C>

                                            2002            2001           2000           1999           1998
                                            ----            ----           ----           ----           ----

Interest expense                          $16,029         $21,787        $24,322        $23,302         $21,632
Less:
   Amortization of deferred
      financing costs                       1,586           1,449          1,274          1,510           1,447
                                          ---------       ---------      ---------      ---------       ---------
Cash interest expense                      14,443          20,338         23,048         21,792          20,185

Decrease (increase) in
   accrued interest                         1,117            (880)           155           (289)            700
                                          ---------       ---------      ---------      ---------       ---------

Interest paid                             $15,560         $19,458        $22,203        $21,503         $20,885
                                          =========       =========      =========      =========       =========
</TABLE>

(10)      Same store sales  growth  data  reflects  average  sales for sales and
          distribution facilities and other facilities that were operated by the
          Company  throughout both the current and previous year. In addition to
          sales and distribution facilities, component manufacturing plants also
          make some direct sales. The following table lists, by year, the number
          of locations that were included in this calculation:

                                    Year          No. of Facilities
                                    ----          -----------------
                                    2002                 58
                                    2001                 98
                                    2000                101
                                    1999                101
                                    1998                101

(11)      Working  capital  presented  excludes  the assets and  liabilities  of
          discontinued operations.



<PAGE>28



  Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
--------------------------------------------------------------------------
RESULTS OF OPERATIONS.
----------------------

General
-------

     As of December 30, 2001 the Company  adopted the  requirements of Statement
of Financial  Accounting  Standards No. 144  "Accounting  for the  Impairment or
Disposal of  Long-Lived  Assets".  As described  earlier in this Form 10-K,  the
Company  sold  31  distribution   centers  and  4  component  plants  to  Lanoga
Corporation (the "Lanoga Sale") which  constituted an asset group, as defined by
the standard. The distribution centers and component plants have been treated as
a disposal of a component of the consolidated Company, which under the standard,
requires the Company to report the results of these  operations as  discontinued
operations.  The results of these  operations have been reported as discontinued
operations  for the year ended  December 28, 2002. The results of operations for
the years ended  December 29, 2001 and December 30, 2000 have been  reclassified
as discontinued  operations to conform to the requirements of this standard. Net
sales from  discontinued  operations  were $271.8 million,  $291.0 million,  and
$301.2 million in 2002, 2001, and 2000,  respectively.  Income from discontinued
operations  was $7.3 million,  $8.5 million,  and $11.3  million,  respectively.
Additionally,  the Company recognized a $22.4 million gain, net of taxes, on the
Lanoga Sale as of December 28, 2002. In addition to the Lanoga Sale, the Company
closed,  consolidated  or sold an additional 11 facilities in 2002 and 5 in 2001
that were not  considered  discontinued  operations and therefore the results of
these operations are reported in continuing operations.

     The following table sets forth, for the periods  indicated,  the percentage
relationship  to net sales of certain  expense and income  items.  All  material
intercompany balances and transactions have been eliminated. The table below has
been adjusted to exclude discontinued operations.  (See additional discussion in
Note 3 to the  consolidated  financial  statements.)  This table and  subsequent
discussion  should  be read  in  conjunction  with  the  consolidated  financial
statements and notes thereto appearing elsewhere herein.

<TABLE>

<S>                                                <C>            <C>               <C>

                                                                   Years Ended
                                                                   -----------

                                                    Dec 28,           Dec. 29,         Dec. 30,
                                                     2002              2001             2000
                                                     ----              ----             ----

    Net sales                                        100.0%           100.0%            100.0%
    Gross profit                                      19.7             20.5              20.6
    Selling, general and administrative
      expenses                                        19.5             20.2              20.0
    Depreciation and amortization                      0.7              0.7               0.6
    Provision for doubtful accounts                    0.2              0.1               0.1
    Impairments                                        2.2              -                 -
    Store closing costs and other charges              0.6              0.2               0.0
    Other operating income                            (0.5)            (0.5)             (1.8)
    (Loss)Income from continuing operations           (3.5)            (0.3)              0.1

</TABLE>

<PAGE>29

     The  Company's  operations,  as  well as  those  of the  building  material
industry,  generally,  have reflected  substantial  fluctuations  from period to
period as a consequence of various  factors,  including  levels of  construction
activity, weather, prices of commodity wood products, general regional and local
economic conditions, interest rates and the availability of credit, all of which
are cyclical or seasonal in nature.  The Company  anticipates that  fluctuations
from  period  to  period  will  continue  in the  future.  Due to a  substantial
percentage of the Company's sales being attributable to building  professionals,
certain of these factors may have a more significant  impact on the Company than
on companies that are more heavily focused on consumers.

     The Company's  first  quarter,  and  occasionally  its fourth  quarter,  is
typically  adversely  affected by weather patterns in the Midwest and Northeast,
which result in seasonal  decreases in levels of construction  activity in these
areas. The extent of such decreases in activity is a function of the severity of
winter weather conditions. During 2002, the Midwest and Northeast of the country
had fairly normal  temperatures and  precipitation.  By comparison,  in December
2001 these regions recorded above normal to record warm temperatures with normal
to below  normal  precipitation,  while during the second  quarter of 2001,  the
Midwest and South regions  experienced more  precipitation  than normal.  In the
first quarter of 2000, the Midwest and Northeast experienced mild winter weather
but   significant   precipitation,   while  the  fourth  quarter  these  regions
experienced more severe winter weather than in the previous years. The Company's
year-to-date  weighted-average interest rate decreased in 2002 to 7.95% compared
to a  weighted-average  interest  rate of  8.93%  in 2001  and  10.07%  in 2000.
Commodity lumber prices decreased 4.0% from last year, negatively affecting 2002
results.  Housing  starts  nationally  were up 5.1% in 2002 and in the Company's
primary markets,  the Northeast,  Midwest,  and South, starts were up 2.3%, 4.2%
and 4.4% respectively.  By comparison,  2001 housing starts nationally increased
2.2% over 2000.  During 2002,  the Company  experienced  reductions  in selling,
general and administrative ("SG&A") expense and gains on the sale of assets as a
direct result of a plan to reduce certain overhead programs and under-performing
assets.

     Losses from continuing  operations  increased to $20.5 million for the year
ended December 28, 2002, from $15.6 million and $8.5 million for the years ended
December 29, 2001 and December 30, 2000, respectively.

     The following table contains selected  unaudited  quarterly  financial data
for the years ended  December 28, 2002 and December 29, 2001.  Quarterly  income
(loss) per share may not total to  year-end  income  (loss) per share due to the
issuance of additional shares of Common Stock during the course of the year.


<PAGE>30

<TABLE>
<S>                             <C>                     <C>          <C>         <C>            <C>


                                 QUARTERLY FINANCIAL DATA
                                      Fiscal Quarters
                   (in millions, except per share data and percentages)


                                                             2002          2002         2002          2002
                                                           Quarter 1     Quarter 2    Quarter 3     Quarter 4
                                                         ------------  ------------ ------------  ------------

Net sales from continuing operations                       $ 135.3       $ 160.4      $ 153.2       $ 128.8
% of annual net sales                                        23.4%         27.8%        26.5%         22.3%

Gross Profit                                                  25.8          32.3         30.7          25.2

Income (loss) from continuing operations                      (2.8)         (0.6)        (3.1)        (14.0)
Income (loss) from discontinued operations                    (1.0)          2.9          4.2          23.5
                                                         ------------  ------------ ------------  ------------

Net (loss) income                                             (3.8)          2.3          1.1           9.5

Basic earnings (loss) per common share:
Income (loss) from continuing operations                   $ (0.34)      $ (0.07)     $ (0.37)      $ (1.69)
Income (loss) from discontinued operations                   (0.12)         0.35         0.51          2.83
                                                         ------------  ------------ ------------  ------------
Net (loss) income                                            (0.46)         0.28         0.14          1.14

Diluted earnings (loss) per common share:
Income (loss) from continuing operations                     (0.34)        (0.07)       (0.37)        (1.69)
Income (loss) from discontinued operations                   (0.12)         0.35         0.50          2.79
                                                         ------------  ------------ ------------  ------------
Net (loss) income                                          $ (0.46)       $ 0.28       $ 0.13        $ 1.10


                                                             2001          2001         2001          2001
                                                           Quarter 1     Quarter 2    Quarter 3     Quarter 4
                                                         ------------  ------------ ------------  ------------

Net sales from continuing operations                       $ 135.4       $ 194.5      $ 206.9       $ 173.2
% of annual net sales                                        19.1%         27.4%        29.1%         24.4%

Gross Profit                                                  30.1          40.1         41.9          33.5

Income (loss) from continuing operations                      (4.8)         (3.1)        (4.0)         (3.7)
Income (loss) from discontinued operations                    (1.7)          4.1          4.7           1.4
                                                         ------------  ------------ ------------  ------------

Net Income (loss)                                             (6.5)          1.0          0.7          (2.3)

Basic earnings (loss) per common share:
Income (loss) from continuing operations                   $ (0.58)      $ (0.37)     $ (0.48)      $ (0.45)
Income (loss) from discontinued operations                   (0.20)         0.50         0.56          0.18
                                                         ------------  ------------ ------------  ------------
Net (loss) income                                            (0.78)         0.12         0.08         (0.27)

Diluted earnings (loss) per common share:
Income (loss) from continuing operations                     (0.58)        (0.37)       (0.48)        (0.45)
Income (loss) from discontinued operations                   (0.20)         0.49         0.56          0.17
                                                         ------------  ------------ ------------  ------------
Net (loss) income                                          $ (0.78)       $ 0.12       $ 0.08       $ (0.28)




Each fiscal quarter in the table above represents a thirteen-week period.
</TABLE>



<PAGE>31


     In the  fourth  quarter  of  2002,  the  Company  recorded  a gain of $22.4
million, net of taxes, on the Lanoga Sale.

                          ---------------------------

     This Item 7 contains  statements  which,  to the  extent  that they are not
recitations of historical fact,  constitute  Forward Looking Statements that are
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform  Act of 1995 and are  inherently  subject  to  uncertainty.  A number  of
important  factors could cause the Company's  business and financial results and
financial condition to be materially  different from those stated in the Forward
Looking Statements. For a discussion of these matters, see the last paragraph of
Item 1 of this report.


2002 Compared with 2001
-----------------------

     The following  discussion is based on the results of continuing  operations
of the  Company.  See  section  above and Note 3 to the  consolidated  financial
statements   regarding  the  Lanoga  Sale,  which  is  treated  as  discontinued
operations of the Company.

     Net Sales
     ---------

     Net sales for 2002 decreased  $132.3  million,  or 18.6%, to $577.7 million
from $710.0  million in 2001.  In addition to the Lanoga Sale  mentioned  above,
which is treated as discontinued operations, the Company closed, consolidated or
sold an additional 11 facilities which contributed  approximately $126.7 million
in sales in 2001. The sales for all facilities  operated  throughout  both years
("same store sales") decreased 9.4%. During 2002, the Company experienced a 4.4%
decrease in same store  sales to its primary  customer,  the  professional  home
builder,  and an 18.0%  decrease  in same store  sales to  commercial  builders.
Repair and  Remodel  and  Consumer  same store  sales  declined  11.1% and 15.5%
respectively.  Sales to building  professionals  as a percentage  of total sales
were 93.1% in 2002 compared to 92.6% in 2001, while sales to consumers were 6.9%
in 2002 compared to 7.4% in 2001.

     Total housing starts  nationally  were up 5.1% in 2002 and in the Company's
primary markets, the Northeast, Midwest, and South starts were up 2.3%, 4.2% and
4.4% respectively.  Nationally, single family housing starts, which generate the
majority of the Company's sales to building professionals,  increased by 5.8% to
1.33 million starts in 2002 from 1.26 million starts in 2001.

     The  Company   estimates  that  deflation  in  lumber  and  drywall  prices
negatively impacted 2002 net sales by approximately $9.3 million,  when compared
with lumber and drywall prices during 2001.  Dimensional lumber, panel products,

<PAGE>32

and to an extent, drywall are commodities (which are generally tracked using the
Random Lengths Framing  Composite Average and the Random Lengths Panel Index for
dimensional lumber and panel products,  respectively)  which cause the Company's
costs and retails to fluctuate with changing market  conditions.  Drywall prices
generally fluctuate based on availability and are tracked using producer prices.
Increases in commodity  prices ("lumber  inflation")  generally are passed on to
the customer with certain lag effects,  resulting in higher selling  prices,  or
are fixed in the futures market for dimensional  lumber and panel products for a
small  percentage  of  longer-term  sales  contracts.  In periods of  decreasing
commodity prices ("lumber deflation"), selling prices decrease, with certain lag
effects.  The Company's  commodity wood products,  including drywall  (excluding
discontinued  operations)  accounted  for  approximately  54.3% of sales for the
year, compared with 57.3% for 2001.

     Products  that  exhibited  the greatest  change in sales for the year ended
December 28, 2002 versus sales of such  products in 2001 were lumber and plywood
(down 27.1%),  trusses (down 12.4%), roofing (down 21.2%), treated wood products
(down 22.3%),  specialty wood products (down 20.8%) and insulation (down 18.5%).
These  products  account for 56.7% of the total Company sales in 2002, and 68.7%
of the change in sales from last year.

     Sales of internally manufactured building components, excluding the effects
of discontinued  operations,  decreased to 54.6% of total  distributed  building
components  from  62.7% in the  prior  year.  Sales of  internally  manufactured
building components  decreased 22.4% to approximately $57.2 million in 2002 from
approximately  $73.8  million  in 2001.  As with  dimensional  lumber,  sales of
internally  manufactured  building  components  are  impacted  by the effects of
lumber deflation.

     Gross Profit
     ------------

     Gross  profit  decreased  $31.6  million to $114.0  million or 19.7% of net
sales for 2002 compared with $145.6  million or 20.5% of net sales for 2001. The
Company  believes  that  deflation in lumber and drywall  prices  decreased  the
dollar value of gross profit by  approximately  $1.6 million for the fiscal year
ended  December 28,  2002.  During 2002,  the Company  sold or  consolidated  11
facilities  and recorded a charge to gross profit of $1.4 million for  inventory
liquidation  costs.  Of the Company's  major product lines,  building  materials
accounted for  approximately  37.5% of total company gross profit, up from 34.8%
last year;  however,  gross margin  percentage for these  products  decreased to
21.6% from 22.2% last year.

     Selling, General, and Administrative Expense
     --------------------------------------------

     Total selling, general, and administrative expense ("SG&A") decreased $30.7
million or 21.4% to $112.9 million in 2002 compared with $143.6 million in 2001.
SG&A also  decreased as a percent of net sales to 19.5%  compared  with 20.2% of
net sales in 2001.

<PAGE>33

     The decrease in SG&A primarily is  attributable  to labor  management  that
reduced  salaries and wages by $18.6  million or 19.0%.  In addition the Company
experienced  a reduction  in benefit  costs,  particularly  in its  self-insured
medical  costs which  decreased by $3.7 million or 33.4% over last year, as well
as smaller reductions in marketing and delivery  expenses.  The Company believes
the  management  plan  developed  and put in place  in the last  half of 2001 to
reorganize  and improve  productivity  and  performance,  and to reduce  certain
overhead programs and under-performing  assets, has resulted and should continue
to result in reductions to labor expenses,  administrative  expenses,  marketing
expenses, insurance expenses and other SG&A expense.

     Depreciation and Amortization
     -----------------------------

     Depreciation and amortization costs decreased approximately $0.9 million to
$4.3 million in 2002,  compared  with $5.2 million in 2001.  As a percentage  of
sales, depreciation and amortization costs compared to last year were flat.

     Provision for Doubtful Accounts
     -------------------------------

     Provision for doubtful accounts  increased to approximately $1.3 million or
0.2% of sales in 2002 from approximately $0.9 million or 0.1% of sales for 2001.
Included in the 2002  provision  is the reserve of  approximately  $0.4  million
against a note issued by Riverside Group, Inc. that was not paid on the December
28,  2002 due date (see  additional  discussion  in Note 15 to the  consolidated
financial statements).

     Impairments
     -----------

     In accordance with SFAS No.142, "Goodwill and Other Intangible Assets", the
Company has  recorded an  impairment  charge of $12.9  million  (see  additional
discussion in Note 4 to the consolidated financial statements).

     Store Closing Costs and Other Charges
     -------------------------------------

     In 2001,  the  Company's  management  developed  a plan to  reorganize  and
improve   productivity   and   performance.   The  results  were  reductions  in
administrative  expense,  marketing  expense,  headcount and the  elimination of
non-strategic operating units. As a result, the Company recorded charges of $1.2
million related to severance,  $0.5 million  related to property  carrying costs
and other costs.

     Pursuant  to  certain   initiatives  to  improve   performance  and  reduce
under-performing assets, from January through November 2002, the Company closed,
consolidated, or sold nine distributions centers and two component plants. These
closings  resulted in termination of approximately  300 employees that worked at
these locations. Another 27 employees were transferred to surrounding locations.
Store closing costs associated with these activities  typically include employee
termination  costs,  non-cancelable  lease  obligations  and  other  exit  costs

<PAGE>34

incurred  as a direct  result of closing  facilities.  As a result,  the Company
recorded  charges of $1.8 million of severance  and $1.7 million of property and
other  carrying  costs.  Also  included  in the $1.8  million of  severance  was
$385,000  in  severance  related  to a plan to  reduce  headquarters  and  field
administration by 23 associates.  In addition, the Company recorded a write down
of inventory of  approximately  $1.4 million.  The following is a summary of the
activity  in the  reserve  balances  from 2001  through  December  28,  2002 (in
thousands):

<TABLE>

<S>                                             <C>            <C>                  <C>
                                                     Employee       Property and
                                                    Separation     Other Carrying
                                                      Costs            Costs          Total
                                                      -----            -----          -----
       2001 Store closing and other costs              $1,223         $ 521          $1,744
       2001 Related payments                            1,084           235           1,319
                                                 ------------- ------------------ ------------
       Accrual balance at December 29, 2001               139           286             425
       2002 Store closing and other costs               1,895         1,658           3,553
       2002 Related payments                            1,649         1,929           3,578
                                                 ------------- ------------------ ------------
       Accrual balance at December 28, 2002             $ 385          $ 15            $400

</TABLE>

     Other Operating Income
     ----------------------

     Other operating income decreased approximately $0.5 million to $2.9 million
in 2002, compared with $3.4 million in 2001. This primarily includes the sale or
disposal of property, plant and equipment, service charges assessed customers on
past due accounts receivable, and casualty losses. During 2002, the Company sold
eight  pieces  of  real  estate  and  various  fixed  assets  for a net  gain of
approximately $1.8 million,  offset by an impairment of $0.9 million charged for
the 2003 sale of real  estate in Aurora,  CO.  This is  compared  with four real
estate  sales and  various  fixed  asset  disposals  in 2001,  for a net gain of
approximately $1.2 million.

     Interest Expense
     ----------------

     Interest  expense  decreased to $16.0 million in 2002 from $21.8 million in
2001.  The  Company's   weighted-average   interest  rate  on  all   outstanding
borrowings,  excluding  amortization  of debt issue  costs,  for the years ended
December  28,  2002 and  December  29, 2001 was  approximately  7.95% and 8.93%,
respectively.

     The Company's 2002 average debt levels decreased significantly,  down $43.2
million  or 19.1% over the  comparable  period in 2001.  In 2002,  approximately
85.9% of the Company's  average  borrowing on its revolving  credit facility was
LIBOR-based as compared with 94.2% in 2001.

     Income Tax Benefit before Discontinued Operations
     -------------------------------------------------

     In 2002,  the  Company  recorded a net income tax  benefit  for  continuing
operations of $13.5  million  versus a net income tax benefit of $8.6 million in
2001. The Company's  effective tax rate was 39.7% for 2002 compared to 35.7% for
<PAGE>35


2001.  Included in the Company's tax provision from  continuing  operations were
state franchise taxes and non-deductible  items. State franchise taxes were $0.4
million and $0.7 million for 2002 and 2001, respectfully.

     The Company  continues to review future  earnings  projections to determine
that there is  sufficient  support  for its  deferred  tax assets and  valuation
allowance.  Management believes that it is more likely than not that the Company
will receive  full benefit of its net deferred tax asset and that the  valuation
allowance is properly stated.

     Net Loss from Continuing Operations
     -----------------------------------

     The Company recorded a net loss from continuing operations in 2002 of $20.5
million  versus a loss of $15.6  million in 2001,  an increase of $4.9  million.
Results of operations  were  negatively  impacted by an impairment of intangible
assets of $12.9  million,  a decrease in sales,  down 18.6%, a decrease in gross
profit  percent,  down 80 basis  points,  an increase in store closing and other
items, up 103.8%,  and a decrease in other income,  down 14.0%. These items were
partially offset by a decrease in selling general and  administrative  expenses,
down 21.4%.

     Discontinued operations
     -----------------------

     As part of the Company's reorganization  initiative,  on December 16, 2002,
the Company  successfully  completed the sale of substantially all of the assets
of its operations in Wisconsin and Northern Michigan to Lanoga Corporation's UBC
division (the "Lanoga Sale").  Included in the transaction  were 14 distribution
centers and three component plants in Wisconsin, and 17 distribution centers and
one  component  plant in Michigan.  See  additional  discussion in Note 3 to the
consolidated financial statements.



2001 Compared with 2000
-----------------------

     Net Sales
     ---------

     Net sales for 2001 decreased $16.4 million, or 2.3%, to $710.0 million from
$726.4 million in 2000. The Company closed or  consolidated 5 facilities  during
2001 which  contributed  approximately  $23.8  million in sales during the prior
year.  Sales for all  facilities  operated  throughout  both years  ("same store
sales") decreased 2.4%. During 2001, the Company  experienced a 0.4% increase in
same store sales to its primary customer,  the professional home builder,  and a
10.2%  decrease  in same store  sales to  commercial  builders.  Consumer  sales
declined 4.8% on a same store basis.

<PAGE>36

     Sales to building  professionals  as a percentage of total sales were 64.9%
in 2001 compared to 62.9% in 2000. Lumber and building  materials  accounted for
84.8% of total sales in 2001, compared with 86.0% in 2000.

     Total  housing  starts in the United  States  increased  2.2% in 2001,  and
starts in the Company's  primary  geographical  market,  the Midwest,  increased
approximately   4.0%,  from  such  starts  in  2000.  The  Company's  two  other
geographical  markets,  the Northeast and South,  experienced a decrease in 2001
housing starts of 3.2% and an increase of 2.5%,  respectively,  from such starts
in 2000.  Nationally,  single family housing starts, which generate the majority
of the  Company's  sales to building  professionals,  increased  by 3.6% to 1.27
million starts in 2001 from 1.23 million starts in 2000.

     The  Company   estimates  that  deflation  in  lumber  and  drywall  prices
negatively impacted 2001 net sales by approximately $15.7 million, when compared
with lumber and drywall prices during 2000.  Dimensional lumber,  panel products
and, to an extent,  drywall are  commodities  which cause the Company's costs to
fluctuate with changing market  conditions,  generally  tracked using the Random
Lengths  Framing  Composite  Average  and the  Random  Lengths  Panel  Index for
dimensional  lumber and panel products,  respectively.  Drywall prices generally
fluctuate based on availability and are tracked using producer prices. Increases
in commodity prices ("lumber inflation") generally are passed on to the customer
with certain lag effects,  resulting in higher selling  prices,  or are fixed in
the  futures  market  for  dimensional  lumber  and panel  products  for a small
percentage of longer-term  sales contracts.  In periods of decreasing  commodity
prices ("lumber deflation"), selling prices decrease, with certain lag effects.

     Products  that  exhibited  the greatest  change in sales for the year ended
December 29, 2001 versus sales of such  products in 2000 were lumber and plywood
(down 10.1%),  drywall (down 33.7%),  windows (up 7.0%),  and trusses (up 4.2%).
These products account for 53.2% of the total Company sales in 2001.

     Sales   of   internally   manufactured   building   components,   excluding
discontinued  operations,  increased  to  62.7% of  total  distributed  building
components  from  61.4% in the  prior  year.  Sales of  internally  manufactured
building  components  increased 2.4% to approximately $73.8 million in 2001 from
approximately  $72.0  million  in 2000.  As with  dimensional  lumber,  sales of
internally  manufactured  building  components  are  impacted  by the effects of
lumber deflation.

<PAGE>37


     Gross Profit
     ------------

     Gross profit decreased $3.9 million to $145.6 million or 20.5% of net sales
for 2001  compared  with  $149.6  million  or 20.6% of net sales  for 2000.  The
Company  believes  that  deflation in lumber and drywall  prices  decreased  the
dollar value of gross profit by  approximately  $3.6 million for the fiscal year
ended  December 29, 2001.  Commodity  wood  products,  drywall and  manufactured
building  components  accounted for  approximately  57.3% of sales for the year,
compared with 59.5% for 2000.

     Selling, General, and Administrative Expense
     --------------------------------------------

     Total selling,  general, and administrative expense ("SG&A") decreased $1.6
million or 1.1% to $143.6  million in 2001 compared with $145.2 million in 2000.
SG&A  increased  slightly  as a percent of net sales to 20.2% in 2001,  compared
with 20.0% of net sales in 2000.

     The  increase in SG&A  primarily is  attributable  to increases in employee
benefits,   specifically  medical  and  workers'  compensation   insurances  and
increases in marketing  expenditures.  These increases were partially  offset by
reductions  in labor that reduced  salaries and  management  incentives,  and an
increase in co-operative marketing and cost recovery programs.

     Depreciation and Amortization
     -----------------------------

     Depreciation and amortization costs increased approximately $0.5 million or
11.2% to $5.2 million in 2001,  compared with $4.7 million in 2000. The increase
in  depreciation  primarily is due to  investments in machinery and equipment at
the Company's manufacturing facilities and delivery vehicles.

     Provision for Doubtful Accounts
     -------------------------------

     Provision for doubtful accounts  increased to approximately $0.9 million or
0.1% of sales in 2001 from approximately $0.7 million or 0.1% of sales for 2000.
The Company extends credit, generally due on the 10th day of the month following
the sale, to qualified and approved contractors.

     Store Closing Costs and Other Charges
     -------------------------------------

     In 2001,  the  Company's  management  developed  a plan to  reorganize  and
improve   productivity   and   performance.   The  results  were  reductions  in
administrative  expense,  marketing  expense,  headcount and the  elimination of
non-strategic operating units. As a result, the Company recorded charges of $1.2
million related to severance,  $0.5 million  related to property  carrying costs
and other costs.  Of these  charges,  the Company  paid $1.1 million  related to
severance, leaving an accrual balance at December 29, 2001 of $0.4 million.

<PAGE>38

     Other Operating Income
     ----------------------

     Other operating income decreased approximately $9.7 million to $3.4 million
in 2001,  compared with $13.2 million in 2000.  Other operating income primarily
includes the gains on the early  extinguishment of debt, the sale or disposal of
property,  plant and equipment,  service charges assessed  customers on past due
accounts  receivable,  closed center expenses and casualty losses.  During 2001,
the Company  sold four pieces of real estate and various  fixed assets for a net
gain of  approximately  $1.2  million.  This is compared  with three real estate
sales and various fixed asset disposals in 2000, for a net gain of approximately
$0.3 million. Additionally, as part of the adoption of SFAS No. 145, the Company
reclassified its gains on debt  extinguishment from extraordinary items to other
operating  income  (see  additional  discussion  in  Note 2 to the  consolidated
financial  statements.)  While not required  until fiscal 2003,  the Company has
elected to early adopt the  provision  of this  statement as  encouraged  by the
Financial  Accounting Standards Board. The pretax gain of $11.1 million has been
reclassified  to other  operating  income for the fiscal year ended December 30,
2000.

     Interest Expense
     ----------------

     Interest  expense  decreased to $21.8 million in 2001 from $24.3 million in
2000.  The  Company's   weighted-average   interest  rate  on  all   outstanding
borrowings,  excluding  amortization  of debt issue  costs,  for the years ended
December  29, 2001 and  December  30, 2000 was  approximately  8.93% and 10.07%,
respectively.  The Company's 2001 average debt levels  decreased by $2.5 million
or 1.1% over the comparable period in 2000.

     Income Tax Benefit
     ------------------

     In 2001,  the  Company  recorded a net income tax  benefit  for  continuing
operations  of $8.6  million  versus a net income tax benefit of $3.7 million in
2000.  The effective tax rate was 35.7% for 2001 compared to 30.6% for 2000. The
Company's  provision  includes state  franchise  taxes and other  non-deductible
items.  State  franchise  taxes were $0.7  million and $1.0 million for 2001 and
2000, respectively.

     The Company  continues to review future  earnings  projections to determine
that there is  sufficient  support  for its  deferred  tax assets and  valuation
allowance.  Management believes that it is more likely than not that the Company
will receive  full benefit of its net deferred tax asset and that the  valuation
allowance is properly stated.


      Net Loss from Continuing Operations
      -----------------------------------

     The Company recorded a net loss from continuing operations in 2001 of $15.6
million versus a net loss from continuing operations of $8.5 million in 2000, an
increase of $7.1 million.  Results of operations were  negatively  impacted by a
decline in sales of 2.3%, increased employee benefit costs, specifically workers
compensation  and medical costs, as well as additional  marketing  expenditures.
Results were  positively  impacted by a decrease in management  incentives and a
decrease in interest expense.



<PAGE>39




Critical Accounting Policies
----------------------------

     Management's  Discussion  and Analysis  discusses the results of operations
and  financial  condition as reflected in the Company's  consolidated  financial
statements,  which have been prepared in accordance with  accounting  principles
generally  accepted in the United  States of America.  As discussed in Note 2 to
the Company's  Consolidated  Financial Statements,  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 reported  amounts of assets and  liabilities  and  disclosure  of contingent
assets and  liabilities  at the date of the  financial  statements  and reported
amounts of revenues and expenses during the reporting period. Actual results may
differ from these estimates.  Management believes that any reasonable deviations
from  these  estimates  would not have a  material  impact  on the  consolidated
financial statements.

     On an ongoing  basis,  management  evaluates its  estimates and  judgments,
including those related to the allowance for uncollectible  accounts,  inventory
valuation,  long-lived assets, and self-insurance and other reserves. Management
bases its estimates and judgments on its substantial  historical  experience and
other relevant factors, the results of which form the basis for making judgments
about the  carrying  values  of  assets  and  liabilities  that are not  readily
apparent from other sources.

     The  Company's  allowance  for  doubtful  accounts  is based on  historical
write-off  experience  net of  recoveries  and  management's  assessment  of the
collectibility of amounts due. Management's estimate considers overall portfolio
quality and current economic  conditions that may affect the borrower's  ability
to pay.

     The Company  utilizes the first-in,  first-out  (FIFO) cost flow assumption
for valuing its inventory.  Estimates are made for obsolescence and unmarketable
inventory to ensure inventory is valued at the lower of cost or market,  but not
in excess of net  realizable  value.  The  Company  also  records a reserve  for
estimated inventory shrinkage, based on previous years actual physical inventory
result, for the periods between physical inventories.

<PAGE>40

     The Company  primarily is self-insured for medical,  workers  compensation,
automotive, general and product liability claims. Self-insurance claims incurred
but not reported and those reported but unpaid are accrued based on management's
estimates,  which are based on actuarial assumptions provided by outside parties
and historical claims experience.

     Long-lived assets, including intangible assets, are reviewed when facts and
circumstances  indicate  that  the  carrying  value  of  the  asset  may  not be
recoverable.  When necessary, impaired assets are written down to estimated fair
value  based on the best  information  available.  Fair value is  determined  by
estimated future cash flows and appraised value of the assets.


Liquidity and Capital Resources
-------------------------------

     The Company's  principal  sources of working capital and liquidity are cash
flows from operations and borrowings under its revolving  credit  facility.  The
Company's primary need for capital resources is to finance accounts  receivable,
inventory, capital expenditures and collateral for self-insurance programs.

     In 2002, net cash provided by operating activities was $28.5 million.  This
compares with net cash used in operating activities of $0.5 million in 2001. The
increase  in cash flow from  operations  primarily  is driven by  reductions  in
accounts  receivable and inventory,  partially  offset by a decrease in accounts
payable and accrued liabilities.

     Accounts  receivable  at the end of 2002 was $56.1  million,  a decrease of
$5.3 million or 8.6% from 2001.  Inventory at the end of 2002 was $50.2 million,
a decrease of $21.7 million or 30.2% from 2001.  Excluding the sale of assets in
the Lanoga Sale,  accounts  receivable  and  inventory  decreases are due to the
Company's efforts to improve the management of both. Accounts payable at the end
of 2002 was $23.8 million, a decrease of $6.8 million or 22.2% from 2001.

     During 2002, the Company decreased its capital expenditures to $1.9 million
compared to $9.2 million in 2001. Net cash provided by investing  activities was
$81.6 million in 2002, compared to net cash used in investing activities in 2001
of $7.4 million.  Proceeds from the sale of  discontinued  operations  and other
facilities in 2002 were $83.5  million,  compared to proceeds of $2.6 million in
2001.

     The Company's  capital  expenditures  consist primarily of the construction
and maintenance of facilities for new and existing  operations,  the purchase of
machinery and equipment for component manufacturing  facilities,  the remodeling
of  sales  and  distribution  facilities  and  the  purchase  of  equipment  and
management  information systems.  The Company may also, from time-to-time,  make
expenditures  to establish or acquire  operations  to expand or  complement  its
existing  operations.  The new senior credit  agreement,  described below,  will
allow the  company to spend $6.0  million on capital  expenditures.  The Company
expects to fund  capital  expenditures  through  borrowings  and its  internally
generated cash flow.

<PAGE>41

     At December 28, 2002 the Company operated 58 sales and distribution centers
and  13  component   manufacturing   facilities   compared  with  98  sales  and
distribution  facilities and 26 component  manufacturing  facilities at December
29, 2001. The reduction in facilities is due to the Lanoga Sale as well as other
sales and  consolidation  of  facilities  that took place  during  the year.  At
December  28,  2002,  there were no material  commitments  to third  parties for
future capital expenditures.

     The Company  maintained  excess  availability  under its  revolving  credit
agreement  throughout  2002. The Company's  receivables and inventory  typically
increase in the second and third quarters of the year due to higher sales in the
peak building season.  In these same periods,  the Company typically reaches its
peak  utilization  of its revolving  credit  agreement  because of the increased
inventory and receivables  needed for the peak building season.  At December 28,
2002, the Company had outstanding borrowings under its previous revolving credit
agreement  of $31.5  million,  the minimum  availability  requirement  was $25.0
million and the unused availability was $38.8 million.

Senior Subordinated Debt
------------------------

     During 2002, management undertook an initiative to restructure its debt and
improve liquidity. As part of that initiative, on February 26, 2003, the Company
completed  its offer to exchange its new Senior  Secured  Notes due 2005 for any
and all of its  outstanding  11 5/8%  Senior  Subordinated  Notes due 2003.  The
Company accepted for the exchange all $42.8 million of Senior Subordinated Notes
validly  tendered in exchange for an equal  principal  amount of Senior  Secured
Notes. The tendered notes represent approximately 67% of the Senior Subordinated
Notes outstanding as of December 28, 2002. The Senior Secured Notes,  which bear
interest at 11 5/8% per annum from the date of  issuance  through  December  15,
2003 and at 18% per annum  thereafter,  are  secured  by liens on the  Company's
owned real estate and  equipment.  These liens are junior to the liens  securing
amounts payable under the Company's new senior credit facility.

     Concurrent with the closing of the exchange offer, the indenture  governing
the outstanding  Senior  Subordinated Notes was amended to remove or modify many
of the restrictive covenants.  Those restrictions included (but were not limited
to) certain  limitations on transactions  with  affiliates,  dividend  payments,
changes in control,  and sales of assets. In addition,  the new notes permit the
Company to call the notes,  at its option,  at declining  discounts  starting at
15%.

     The Company continues to carry outstanding old notes of approximately $21.2
million.  These notes are due in full on December 15, 2003. Sufficient liquidity
to meet these  obligations  when they come due is contingent on a number of risk
factors, as discussed in Item 1 of this Form 10-K.

<PAGE>42

Revolving Credit Facility
-------------------------

     Concurrent  with the Exchange  Offer,  on February  26,  2003,  the Company
completed a refinancing  of its Fleet Credit  Agreement and term notes  existing
under the prior Amended and Restated  Credit  Agreement  dated December 13, 2000
and entered into the new Merrill Credit  Agreement  dated February 26, 2003. The
total  commitment  was reduced from the original  $251.7  million  ($200 million
revolving  line of credit and $51.7 million of term notes) to $125 million ($100
million  revolving  line of credit and $25 million of term  notes).  The Merrill
Credit  Agreement  expires on February 26, 2007,  and the term notes are now due
February 26, 2007.

     As of December 28, 2002 there was $31.5 million outstanding under the Fleet
Credit  Agreement of which $20.3 million was revolving  credit and $11.2 million
was term  notes.  The spread on prime rate  borrowings  under the new  agreement
ranges  from  1.25% to 2% over  prime for  revolving  loans and 2% to 2.75% over
prime under the term notes.  The spread for LIBOR  based  borrowing  ranges from
2.5% to 3.25% over LIBOR for revolving loans and 3.25% to 4% over LIBOR for term
notes.  The spread  over the prime or LIBOR rates is  determined  based upon the
Company's  Fixed Charge  Coverage  Ratio,  as defined  under the Merrill  Credit
Agreement.  The  Company's  base rate,  5.00% at December  28, 2002 and 5.50% at
December  29, 2001,  included an interest  spread over prime of 0.75% and 0.75%,
respectively. The Company's LIBOR borrowing rate, 4.13% at December 28, 2002 and
4.69% at December 29, 2001,  included an interest spread over LIBOR of 2.75% and
2.75%,  respectively.  The Company's weighted average interest rates were 7.95%,
8.93%,  and 10.07% as of December 28, 2002,  December 29, 2001, and December 30,
2000, respectively.

     The Merrill Credit Agreement  limits the level of capital  expenditures for
each annual period,  while allowing for reinvestment of proceeds on asset sales.
The  company is also  subject to certain  minimum  levels of EBITDA,  as defined
within  the  Credit  Agreement.  Availability  is  generally  limited  to 85% of
eligible accounts  receivable and 60% of eligible  inventory.  For the first six
months from inception of this agreement,  minimum availability is required to be
$15 million. As of March 22, 2003 unused availability was $37.2 million.

     Under the Merrill  Credit  Agreement,  a commitment  fee of .375% to .5% is
payable on the unused  revolving  credit  amount.  Ranges of fees are determined
based upon the aforementioned  Fixed Charge Coverage Ratio, as defined under the
Credit  Agreement.  As of December 28, 2002, the Company was in compliance  with
all of its then existing covenants.

     The  maturity  schedule  in  the  Contractual  Obligations  and  Commercial
Commitments Table within the Liquidity and Capital Resources section of the MD&A
has been adjusted to reflect the current  repayment  requirements of the Merrill
Credit Agreement dated February 26, 2003.

     As a result of (i) the  Company's  failure to deliver  to the  lenders  its
fiscal 2002 audited financial  statements by March 28, 2003 and (ii) as of April
4, 2003,  Riverside  Group Inc. and J. Steven Wilson ceasing between them to own
at least 25% of the Company's  outstanding common stock and Imagine Investments,
Inc.  owning a greater  percentage of such shares than Riverside and Mr. Wilson,
certain  events of  default  arose  under the  Merrill  Credit  Agreement.  Such
defaults were simultaneously  waived by the lenders and the Credit Agreement was
amended in certain respects, including the addition of a provision which permits
the Company to make the severance payment to Mr. Wilson. In connection with such
waiver and amendments, the Company paid to the lenders a fee of $312,500.



<PAGE>43

Contractual Obligations and Commercial Commitments
--------------------------------------------------

     To facilitate an understanding of the Company's contractual obligations and
commercial commitments, the following data is provided. Note that approximately
$0.6 million of mortgages on real estate  included  herein are  classified  as a
component of other long-term liabilities in the Company's Balance Sheet.

<TABLE>
<S>                                                <C>         <C>             <C>          <C>           <C>


                                                                       Payments Due by Period
                                                                       -----------------------
                                                                  Within        2 - 3         4 - 5        After 5
Thousands                                            Total        1 year        years         years         years
                                                 -------------- ------------ ------------- ------------- ------------

     Contractual Obligations
     -----------------------
     Long-Term Debt and Other Liabilities         $   96,027     $ 28,518    $  43,120       $  24,389    $    -

     Operating Leases                                 43,125        9,651       10,431           3,021      20,022

                                                 -------------- ------------ ------------- ------------- ------------

     Total Contractual Cash Obligations           $  139,152     $ 38,169     $ 53,551       $  27,410    $ 20,022
                                                 ============== ============ ============= ============= ============

</TABLE>

     Other than the operating  leases included  above,  the Company has no other
off-balance sheet financing arrangements.


Net Operating Loss Carryforwards
--------------------------------

     At December  28, 2002 the Company and its  subsidiaries  had income tax net
operating loss carryforwards  ("NOLs") of approximately $22.4 million.  The NOLs
will expire in the years 2011 to 2021 if not previously utilized.  See also Note
13 to the Consolidated Financial Statements included elsewhere herein.

     The Company  continues to review future  earnings  projections to determine
that there is  sufficient  support  for its  deferred  tax assets and  valuation
allowance.  Management believes that it is more likely than not that the Company
will receive  full benefit of its net deferred tax asset and that the  valuation
allowance is properly stated.


Recently Issued Accounting Pronouncements
-----------------------------------------

     In December 2002, the FASB issued SFAS No. 148  "Accounting for Stock-Based
Compensation  --Transition  and  Disclosure,  an amendment of FASB Statement No.
123".  This  standard  provides  transitional  guidance  for  applying  the fair
value-based method of accounting for stock options.  It also requires additional
proforma  disclosures for interim periods beginning after December 15, 2003. The

<PAGE>44

company will continue to apply the intrinsic value based method of accounting as
prescribed  by APB  Opinion  No.  25. As such,  management  does not  expect the
adoption  of this  pronouncement  to have a  material  effect  on its  financial
statements.

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires companies to
recognize  costs  associated  with  exit or  disposal  activities  when they are
incurred  rather  than at the date of  commitment  to a plan.  SFAS  No.  146 is
effective for any exit plans  commencing  after  December 29, 2002.  The Company
does not believe that the initial adoption of this standard will have a material
impact on the Company's financial statements.

     In April 2002,  the FASB issued SFAS No. 145,  "Rescission of SFAS No's, 4,
44, and 64, Amendment of SFAS No. 13, and Technical  Corrections."  SFAS No. 145
modifies the treatment of  sale-leaseback  transactions  and  extinguishment  of
debt. Part of its provisions  change the  presentation of  extraordinary  gain /
loss on  extinguishment  of debt to a component  of  continuing  operations  and
requires  reclassification  of prior  periods.  While not required  until fiscal
2003, the Company has elected to early adopt the provision of this statement.  A
pretax gain of $11.1 million has been reclassified to other operating income for
the fiscal year ended  December 30, 2000.  The income tax provision and net loss
from continuing operations have been adjusted to reflect this reclassification.

     In September  2002,  the Emerging  Issues Task Force  ("EITF")  issued EITF
Issue No. 02-16 "Accounting by a Reseller for Cash Consideration Received from a
Vendor". This consensus requires cash consideration  received from vendors to be
classified  as a  reduction  of  costs of the  customer  product  cost  unless a
customer incurs a specific  incremental  cost to promote that vendor's  products
for  which it is being  reimbursed  or is  providing  a  service  for  which the
consideration  represents the consideration for the fair value of those services
being performed.  This consensus is effective to the Company for the fiscal year
ended December 27, 2003. Currently,  allowances that are reimbursements of costs
to promote vendors  products are offset against those costs in the statements of
operations.  Rebates that are associated with purchasing  volumes are considered
reductions  of the costs of  products  are  recognized  as  revenues  when those
products are sold.


<PAGE>45




Item 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
---------------------------------------------------------------------

     The Company is subject to market risk primarily  associated with changes in
interest rates and commodity lumber prices.

Interest Rate Risk
------------------

     See  "Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations - Liquidity and Capital  Resources"  for a description  of
the Company's outstanding indebtedness.

     The Company had an interest  rate swap  agreement  that expired in February
2002.  This interest rate swap  agreement  had  effectively  fixed the Company's
borrowing  cost at 5.75%  plus the  Company's  LIBOR  borrowing  spread on $40.0
million of the Company's Fleet Credit Agreement.

     Based on limited and infrequent trading  information,  management estimates
that the fair value of the  Company's  outstanding  11 5/8% Senior  Subordinated
Notes was $35.8  million and $32.0 million at December 28, 2002 and December 29,
2001,  respectively.  As  discussed  in  Note  9 to the  Consolidated  Financial
Statements,  the Company redeemed approximately $36.0 million face amount of the
notes in December 2000.  Assuming a hypothetical 100 basis point decrease in the
yield to maturity of the outstanding  notes at December 28, 2002, the fair value
of the fixed rate debt would have increased by $0.2 million.

     Commodity Price Risk
     --------------------

     The Company will from time to time enter into lumber  futures  contracts to
hedge price  fluctuations  related to anticipated  future purchases of commodity
lumber.  While lumber  futures  contracts are entered into on a risk  management
basis,  the Company's hedge positions could show a net gain or loss depending on
prevailing market conditions. At December 28, 2002, the Company did not have any
lumber futures contracts outstanding.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
-----------------------------------------------------

     Financial statements of the Company are set forth herein beginning on page
F-1.

Item 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON  ACCOUNTING AND
-------------------------------------------------------------------------------
FINANCIAL DISCLOSURE.
---------------------

     Not Applicable.

<PAGE>46

                                    PART III
                                    --------

Item 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
-------------------------------------------------------------

     Information  required by this Item is  incorporated  herein by reference to
the Sections entitled "Election of Directors" and "Management" in the definitive
proxy statement to be filed in connection with the Company's 2003 Annual Meeting
of Stockholders.


Item 11.  EXECUTIVE COMPENSATION.
---------------------------------

     Information  required by this Item is  incorporated  herein by reference to
the Sections entitled  "Executive  Compensation",  "Board of Directors' Meetings
and  Compensation"  (the last two  paragraphs),  "Report of the Compensation and
Benefits   Committee"  and  "Comparison  of  Cumulative  Total  Return"  in  the
definitive  proxy  statement to be filed in connection  with the Company's  2003
Annual Meeting of Stockholders.


Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
-------------------------------------------------------------------------

     Information  required by this Item is  incorporated  herein by reference to
the Section  entitled  "Principal  Security  Holders and  Security  Ownership of
Management" in the definitive proxy statement to be filed in connection with the
Company's 2003 Annual Meeting of Stockholders.


Item 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
---------------------------------------------------------

     Information  required by this Item is  incorporated  herein by reference to
the Section entitled  "Certain  Relationships  and Related  Transactions" in the
definitive  proxy  statement to be filed in connection  with the Company's  2003
Annual Meeting of Stockholders.

Item 14. CONTROLS AND PROCEDURES.
---------------------------------

     The Company has performed an evaluation  under the supervision and with the
participation of management,  including the Members of the Executive  Management
Committee (Co-Principal Executive Officers) and Chief Financial Officer ("CFO"),
of the effectiveness of the design and operation of the disclosure  controls and
procedures.  Based on that evaluation,  the Members of the Executive  Management
Committee and CFO concluded  that the disclosure  controls and  procedures  were
effective as of December 28, 2002. There have been no significant changes in the
internal  controls or other  factors that could  significantly  affect  internal
controls subsequent to December 28, 2002.

<PAGE>47

                                    PART IV
                                    -------

Item 15.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
-------------------------------------------------------------------------------

(a) List of Documents Filed as a Part of this Report:
-----------------------------------------------------

<TABLE>
<S>                                                                <C>

(1) Financial Statements:                                            Page No.
-------------------------                                            --------

Independent Auditors' Report                                           F-1
Consolidated balance sheets as of December 28, 2002
     and December 29, 2001                                             F-2
Consolidated statements of operations for the years ended
     December 28, 2002, December 29, 2001 and December 30, 2000        F-3
Consolidated statements of changes in stockholders'
     equity for the years ended December 28, 2002, December 29,
     2001 and December 30, 2000                                        F-4
Consolidated statements of cash flows for the years ended
     December 28, 2002, December 29, 2001 and December 30, 2000        F-5
Notes to consolidated financial statements                             F-6

(2) Financial Statement Schedules:
----------------------------------

Schedule II.  Valuation and Qualifying Accounts                        S-1

(3) Exhibits
------------
</TABLE>

See Exhibit Index included elsewhere herein.

(b)      Reports on Form 8-K
         -------------------

     The  Company  filed a  current  report  of Form 8-K on  December  31,  2002
     reporting  that  the  Company   released   unaudited  pro  forma  condensed
     consolidated financial information which reflects the Company's disposition
     of thirty-five  of its sales and  distribution  facilities and plants,  and
     other facilities and assets in Wisconsin and Michigan to Lanoga Corporation
     for the nine-month  period ended September 28, 2002 and for the years ended
     December 29, 2001 and December 30, 2000.

     The  Company  filed a  current  report  of Form 8-K on  December  20,  2002
     reporting  that the Company  announced  that it had  commenced  an offer to
     exchange an equal principal amount of its new Senior Secured Notes due July
     29, 2005, for any and all of its $63,956,000  aggregate principal amount of
     outstanding 11 5/8 percent Senior Subordinated Notes due December 15, 2003.

<PAGE>48

     The  Company  filed a  current  report  of Form 8-K on  December  18,  2002
     reporting  that on December 16, 2002,  the Company sold  thirty-five of its
     sales and  distribution  facilities  and plants,  and other  facilities and
     assets in  Wisconsin  and  Michigan to Lanoga  Corporation,  pursuant to an
     Asset Purchase and Sale Agreement  between  Lanoga  Corporation  and Wickes
     dated as of October 30, 2002 (the "Asset Purchase Agreement").

     The  Company  filed a  current  report  of Form  8-K on  December  6,  2002
     reporting  that the  Company  has  agreed  to make a  transfer,  which  may
     constitute a bulk transfer under W.S.A.  406 et seq, of its  thirty-five of
     its sales and distribution  facilities and plants,  and other facilities in
     Wisconsin and Michigan to Lanoga Corporation.

     The  Company  filed a  current  report  of Form  8-K on  November  6,  2002
     reporting  that on November  4, 2002,  Standard & Poor's  Ratings  Services
     lowered its corporate credit rating on Wickes Inc. to `CCC' from `CCC+'.

     The  Company  filed a  current  report  of Form  8-K on  November  1,  2002
     reporting that on October 30, 2002, the Company  announced the signing of a
     definitive agreement for the sale of substantially all of the assets of its
     operations in Wisconsin and Northern Michigan to Lanoga Corporation.

     The  Company  filed a  current  report  of Form  8-K on  October  18,  2002
     reporting that on October 11, 2002, the Company received notice from NASDAQ
     that the Company's  common stock has not  maintained  the minimum per share
     requirement for continued inclusion under Marketplace Rule 4310(c)(4).

(c)      See item 15(a)(3) above
         -----------------------
(d)      See item 15(a)(2) above
         -----------------------

     23.1 Independent Auditors' Consent
     ----------------------------------


<PAGE>49



                                   SIGNATURES
                                   ----------

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

                                         WICKES INC.
                                         -----------

Date:  April 7, 2003               By:   /s/ James A. Hopwood
                                         --------------------
                                          James A. Hopwood
                                          Senior Vice President, Chief Financial
                                          Officer and Member of the Executive
                                          Management Committee

     Pursuant to the requirements of the Securities 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:

<TABLE>
<S>     <C>                         <C>                <C>                                    <C>

         Signature                                        Title                                      Date
         ---------                                        -----                                      ----

/s/ James A. Hopwood                  Senior Vice President, Chief Financial                     April 7, 2003
--------------------
James A. Hopwood                      Officer and Member of the Executive
                                      Management Committee (Co-Principal
                                      Executive Officer and Principal Accounting Officer)

/s/ Robert E. Mulcahy III             Chairman of the Board and Director                         April 7, 2003
-------------------------
Robert E. Mulcahy III

/s/ William H. Luers                  Director                                                   April 7, 2003
--------------------
William H. Luers

/s/ Frederick H. Schultz              Director                                                   April 7, 2003
------------------------
Frederick H. Schultz

/s/ Claudia B. Slacik                 Director                                                   April 7, 2003
---------------------
Claudia B. Slacik

/s/ Jimmie J. Frank                   Senior Vice President of Merchandising                     April 7, 2003
-------------------
Jimmie J. Frank                       and Sales and Member of the
                                      Executive Management Committee
                                      (Co-Principal Executive Officer)

/s/ James R. Detmer                   Senior Vice President of Distribution and                  April 7, 2003
-------------------
James R. Detmer                       Manufacturing and Member of the Executive
                                      Management Committee (Co-Principal
                                      Executive Officer)

</TABLE>

<PAGE>50

                            SECTION 302 CERTIFICATION
                            -------------------------

I, Jimmie J. Frank, certify that:


1.   I have reviewed this annual report on Form 10-K of Wickes Inc.;


2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;


3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;


4.   The  registrant's  other  certifying  officers  and I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a)   designed such  disclosure  controls and  procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;


b)   evaluated the  effectiveness  of the registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and


c)   presented in this annual report our conclusions  about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;


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


a)   all  significant  deficiencies  in the  design  or  operation  of  internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and


b)   any fraud,  whether or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and


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

Date: April 7, 2003                 Signature: /s/ Jimmie J. Frank
      -------------                            ---------------------
                                    Senior Vice President of Merchandising and
                                    Sales and Member of the Executive Management
                                    Committee
                                    (Co-Principal Executive Officer)

<PAGE>51

                            SECTION 302 CERTIFICATION
                            -------------------------

I, James R. Detmer, certify that:


1.   I have reviewed this annual report on Form 10-K of Wickes Inc.;


2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;


3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;


4.   The  registrant's  other  certifying  officers  and I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


a)   designed such  disclosure  controls and  procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;


b)   evaluated the  effectiveness  of the registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and


c)   presented in this annual report our conclusions  about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;


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


a)   all  significant  deficiencies  in the  design  or  operation  of  internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and


b)   any fraud,  whether or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and


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

Date: April 7, 2003                 Signature: /s/ James R. Detmer
      -------------                            ---------------------
                                    Senior Vice President of Distribution and
                                    Manufacturing and Member of the Executive
                                    Management Committee
                                    (Co-Principal Executive Officer)

<PAGE>52


                            SECTION 302 CERTIFICATION
                            -------------------------

I, James A. Hopwood, certify that:


1. I have reviewed this annual report on Form 10-K of Wickes Inc.;


2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;


3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;


4.   The  registrant's  other  certifying  officers  and I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:


a)   designed such  disclosure  controls and  procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;


b)   evaluated the  effectiveness  of the registrant's  disclosure  controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and


c)   presented in this annual report our conclusions  about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;


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


a)   all  significant  deficiencies  in the  design  or  operation  of  internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and


b)   any fraud,  whether or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and


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

Date: April 7, 2003                 Signature: /s/ James A. Hopwood
      -------------                            ----------------------
                                    Senior Vice President, Chief Financial
                                    Officer, and Member of the Executive
                                    Management Committee
                                    (Co-Principal Executive Officer)



<PAGE>F-1



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

To the Board of Directors and Stockholders of Wickes, Inc.
Vernon Hills, Illinois

We have audited the accompanying consolidated balance sheets of Wickes, Inc. and
subsidiaries  (the "Company") as of December 28, 2002 and December 29, 2001, and
the related  consolidated  statements of  operations,  changes in  stockholders'
equity,  and cash flows for each of the three years in the period ended December
28, 2002. Our audits also included the financial statement schedules for each of
the three years in the period ended  December  28, 2002,  listed in the Index at
Item  15.  These  consolidated  financial  statements  and  financial  statement
schedules are the responsibility of the Company's management. Our responsibility
is to express an opinion on the consolidated  financial statements and financial
statement schedules based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain reasonable  assurance about whether the consolidated
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,  such consolidated  financial  statements present fairly, in all
material respects, the financial position of Wickes, Inc. and subsidiaries as of
December 28, 2002 and December 29, 2001, and the results of their operations and
their cash flows for each of the three years in the period  ended  December  28,
2002, in conformity with accounting  principles generally accepted in the United
States of America.  Also, in our opinion,  such financial  statement  schedules,
when considered in relation to the basic consolidated financial statements taken
as a whole,  present fairly in all material  respects the  information set forth
therein.

As discussed in Notes 3, 4, and 17, respectively,  to the consolidated financial
statements,  in 2002 the Company adopted new Statements of Financial  Accounting
Standards  that  required it to (i)  classify  the 2002 sale of a portion of the
business as discontinued operations, (ii) record a 2002 charge for impairment of
goodwill and other  intangible  assets,  and (iii) reclassify a 2000 gain on the
early retirement of debt from extraordinary to operating income.

/s/ Deloitte & Touche LLP
Chicago, Illinois
March 27, 2003 except for Notes 9 and 19, as to which the date is April 4, 2003

<PAGE>F-2

<TABLE>

<S>                                <C>                                         <C>               <C>

                                          WICKES INC. AND SUBSIDIARIES
                                          CONSOLIDATED BALANCE SHEETS
                                     December 28, 2002 and December 29, 2001
                                        (in thousands except share data)

                                                                                   December 28,    December 29,
                                                                                       2002             2001
                                                                                  ---------------  ---------------
                                             ASSETS
Current assets:
    Cash                                                                        $             40 $            153
    Accounts receivable, less allowance for doubtful
       accounts of $1,919 in 2002, $2,119 in 2001                                         56,094           61,387
    Notes receivable from affiliate                                                            -              430
    Inventory, net                                                                        50,170           71,880
    Deferred tax assets                                                                    5,720            5,399
    Prepaid expenses and other assets                                                      5,619            4,995
    Assets of discontinued operations                                                          -           52,404
                                                                                  ---------------  ---------------
        Total current assets                                                             117,643          196,648
                                                                                  ---------------  ---------------

Property, plant and equipment, net                                                        37,971           47,138
Trademark                                                                                      -            5,856
Deferred tax assets                                                                       13,775           16,342
Rental equipment (net of accumulated depreciation of $1,475 in
      2002, $2,186 in 2001)                                                                1,021            1,752
Goodwill                                                                                       -            6,788
Other assets (net of accumulated amortization of $13,320 in
      2002, $11,881 in 2001)                                                               3,577            4,806
Assets of discontinued operations                                                              -           17,743
                                                                                  ---------------  ---------------
        Total assets                                                            $        173,987 $        297,073
                                                                                  ===============  ===============

                               LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
    Current maturities of long-term debt                                        $         28,107 $          9,157
    Accounts payable                                                                      23,824           30,622
    Accrued liabilities                                                                   16,256           11,390
    Liabilities of discontinued operations                                                     -           22,507
                                                                                  ---------------  ---------------
      Total current liabilities                                                           68,187           73,676
                                                                                  ---------------  ---------------

Long-term debt, less current maturities                                                   67,363          193,253
Other long-term liabilities                                                                2,407            2,709
Liabilities of discontinued operations                                                         -              664

Stockholders' equity:
    Common stock, $0.01 par (8,307,984,  8,281,585,
        shares issued and outstanding respectively)                                           83               83
    Accumulated other comprehensive loss                                                       -              (93)
    Additional paid-in capital                                                            87,173           87,134
    Accumulated deficit                                                                  (51,226)         (60,353)
                                                                                  ---------------  ---------------
     Total stockholders' equity                                                           36,030           26,771
                                                                                  ---------------  ---------------
     Total liabilties and stockholders' equity                                  $        173,987 $        297,073
                                                                                  ===============  ===============


 The accompanying notes are an integral part of the consolidated financial statements.


</TABLE>

<PAGE>F-3
<TABLE>

<S>                    <C>                                       <C>            <C>            <C>



                               WICKES INC. AND SUBSIDIARIES
                           CONSOLIDATED STATEMENTS OF OPERATIONS
      For the Years Ended December 28, 2002, December 29, 2001, and December 30, 2000
                           (in thousands, except per share data)

                                                                        2002          2001         2000
                                                                     -----------   -----------  -----------


Net sales                                                          $    577,731  $    710,000 $    726,375
Cost of sales                                                           463,718       564,386      576,812
                                                                     -----------   -----------  -----------
    Gross profit                                                        114,013       145,614      149,563
                                                                     -----------   -----------  -----------
Selling, general and administrative expenses                            112,884       143,587      145,193
Depreciation and amortization                                             4,301         5,239        4,710
Provision for doubtful accounts                                           1,281           916          727
Impairments                                                              12,894             -            -
Store closing costs and other charges                                     3,554         1,744            -
Other operating income                                                   (2,941)       (3,421)     (13,163)
                                                                     -----------   -----------  -----------
                                                                        131,973       148,065      137,467
                                                                     -----------   -----------  -----------
    (Loss) Income from continuing operations                            (17,960)       (2,451)      12,096
Interest expense                                                         16,029        21,787       24,322
                                                                     -----------   -----------  -----------
    Loss from continuing operations before income taxes                 (33,989)      (24,238)     (12,226)
Income tax benefit                                                      (13,503)       (8,648)      (3,745)
                                                                     -----------   -----------  -----------
    Loss from continuing operations                                     (20,486)      (15,590)      (8,481)

Discontinued operations:
Income, net of taxes                                                      7,263         8,516       11,335
Gain on disposal, net of taxes of $14,356                                22,350             -            -
                                                                     -----------   -----------  -----------
     Income from discontinued operations                                 29,613         8,516       11,335
                                                                     -----------   -----------  -----------

    Net income (loss)                                              $      9,127  $     (7,074)$      2,854
                                                                     ===========   ===========  ===========


Loss from continuing operations per common share-basic and diluted $      (2.47) $      (1.88)$      (1.03)
                                                                     ===========   ===========  ===========

Income from discontinued operations per common share-basic         $       3.57  $       1.03 $       1.37
                                                                     ===========   ===========  ===========

Income from discontinued operations per common share-diluted       $       3.52  $       1.01 $       1.34
                                                                     ===========   ===========  ===========

Net income (loss) per common share-basic                           $       1.10  $      (0.85)$       0.35
                                                                     ===========   ===========  ===========

Net income (loss) per common share-diluted                         $       1.08  $      (0.85)$       0.34
                                                                     ===========   ===========  ===========

Weighted average common shares-for basic                              8,293,261     8,277,190    8,249,774
                                                                     ===========   ===========  ===========

Weighted average common shares-for diluted                            8,416,481     8,403,742    8,466,383
                                                                     ===========   ===========  ===========



The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>




<PAGE>F-4




                          WICKES INC. AND SUBSIDIARIES

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

 For the Years Ended December 30, 2000, December 29, 2001 and December 28, 2002
                      (in thousands, except for share data)

<TABLE>
<S>                                 <C>                      <C>             <C>            <C>                     <C>

                                                                                                  Accumulated
                                                                  Additional                         Other
                                             Common Stock          Paid-in        Accumulated    Comprehensive           Total
                                          Shares      Amount       Capital          Deficit          Loss                Equity
                                          ------      ------       -------          -------          ----                ------

Balance at December 25, 1999            8,224,888     $  82        $ 86,870        $ (56,133)     $                    $ 30,819

Net income                                                -               -            2,854                              2,854
Issuance of common stock                   46,425         1             222                -                                223
                                      -----------    -------       --------        -----------      -------               ------

Balance at December 30, 2000            8,271,313        83          87,092          (53,279)                            33,896

Net loss                                                                              (7,074)                            (7,074)
 Change in fair value of swap
                                                                                                     (93)                   (93)
                                                                                                                         --------
  Total comprehensive loss                                -               -                                              (7,167)
Issuance of common stock                   10,272         -              42                -                                 42
                                      -----------    ------        --------        -----------      --------            ----------

Balance at December 29, 2001            8,281,585        83          87,134          (60,353)        (93)                26,771

Net income                                                                             9,127                              9,127
Reclassification of swap fair
  value to earnings                                                                                   93                     93
                                                                                                                         --------
  Total comprehensive income                                                                                              9,220
Issuance of Common stock                   26,399         -              39                -                                 39
                                      -----------     ------        ----------     ------------     -------              -------

Balance at December 28, 2002            8,307,984      $ 83        $ 87,173        $ (51,226)           -              $  36,030
                                        =========      ====         =======          ========        ====                 ======




 The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>

<PAGE>F-5

<TABLE>
<S>                         <C>                                           <C>                <C>               <C>


                                  WICKES INC. AND SUBSIDIARIES
                              CONSOLIDATED STATEMENTS OF CASH FLOWS
         For the Years ended December 28, 2002, December 29, 2001, and December 30, 2000
                                         (in thousands)


                                                                                   2002              2001              2000
                                                                             --------------   ---------------   ---------------
Cash flows from operating activities:
    Net income (loss)                                                      $         9,127  $         (7,074) $          2,854
    Adjustments to reconcile net income (loss) to
       net cash provided by operating activities:
    Income from discontinued operations                                             (7,263)           (8,516)          (11,335)
    Gain on extinguishment of debt                                                       -                 -            (6,806)
    Depreciation expense                                                             6,731             6,450             5,437
    Amortization of trademark                                                            -               222               222
    Amortization of goodwill                                                             -               515               621
    Impairment of intangibles and other items                                       13,846                 -                 -
    Amortization of deferred financing costs                                         1,586             1,449             1,274
    Provision for doubtful accounts                                                  1,281               916               727
    (Gain) loss on sale of assets and other items                                   (1,841)           (1,223)              116
    (Gain) on sale of discontinued operations, net of taxes                        (22,350)                -                 -
    Deferred income taxes                                                            2,246            (4,576)           (1,615)
    Changes in assets and liabilities, net of assets sold
      and liabilities assumed:
       Decrease (increase) in accounts receivable                                   13,305            (6,071)           25,974
       Decrease in inventory                                                        13,520            13,070               796
       (Decrease) increase in accounts payable and accrued liabilities              (1,493)            3,796           (16,576)
       (Increase) decrease in prepaids and other assets                               (236)              589            (1,667)
                                                                             --------------   ---------------   ---------------

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES                                 28,459              (453)               22
                                                                             --------------   ---------------   ---------------

Cash flows from investing activities:
  Purchases of property, plant and equipment                                        (1,883)           (9,222)           (7,898)
  Payments for acquisitions                                                              -              (760)             (800)
  Proceeds from sale of business                                                    83,507             2,585             1,212
                                                                             --------------   ---------------   ---------------

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                 81,624            (7,397)           (7,486)
                                                                             --------------   ---------------   ---------------

Cash flows from financing activities:
    Net (repayments) borrowings under revolving line of credit                     (81,900)           (4,332)           22,044
    Decrease (increase) in notes receivable                                              -                53                (2)
    Repayments of term loan                                                        (25,040)                -           (24,925)
    Debt issuance cost                                                                (686)             (581)           (2,595)
                                                                             --------------   ---------------   ---------------

NET CASH USED IN FINANCING ACTIVITIES                                             (107,626)           (4,860)           (5,478)
                                                                             --------------   ---------------   ---------------

NET CASH (USED IN) PROVIDED BY DISCONTINUED OPERATIONS                              (2,570)           12,662            13,091
                                                                             --------------   ---------------   ---------------

NET INCREASE (DECREASE) IN CASH                                                      2,457           (12,710)          (12,942)
Cash at beginning of period                                                            153               201                52
                                                                             --------------   ---------------   ---------------

CASH AT END OF PERIOD                                                      $            40  $            153  $            201
                                                                             ==============   ===============   ===============

Supplemental schedule of cash flow information:
     Interest paid                                                         $        15,560  $         19,458  $         22,203
     Income taxes paid                                                     $           634  $          1,141  $          1,457


The accompanying notes are an integral part of the consolidated financial statements.

</TABLE>



<PAGE>F-6




1.   Description of Business
----------------------------

     Wickes  Inc.  (formerly  Wickes  Lumber  Company),  through  its  sales and
distribution  facilities,  markets  lumber and building  materials  and provides
specialized   services  primarily  to  professional   contractors,   repair  and
remodelers,   and  do-it-yourself  home  owners,  principally  in  the  Midwest,
Northeast and Southern United States.  Wickes Inc.'s  wholly-owned  subsidiaries
are:  Lumber  Trademark  Company  ("LTC"),  a holding company for the "Flying W"
trademark;  and GLC Division,  Inc. ("GLC"), which subleases certain real estate
to Wickes Inc.


2.   Accounting Policies
------------------------

Principles of Consolidation
---------------------------

     The consolidated  financial  statements  present the results of operations,
financial  position,  and cash flows of Wickes Inc. and all of its  wholly-owned
subsidiaries  (the  "Company").   All  significant   intercompany  balances  and
transactions have been eliminated in consolidation.

Fiscal Year
-----------

     The  Company's  fiscal  year ends on the last  Saturday  in  December.  All
periods  presented  represent  52-week  years with the exception of 2000 being a
53-week year.

Cash and Cash Equivalents
-------------------------

     The Company considers all highly liquid investments with a maturity date of
three months or less to be cash equivalents.

Accounts Receivable
-------------------

     The Company extends credit primarily to qualified professional  contractors
and professional repair and remodelers, generally on a non-collateralized basis.
The allowance for doubtful accounts is based on historical  write-off experience
net of recoveries and management's  assessment of the  collectibility of amounts
due.  Management's  estimate  considers  overall  portfolio  quality and current
economic conditions that may affect the borrower's ability to pay.

Inventory
---------

     Inventory consists  principally of finished goods. The Company utilizes the
first-in,  first-out  (FIFO) cost flow  assumption  for  valuing its  inventory.
Estimates  are  made for  obsolescence  and  unmarketable  inventory  to  ensure

<PAGE>F-7

inventory  is valued at the  lower of cost or  market,  but not in excess of net
realizable  value.  The Company also records a reserve for  estimated  inventory
shrinkage,  based on previous year's actual physical inventory results,  for the
periods between physical inventories.

Property, Plant and Equipment
-----------------------------

     Property,  plant and equipment are stated at cost and are depreciated under
the straight-line  method.  Estimated useful lives range from 15 to 39 years for
buildings and  improvements.  Leasehold  improvements  are depreciated  over the
lesser of the  estimated  useful life of the asset or the lease term.  Machinery
and equipment,  which includes  software,  has useful lives ranging from 3 to 10
years.  Expenditures  for  maintenance  and repairs are charged to operations as
incurred.  Gains and losses from dispositions of property,  plant, and equipment
are included in the Company's statement of operations as other operating income.

Rental Equipment
----------------

     Rental  equipment  consists  of hand  tools  and power  equipment  held for
rental. This equipment is depreciated using the straight-line method over a 3 to
7 year life.

Other Assets
------------

     Other assets,  primarily  consisting of deferred financing costs, are being
amortized over the expected terms of the related debt  agreements.  Amortization
expense for deferred  financing  costs is  reflected as interest  expense on the
Company's Consolidated Statements of Operations.

Goodwill and Other Intangible Assets
------------------------------------

     Effective at the beginning of fiscal 2002, the Company adopted Statement of
Financial  Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets".  Upon  adoption,  the  Company  determined  that its  trademark  had an
indefinite  life.  As required by SFAS No. 142,  the Company  ceased  amortizing
goodwill  and  the  trademark.  The  Company  determined  that it has  only  one
reporting unit under SFAS No. 142.

     The Company completed the transitional impairment test required by SFAS No.
142 during the first quarter of 2002.  The  Company's  analysis  indicated  that
there  were  not  indications  of  impairment  as of the date of  adoption.  The
Company's  policy is to perform the annual  impairment test required by SFAS No.
142 in the  fourth  quarter.  Because of the sale of a  significant  part of the
Company's  operations and the resulting  changes in the Company's net assets and
market capitalization, and other factors, the Company determined that impairment
indicators existed and, therefore, the Company was required to estimate the fair
value of the Company's goodwill and trademark.

<PAGE>F-8

     The Company has determined, based on its step two analysis, which indicated
the Company's estimated real estate market value was significantly  greater than
book value, that the implied fair value of the goodwill and trademark is zero as
of December 28, 2002.  Therefore,  the Company has recorded an impairment charge
of  $12.9  million  to fully  write-off  the net  book  value  of these  assets.
Approximately $5.4 million of goodwill was allocated to discontinued  operations
and is included in the determination of the gain on disposal.  See discussion in
Note 4 to the Consolidated Financial Statements.

Postretirement Benefits Other Than Pensions
-------------------------------------------

     The  Company  provides  certain  health  and life  insurance  benefits  for
eligible  retirees and their  dependents.  The Company accounts for the costs of
these postretirement  benefits over the employees' working careers in accordance
with SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions."

Postemployment Benefits
-----------------------

     The Company  provides  certain other  postemployment  benefits to qualified
former  or  inactive  employees.  The  Company  accounts  for the costs of these
postemployment benefits in the period when it is probable that a benefit will be
provided  in  accordance   with  SFAS  No.  112,   "Employers'   Accounting  for
Postemployment Benefits."

Income Taxes
------------

     The Company  accounts  for income  taxes in  accordance  with SFAS No. 109,
"Accounting  for Income  Taxes." Tax  provisions  and  credits  are  recorded at
statutory  rates for taxable items  included in the  consolidated  statements of
operations  regardless  of the period for which such items are  reported for tax
purposes. Deferred income taxes are recognized for temporary differences between
financial statement and income tax bases of assets and liabilities. Deferred tax
assets are reduced by a  valuation  allowance  when the Company  cannot make the
determination that it is more likely than not that of the related tax asset will
be realized.

Revenue Recognition
-------------------

     The Company earns revenue by providing goods or performing  services in the
normal course of business. Customer's creditworthiness is determined,  through a
standard credit application,  before performance occurs to determine whether the
sale is to be made on a cash or credit basis. The Company  recognizes  revenues,
net of estimated  returns,  at the time  products are delivered to the customer,
when the  customer  takes  possession,  or as services are  provided.  Estimated
returns are based on an analysis of historical returns,  applied as a percentage
of sales.  For contracts  that have material or service  elements  provided over
extended  periods of time,  revenue is  recognized as materials are delivered or
services have been performed. Prepayments for materials or services are deferred
until such materials have been delivered or services have been provided.

<PAGE>F-9

Earnings Per Common Share
-------------------------

     Earnings per common share is calculated  in  accordance  with SFAS No. 128,
"Earnings Per Share." Weighted average shares outstanding have been adjusted for
dilution using the treasury stock method.

Shipping & Handling Expenses
----------------------------

     The Company  presents  costs  associated  with  shipping  and  handling its
products as a component of selling,  general and administrative  expenses. These
costs, from continuing  operations,  were $11.1 million, $13.9 million and $14.3
million for the fiscal years ended  December 28,  2002,  December 29, 2001,  and
December 30, 2000, respectively.

Vendor Allowances
-----------------

     The company recognizes  allowances received from vendors in accordance with
its arrangements with its vendors.  Allowances that are  reimbursements of costs
to promote vendors  products are offset against those costs in the statements of
operations.  Rebates that are associated with purchasing  volumes are considered
reductions of the costs of products and are  recognized  when those products are
sold.

Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------

     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  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the  reporting  period.  Actual  results  could differ from the estimates
reported.

Impairment of Long-Lived Assets
-------------------------------

     Long-lived assets, including intangible assets, are reviewed when facts and
circumstances  indicate  that  the  carrying  value  of  the  asset  may  not be
recoverable.  When necessary, impaired assets are written down to estimated fair
value  based on the best  information  available.  Fair value is  determined  by
estimated future cash flows and appraised value of the assets (see Note 4).


<PAGE>F-10


Stock-Based Compensation
------------------------

     SFAS No. 123, "Accounting for Stock-Based  Compensation,"  encourages,  but
does not  require,  companies to  recognize  compensation  expense for grants of
stock,  stock options,  and other equity  instruments to employees  based on the
fair value of such instruments. The pronouncement requires companies that choose
not to adopt the fair value method of  accounting  to disclose the pro forma net
income and earnings per share under the fair value method.  As permitted by SFAS
No.  123,  the  Company  elected  to  continue  the  intrinsic  value  method of
accounting  prescribed  by APB  Opinion  No. 25. As  required,  the  Company has
disclosed  the pro forma net income (loss) and pro forma income (loss) per share
as if the fair value  based  accounting  methods  had been used to  account  for
stock-based  compensation  cost (see Note 11). In addition,  the following table
presents the pro forma impact (in thousands, except share data) to the Company's
financial statements as if the fair value method had been applied:

<TABLE>
<S>                                                 <C>            <C>           <C>


                                                           2002         2001        2000
                                                           ----         ----        ----
Loss from continuing operations (as reported)          $ (20,486)   $  (15,590)   $ (8,481)
Add: Stock based compensation cost included
       in determination of compensation expense               39            43          41
Deduct:  Stock based compensation under the
         fair-value method for all awards, net of tax       (130)         (121)       (205)
                                                         --------      --------     -------
Adjusted loss from continuing operations               $ (20,577)   $  (15,668)   $ (8,645)
Income from discontinued operations                       29,613         8,516      11,335
Net income (loss) (as reported)                            9,127        (7,074)      2,854
Adjusted net income (loss)                                 9,036        (7,152)      2,690
Earnings per share:
Basic:
     Loss from continuing operations (as reported)     $   (2.47)   $    (1.88)   $  (1.03)
     Adjusted loss from continuing operations              (2.48)        (1.89)      (1.05)
     Income from discontinued operations                    3.57          1.03        1.37
     Net income (loss) (as reported)                        1.10         (0.85)       0.35
     Adjusted net income (loss)                             1.09         (0.86)       0.33
Diluted:
     Loss from continuing operations (as reported)     $   (2.47)   $    (1.88)   $  (1.03)
     Adjusted loss from continuing operations              (2.48)        (1.89)      (1.05)
     Income from discontinued operations                    3.52          1.01        1.34
     Net income (loss) (as reported)                        1.08         (0.85)       0.34
     Adjusted net income (loss)                             1.07         (0.86)       0.32



</TABLE>

<PAGE>F-11

Segment Reporting
-----------------

     SFAS No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information"  requires that a public business  enterprise  report  financial and
descriptive  information  about its reportable  operating  segments.  Generally,
financial  information  is  required to be reported on the basis that it is used
internally  for  evaluating  segment  performance  and  deciding how to allocate
resources to segments.  Based on this criteria,  the Company has determined that
it  operates  in one  reportable  business  segment,  that  being the supply and
distribution  of lumber and  building  materials to building  professionals  and
do-it-yourself customers,  primarily in the Midwest, Northeast, and South. Thus,
all information  required by SFAS No. 131 is included in the Company's financial
statements.  In addition,  the table below reflects net revenues for each of the
Company's major product categories (amounts in thousands):

<TABLE>
<S>                           <C>          <C>              <C>

                                2002            2001             2000
                                ----            ----             ----
      Wood Products       $   289,060     $   373,517      $   395,446
      Building Materials      197,948         228,747          229,412
      Hardlines                55,049          62,308           64,774
      Other                    35,674          45,428           36,743
                              -------         -------          -------

     Total Sales          $   577,731     $   710,000      $   726,375
                              =======         =======          =======
</TABLE>

No single customer represented more than 10% of the Company's total net sales in
2002, 2001 and 2000.

Recently Issued Accounting Pronouncements
-----------------------------------------

     In December 2002, the FASB issued SFAS No. 148  "Accounting for Stock-Based
Compensation  --Transition  and  Disclosure,  an amendment of FASB Statement No.
123".  This  standard  provides  transitional  guidance  for  applying  the fair
value-based method of accounting for stock options.  It also requires additional
proforma  disclosures for interim periods beginning after December 15, 2003. The
company will continue to apply the intrinsic value based method of accounting as
prescribed  by APB No. 25. As such,  management  does not expect the adoption of
this  pronouncement  to  have  a  material  effect  on the  Company's  financial
statements.

     In June  2002,  the  FASB  issued  SFAS  No.  146,  "Accounting  for  Costs
Associated with Exit or Disposal Activities." SFAS No. 146 requires companies to
recognize  costs  associated  with  exit or  disposal  activities  when they are
incurred  rather  than at the date of  commitment  to a plan.  SFAS  No.  146 is
effective for any exit plans  commencing  after  December 29, 2002.  The Company
does not believe that the initial adoption of this standard will have a material
impact on the Company's financial statements.

     In April 2002,  the FASB issued SFAS No. 145,  "Rescission of SFAS No's, 4,
44, and 64, Amendment of SFAS No. 13, and Technical  Corrections."  SFAS No. 145

<PAGE>F-12

modifies the treatment of  sale-leaseback  transactions  and  extinguishment  of
debt. Part of its provisions  change the presentation of extraordinary  gains or
losses on  extinguishment  of debt to a component of continuing  operations  and
requires  reclassification  of prior  periods.  While not required  until fiscal
2003, the Company has elected to early adopt the provisions of this statement as
encouraged by the Financial  Accounting  Standards Board. A pretax gain of $11.1
million  related to an early  extinguishment  of debt has been  reclassified  to
other  operating  income for the fiscal year ended December 30, 2000. The income
tax  provision  and net loss from  continuing  operations  have been adjusted to
reflect this reclassification.

     In September  2002,  the Emerging  Issues Task Force  ("EITF")  issued EITF
Issue No. 02-16 "Accounting by a Reseller for Cash Consideration Received from a
Vendor". This consensus requires cash consideration  received from vendors to be
classified  as a  reduction  of  costs of the  customer  product  cost  unless a
customer incurs a specific  incremental  cost to promote that vendor's  products
for  which it is being  reimbursed  or is  providing  a  service  for  which the
consideration  represents the consideration for the fair value of those services
being performed.  This consensus is effective to the Company for the fiscal year
ended December 27, 2003. Currently,  allowances that are reimbursements of costs
to promote vendors  products are offset against those costs in the statements of
operations.  Rebates that are associated with purchasing  volumes are considered
reductions  of the costs of  products  are  recognized  as  revenues  when those
products are sold.

Reclassifications and Eliminations
----------------------------------

     Certain  reclassifications  have been made to prior year amounts to conform
to the current presentation. All material intercompany balances and transactions
have been eliminated.


3.  Discontinued Operations
---------------------------

     As of December 30, 2001 the Company  adopted the  requirements of Statement
of Financial  Accounting  Standards No. 144,  "Accounting  for the Impairment or
Disposal  of  Long-Lived  Assets."  This  standard  establishes  accounting  and
reporting  standards for the  impairment  and disposal of long-lived  assets and
discontinued operations. On December 16, 2002 the Company successfully completed
the sale of  substantially  all of the assets of its operations in Wisconsin and
Northern Michigan to Lanoga Corporation's UBC Division (the "Lanoga Sale") for a
sales price of $104.7  million  including the assumption of  liabilities.  These
operations have been treated as discontinued  operations in accordance with this
standard.  In addition to the Lanoga Sale, the Company  closed,  consolidated or
sold an additional 11 facilities in 2002 and 5 in 2001 that were not  considered
discontinued  operations  and  therefore  the  results of these  operations  are
reported in continuing operations.

<PAGE>F-13

     The Company  recorded a gain, net of tax, of $22.4 million,  which included
approximately   $0.6  million   related  to  a  curtailment   of  the  Company's
post-employment  benefit  obligation.   Included  in  the  transaction  were  14
distribution   centers  and  three  component   plants  in  Wisconsin,   and  17
distribution centers and one component plant in Michigan.  The funds provided by
this  transaction  were primarily used to pay down a substantial  portion of the
Company's  senior  credit   facilities,   leaving   approximately   $31  million
outstanding  as of  December  28,  2002.  The  Lanoga  Sale was part of  Wickes'
strategic decision to focus on larger demographic  markets,  where it can better
serve its  professional  contractor and volume builder  customers.  As a result,
management  concluded that these locations no longer fit the Company's strategic
direction and were more vulnerable to competitive pressures.

     Sales  and  income  from  discontinued   operations  were  as  follows  (in
thousands):

<TABLE>
<S>                                               <C>              <C>               <C>

                                                       2002             2001             2000
                                                       ----             ----             ----
  Sales                                              $271,763         $290,999         $301,230
  Income before income taxes                           11,927           14,018           18,658
  Tax provision                                         4,664            5,502            7,323
  Net income from discontinued operations               7,263            8,516           11,335
</TABLE>

     The major classes of assets and liabilities of discontinued operations sold
were as follows (in thousands):


<TABLE>
<S>                                                <C>                     <C>

                                                      As sold on
                                                      December 16                 December 29,
                                                         2002                         2001
                                                         ----                         ----

  Cash                                        $              -             $             45
  Accounts receivable                                   23,725                       21,982
  Inventory                                             23,010                       28,239
  Deferred tax assets                                        -                        2,075
  Prepaid expenses and other assets                          -                           63
                                                        ------                       ------
    Total current assets                                46,735                       52,404

  Property, plant and equipment                         11,119                       12,087
  Deferred tax assets                                        -                          215
  Goodwill                                               5,441                        5,441
                                                        ------                       ------
    Total assets                                        63,295                       70,147

  Accounts payable                                      15,789                       13,334
  Accrued liabilities                                    2,364                        9,837
                                                        ------                       ------
    Total current liabilities                           18,153                       22,507
  Other long-term liabilities                                -                          664
                                                        ------                       ------
    Total current liabilities                           18,153                       23,171
                                                        ------                       ------
    Net assets                                $         45,142              $        46,976
                                                        ======                       ======

</TABLE>

<PAGE>F-14



4.       Impairment of Goodwill and Trademark
---------------------------------------------

     Effective at the  beginning of fiscal  2002,  the Company  adopted SFAS No.
142,  "Goodwill  and  Other  Intangible  Assets".  Upon  adoption,  the  Company
determined  that its trademark  had an indefinite  life. As required by SFAS No.
142,  the Company  ceased  amortizing  goodwill and the  trademark.  The Company
determined that it has only one reporting unit under SFAS No. 142.

     The Company completed the transitional impairment test required by SFAS No.
142 during the first quarter of 2002.  The  Company's  analysis  indicated  that
there  were  not  indications  of  impairment  as of the date of  adoption.  The
Company's  policy is to perform the annual  impairment test required by SFAS No.
142 in the  fourth  quarter.  Because of the sale of a  significant  part of the
Company's  operations and the resulting  changes in the Company's net assets and
market capitalization, and other factors, the Company determined that impairment
indicators  existed and  therefore the Company was required to estimate the fair
value of the Company's goodwill and trademark.

     The Company has determined,  based on its step two analysis which indicated
the Company's estimated real estate market value was significantly  greater than
book value, that the implied fair value of the goodwill and trademark is zero as
of December 28, 2002.  Therefore,  the Company has recorded an impairment charge
of  $12.9  million  to fully  write-off  the net  book  value  of these  assets.
Approximately $5.4 million of goodwill was allocated to discontinued  operations
and is included in the determination of the gain on disposal.  As required under
SFAS No.  142 the  following  table  provides  income  (loss) and per share data
adjusted for the effect of amortization of goodwill and other  indefinite  lived
intangible assets.

<TABLE>

<S>                                                    <C>        <C>           <C>

                                                        2002           2001           2000
                                                        ----           ----           ----

Loss from continuing operations (as reported)        $ (20,486)   $   (15,590)   $   (8,481)
Goodwill amortization                                        -            515           621
Trademark amortization                                       -            222           222
                                                       --------       --------      --------
Adjusted loss from continuing operations             $  (20,486)  $   (14,853)   $   (7,638)
Income from discontinued operations                      29,613         8,516        11,335
Net income (loss) (as reported)                           9,127        (7,074)        2,854
Adjusted net income (loss)                                9,127        (6,337)        3,697
Earnings per share:
Basic:
     Loss from continuing operations (as reported)   $    (2.47)  $     (1.88)   $    (1.03)
     Adjusted loss from continuing operations             (2.47)        (1.79)        (0.93)
     Income from discontinued operations                   3.57          1.03          1.37
     Net income (loss) (as reported)                       1.10         (0.85)         0.35
     Adjusted net income (loss)                            1.10         (0.77)         0.45
Diluted:
     Loss from continuing operations (as reported)   $    (2.47)  $     (1.88)   $    (1.03)
     Adjusted loss from continuing operations             (2.47)        (1.79)        (0.93)
     Income from discontinued operations                   3.52          1.01          1.34
     Net income (loss) (as reported)                       1.08         (0.85)         0.34
        Adjusted net income (loss)                         1.08         (0.77)         0.44




</TABLE>

5.   Other Comprehensive Income
-------------------------------

     The components of comprehensive  income (loss) for the years ended December
28, 2002 and December 29, 2001 are as follows (in thousands):

<TABLE>
<S>                                                   <C>                     <C>

                                                            Dec 28,                Dec 29,
                                                             2002                   2001
                                                             ----                   ----

      Net income (loss)                                 $     9,127             $  (7,074)
          Change in fair value of interest rate
            swap, net of tax of $57                                                   (93)
           Reclassification of swap fair value
             to earnings                                         93                     -
                                                             -------               -------
      Comprehensive income (loss)                       $     9,220             $  (7,167)
                                                             =======               =======

</TABLE>



6.   Acquisitions
-----------------

     During  2001,  the Company  acquired  the real estate and other assets of a
local lumber  distributor in Kenvil,  New Jersey for approximately $1.6 million,
of which  $650,000 was paid in cash and $950,000 in a three-year  purchase money
mortgage.  The purpose of the acquisition was to relocate an existing lumber and
distribution  center from a nearby  leased  location.  In addition,  the Company
acquired  JWatt   Construction,   a  framing   contractor  for  construction  of
residential and commercial real property, for an immaterial purchase price.

     The costs of this  acquisition have been allocated on the basis of the fair
value of the assets  acquired  and the  liabilities  assumed.  The excess of the
purchase  price  over the fair  value of the net  assets  acquired  resulted  in
goodwill,  which is tested for impairment at least  annually.  Operations of the
companies acquired have been included in the accompanying consolidated financial
statements from their respective acquisition dates.

<PAGE>F16



7. Property, Plant, and Equipment
---------------------------------

Property, plant and equipment is summarized, in thousands, as follows:

<TABLE>
<S>                                                         <C>                        <C>

                                                               December 28,               December 29,
                                                                   2002                       2001
                                                                   ----                       ----

          Land and Improvements                               $   10,107                $   11,659
          Buildings                                               24,329                    26,250
          Machinery and equipment                                 28,191                    33,798
          Leasehold improvements                                   2,262                     3,315
          Construction in progress                                 1,964                     3,081
                                                                  --------                  --------
          Gross property, plant & equipment                       66,853                    78,103

          Less: Accumulated depreciation                         (30,356)                  (32,469)
                                                                 --------                  --------

          Property, plant & equipment in use, net                 36,497                    45,634
          Assets held for sale, net                                1,474                     1,504
                                                                 --------                  --------

          Property, plant & equipment, net                    $   37,971                $   47,138
                                                                 ========                  ========
</TABLE>


Assets Held for Sale
--------------------

     Pursuant to certain  initiatives  to reduce  under-performing  assets,  the
Company  has four  properties  held  for sale as of  December  28,  2002.  These
properties are held at the lower of book value or fair market value.  Management
believes these properties are recoverable at the net book value of $1.5 million.
At December 29, 2001 the Company held three  properties  for sale for a net book
value of $1.5 million.

Sales of Real Estate
--------------------

     Throughout 2002, the Company sold eight pieces of real estate for a gain of
$1.8 million.  These properties were not previously held for sale, but were sold
as on-going businesses.  See additional  discussion in Note 3 regarding sales of
properties to Lanoga.

     In 2001, the Company sold four pieces of real estate for a net gain of $1.2
million. One property, which had been held since first quarter 1996, was sold at
a net loss of $10,000.  The other three  properties were not previously held for
sale and were sold for net gains. Of the three  properties,  one was an easement
of property,  one was a result of relocation to a larger facility, and one was a
result of closing a center and selling the property.

     In 2000,  the  Company  sold  three  pieces of real  estate  for a net gain
$204,000.  One  property,  which had been  held for sale  since  1998,  had been
previously written down by $119,000 from its original net book value and sold at
a net loss of $72,000. The other two properties,  both held for sale since prior
to 1996, had not been previously written down and each were sold for net gains.

<PAGE>F-17


8.   Accrued Liabilities
------------------------

Accrued liabilities consist of the following (in thousands):
<TABLE>
<S>                                                   <C>                  <C>

                                                           Dec 28,                Dec 29,
                                                            2002                   2001
                                                            ----                   ----

         Accrued payroll                               $    5,797             $    5,163
         Accrued liability insurance                        2,667                  3,514
         Other                                              7,792                  2,713
                                                           -------                -------

         Total accrued liabilities                     $   16,256             $   11,390
                                                           ======                 ======

</TABLE>


9.   Long-Term Debt
-------------------
Long-term debt obligations are summarized, in thousands, as follows:

<TABLE>
<S>                                                        <C>                     <C>

                                                                 December 28,          December 29,
                                                                    2002                  2001
                                                                    ----                  ----
        Senior subordinated notes                            $     63,956          $     63,956
        Revolving credit facility:
           Revolving notes                                         20,346                93,143
           Term notes                                              11,168                45,311
                                                                  --------              --------
        Total long-term debt                                       95,470               202,410
        Less current maturities                                   (28,107)               (9,157)
                                                                  --------              --------

        Total long-term debt less current maturities         $     67,363          $    193,253
                                                                  ========              ========
</TABLE>

Aggregate Maturities
--------------------

     The Senior subordinated notes totaling $21.2 million mature on December 15,
2003. The remaining  outstanding  principal  balance of $42.8 million matures on
July 29,  2005.  The term  portion of the  revolving  credit  facility  requires
quarterly principal payments as follows:  $1.5 million from May 31, 2003 through
February  29, 2004;  $3.0  million from May 31, 2004 through  February 28, 2005;
$6.1  million from May 31, 2005 through  November 30, 2006;  with the  remaining
principal balance due February 26, 2007.

<PAGE>F-18



Senior Subordinated Debt
------------------------

     During 2002, management undertook an initiative to restructure its debt and
improve liquidity. As part of that initiative, on February 26, 2003, the Company
completed  its offer to exchange its new Senior  Secured  Notes due 2005 for any
and all of its  outstanding  11 5/8%  Senior  Subordinated  Notes due 2003.  The
Company  accepted for exchange all $42.8  million of Senior  Subordinated  Notes
validly  tendered in exchange for an equal  principal  amount of Senior  Secured
Notes. The tendered notes represent approximately 67% of the Senior Subordinated
Notes outstanding as of December 28, 2002. The Senior Secured Notes,  which bear
interest at 11 5/8% per annum from the date of  issuance  through  December  15,
2003 and at 18% per annum  thereafter,  are  secured  by liens on the  Company's
owned real estate and  equipment.  These liens are junior to the liens  securing
amounts payable under the Company's new senior credit facility.

     Concurrent with the closing of the exchange offer, the indenture  governing
the outstanding  Senior  Subordinated Notes was amended to remove or modify many
of the restrictive covenants.  Those restrictions included (but were not limited
to) certain  limitations on transactions  with  affiliates,  dividend  payments,
changes in control,  and sales of assets. In addition,  the new notes permit the
Company to call the notes,  at its option,  at declining  discounts  starting at
15%.

     The Company continues to carry outstanding old notes of approximately $21.2
million.  These notes are due in full on December 15, 2003. Sufficient liquidity
to meet these  obligations  when they come due is  dependent on a number of risk
factors as discussed in Item 1 of this Form 10-K.

     On November 21, 2000, the Company commenced a cash tender offer for the old
notes at a discount from face value. On December 26, 2000, the Company  redeemed
$36  million  of the  notes  tendered  (the  "Redemption").  As a result of this
transaction,  the Company recorded a pre-tax gain of $11.1 million, net of costs
associated with the transaction as a component of other  operating  income.  See
discussion  in Note 2 to the  consolidated  financial  statements  regarding the
Company's adoption of SFAS No. 145.

Revolving Credit Facility
-------------------------

     Concurrent  with the Exchange  Offer,  on February  26,  2003,  the Company
completed a refinancing  of its Fleet Credit  Agreement and term notes  existing
under the prior Amended and Restated  Credit  Agreement  dated December 13, 2000
and entered into the new Merrill Credit  Agreement  dated February 26, 2003. The
total  commitment  was reduced from the original  $251.7  million  ($200 million
revolving  line of credit and $51.7 million of term notes) to $125 million ($100
million  revolving  line of credit and $25 million of term  notes).  The Merrill
Credit  Agreement  expires on February 26, 2007,  and the term notes are now due
February 26, 2007. The current  portion of the Company's  $11.2 million note has
been adjusted to reflect current maturities under the Merrill Credit Agreement.

<PAGE>F-19

     As of December 28, 2002 there was $31.5 million outstanding under the Fleet
Credit  Agreement of which $20.3 million was revolving  credit and $11.2 million
was term notes. The spread on prime rate borrowings under the Merrill  agreement
ranges  from  1.25% to 2% over  prime for  revolving  loans and 2% to 2.75% over
prime under the term notes.  The spread for LIBOR  based  borrowing  ranges from
2.5% to 3.25% over LIBOR for revolving loans and 3.25% to 4% over LIBOR for term
notes.  The spread  over the prime or LIBOR rates is  determined  based upon the
Company's  Fixed Charge  Coverage  Ratio,  as defined  under the Merrill  Credit
Agreement.  The  Company's  base rate,  5.00% at December  28, 2002 and 5.50% at
December  29, 2001,  included an interest  spread over prime of 0.75% and 0.75%,
respectively. The Company's LIBOR borrowing rate, 4.13% at December 28, 2002 and
4.69% at December 29, 2001,  included an interest spread over LIBOR of 2.75% and
2.75%,  respectively.  The Company's weighted average interest rates were 7.95%,
8.93%,  and 10.07% as of December 28, 2002,  December 29, 2001, and December 30,
2000, respectively.

     The Merrill Credit Agreement  limits the level of capital  expenditures for
each annual period,  while allowing for reinvestment of proceeds on asset sales.
The company is also  required to achieve  certain  levels of EBITDA,  as defined
within  the  Credit  Agreement.  Availability  is  generally  limited  to 85% of
eligible accounts  receivable and 60% of eligible  inventory.  For the first six
months from inception of this agreement,  minimum availability is required to be
$15 million. As of March 22, 2003 unused availability was $37.2 million.

     Under the Merrill  Credit  Agreement,  a commitment  fee of .375% to .5% is
payable on the unused  revolving  credit  amount.  Ranges of fees are determined
based upon the aforementioned  Fixed Charge Coverage Ratio, as defined under the
Credit  Agreement.  As of December 28, 2002, the Company was in compliance  with
all of its then existing covenants.

     As a result of (i) the  Company's  failure to deliver  to the  lenders  its
fiscal 2002 audited financial  statements by March 28, 2003 and (ii) as of April
4, 2003,  Riverside  Group Inc. and J. Steven Wilson ceasing between them to own
at least 25% of the Company's  outstanding common stock and Imagine Investments,
Inc.  owning a greater  percentage of such shares than Riverside and Mr. Wilson,
certain  events of  default  arose  under the  Merrill  Credit  Agreement.  Such
defaults were simultaneously  waived by the lenders and the Credit Agreement was
amended in certain respects, including the addition of a provision which permits
the Company to make the severance payment to Mr. Wilson. In connection with such
waiver and amendments, the Company paid to the lenders a fee of $312,500.


<PAGE>F-20


10.      Commitments and Contingencies
--------------------------------------

     At December 28, 2002,  the Company had accrued  approximately  $199,000 for
remediation of certain environmental and product liability matters.

     Many of the  sales  and  distribution  facilities  presently  and  formerly
operated  by the Company at one time  contained  underground  petroleum  storage
tanks.  All such tanks known to the Company and located on  facilities  owned or
operated  by the  Company  have  been  filled  or  removed  in  accordance  with
applicable  environmental  laws in effect  at the time.  As a result of  reviews
made in  connection  with the sale or possible sale of certain  facilities,  the
Company has found petroleum contamination of soil and ground water on several of
these sites and has taken,  and expects to take,  remedial  actions with respect
thereto.  In addition,  it is possible that similar  contamination  may exist on
properties no longer owned or operated by the Company,  the remediation of which
the Company could, under certain circumstances, be held responsible. Since 1988,
the Company has incurred  approximately  $2.1 million of costs, net of insurance
and  regulatory  recoveries,   with  respect  to  the  filling  or  removing  of
underground  storage  tanks and  related  investigatory  and  remedial  actions.
Insignificant amounts of contamination have been found on excess properties sold
over the past six years.

     The Company is one of many  defendants  in two class  action suits filed in
August of 1996 by  approximately  200  claimants  for  unspecified  damages as a
result of health  problems  claimed to have been caused by  inhalation of silica
dust, a byproduct of concrete  and mortar mix,  allegedly  generated by a cement
plant with which the Company  has no  connection  other than as a customer.  The
Company has entered into a  cost-sharing  agreement  with its insurers,  and any
liability is not expected to be material.

     The Company is one of many defendants in approximately 794 actions, each of
which seeks unspecified  damages, in various state courts against  manufacturers
and  building  material  retailers  by  individuals  who claim to have  suffered
injuries  from  products  containing  asbestos.   The  Company  is  aggressively
defending  these  actions and does not believe  that these  actions  will have a
material adverse effect on the Company.  Since 1993, the Company has settled 284
similar actions for insignificant amounts, and another 353 of these actions have
been dismissed. None of these suits have made it to trial.

     The  Company  is  involved  in various  other  legal  proceedings  that are
incidental to the conduct of its business.  Certain of these proceedings involve
potential damages for which the Company's insurance coverage may be unavailable.
While the Company  does not believe  that any of these  proceedings  will have a
material adverse effect on the Company's financial  position,  annual results of
operations or liquidity, there can be no assurance of this.

<PAGE>F-21

     Losses in excess of the  $199,000  reserved  as of  December  28,  2002 are
possible, but an estimate of these amounts cannot be made.

Leases
------

     The Company has entered into operating  leases for corporate  office space,
distribution  center space,  equipment and other items. These leases provide for
minimum rents.  These leases  generally  include options to renew for additional
periods.  Total rent expense under all operating leases was $16.1 million, $18.5
million,  and $17.4 million for the years ended December 28, 2002,  December 29,
2001, and December 30, 2000, respectively.

Future minimum commitments for noncancelable operating leases are as follows:


                           Year                                 Amount
                           ----                                 ------
                                                            (in thousands)
                           2003                               $  9,651
                           2004                                  7,188
                           2005                                  3,244
                           2006                                  1,608
                           2007                                  1,413
                           Thereafter                           20,022
                                                               --------
                             Subtotal                           43,125
                           Less sublease income                 (6,385)
                                                               --------
                             Total                             $36,740
                                                               =======


11.   Stockholders' Equity
--------------------------

Preferred Stock
---------------

     As of December 28, 2002,  the Company had  authorized  3,000,000  shares of
preferred stock, none of which were issued or outstanding.

Common Stock
------------

     The Company has one class of common stock: Common Stock, par value $.01 per
share.  At December  28,  2002,  there were  20,000,000  shares of Common  Stock
authorized and 8,307,984 shares issued and outstanding. In addition, at December
28, 2002,  there were options to purchase  525,886  shares of Common Stock under
the Company's 1993 Long-Term Incentive Plan and 1993 Director Incentive Plan.

<PAGE>F-22


Stock Compensation Plans
------------------------

     As of December 28, 2002, the Company has two stock-based compensation plans
(both fixed option plans),  which are described below.  Under the 1993 Long-Term
Incentive  Plan as amended on November 30, 1994,  the Company may grant  options
and other awards to its  employees.  No more than 835,000 shares of common stock
may be issued under the Incentive Plan. Under the 1993 Director  Incentive Plan,
the  Company  may grant  options  and other  awards and issue  shares in lieu of
directors  fees to  directors.  No more than 75,000  shares may be issued  under
options or other awards under the Director  Plan.  The exercise  price of grants
equals or exceeds  the market  price at the date of grant.  The  options  have a
maximum  term of 10  years.  For  non-officers,  the  options  generally  become
exercisable  in equal  installments  over a  three-year  period from the date of
grant. For officers, the vesting periods can vary by grant.

     Since the Company applies APB Opinion No. 25 and related interpretations in
accounting  for  its  plans,  no  compensation   cost  has  been  recognized  in
conjunction  with  these  plans.   Had  compensation   cost  for  the  Company's
stock-based  compensation  plans been determined  consistent with the fair-value
based method  described  in SFAS No.123,  the  Company's  net income  (loss) and
income  (loss)  per share  would  have  been  reduced  to the pro forma  amounts
indicated below (in thousands, except per share data):
<TABLE>
<S>                               <C>                       <C>               <C>               <C>

                                                                  2002             2001             2000
                                                                  ----             ----             ----
(Loss) from
 continuing operations              As reported                $(20,486)         $(15,590)        $(8,481)
                                    Pro forma                  $(20,616)         $(15,711)        $(8,686)

Income from discontinued operations
                                    As reported                 $29,613            $8,516         $11,335
                                    Pro forma                   $29,613            $8,516         $11,335

Net income (loss)                   As reported                $  9,127           $(7,074)        $ 2,854
                                    Pro forma                  $  8,997           $(7,195)        $ 2,649
(Loss) from continuing operations
per share
basic and diluted                   As reported                  $(2.47)           $(1.88)         $(1.03)
                                    Pro forma                    $(2.49)           $(1.90)         $(1.05)
Income from
 discontinued operations
per share-basic                     As reported                  $ 3.57             $1.03           $1.37
                                    Pro forma                    $ 3.57             $1.03           $1.37

Income from
 discontinued operations
per share-diluted                   As reported                  $ 3.52             $1.01           $1.34
                                    Pro forma                    $ 3.52             $1.01           $1.34

</TABLE>
<PAGE>F-23

<TABLE>
<S>                               <C>                        <C>              <C>             <C>


Net income (loss)
  basic                             As reported                  $ 1.10            $(0.85)          $0.35
                                    Pro forma                    $ 1.08            $(0.87)          $0.32

Net income (loss)
  diluted                           As reported                  $ 1.08            $(0.85)          $0.34
                                    Pro forma                    $ 1.07            $(0.87)          $0.31

Weighted Average Shares - basic                                 8,293,261        8,277,190       8,249,774
Weighted Average Shares - diluted                               8,416,481        8,403,742       8,466,383

</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the   following   weighted-average
assumptions  used for grants in 2002,  2001,  and 2000,  respectively:  dividend
yield  of 0% for all  years;  expected  volatility  of  233%,  169%,  and  170%;
risk-free  interest  rates of 4.5%,  4.9% and 6.7%; and an expected life of 5.6,
5.5 and 5.6 years.

     A summary of the status of the  Company's  fixed stock  option  plans as of
December 28, 2002,  December 29, 2001, and December 30, 2000, and changes during
the years ended on those dates is presented as follows:
<TABLE>
<S>                           <C>                         <C>                         <C>

                                       2002                        2001                         2000
                                       ----                        ----                         ----
                                     Weighted                    Weighted                     Weighted
                                     Average                     Average                      Average
                                     Exercise                    Exercise                     Exercise
Fixed Options                  Shares         Price         Shares         Price        Shares           Price
-------------                  ------         ------        ------         -----        ------           -----

Outstanding beginning
     of year                   653,297    $ 7.68            776,797      $ 7.23         788,072         $  7.22
Granted                        135,000    $ 2.18             75,500      $ 4.49          83,500         $  6.90
Exercised                           -                                                   (39,433)        $  3.68
Forfeited, cancelled
     or expired               (262,431)   $(6.32)          (199,000)     $ 4.72         (55,342)        $  9.04
                              ---------                    --------                     --------
Outstanding end
    of year                    525,866    $ 6.28            653,297      $ 7.68         776,797         $  7.23

Options exercisable
    at year end                381,214    $ 7.57            526,532      $ 8.26         443,404         $  8.86

Options available for
    future grant at
    year end                   330,070                      202,639                      79,139
</TABLE>

<PAGE>F-24


Weighted-average fair value of options granted during the year where:
<TABLE>
<S>                                                             <C>               <C>                 <C>


                                                                    2002              2001               2000
                                                                    ----              ----               ----
   Exercise price equals market price                             $ 1.97             $ 2.84              $4.02
   Exercise price exceeds market price                               n/a                n/a                n/a
   Exercise price is less than market price                          n/a                n/a                n/a
</TABLE>

     The  following  table  summarizes  information  about fixed  stock  options
outstanding at December 28, 2002:

<TABLE>
<S>                                <C>                                          <C>

                                     Options Outstanding                           Options Exercisable
                                     -------------------                           -------------------
                                           Weighted-
                                            Average            Weighted-                            Weighted-
      Range of            Number          Remaining            Average               Number         Average
      Exercise        Outstanding         Contractual          Exercise          Exercisable        Exercise
       Prices         at 12/28/02             Life             Price              at 12/28/02        Price
       ------         -----------            ------            -----              -----------        -----
$  1.74 - $  5.00         352,897           4.5 years           $ 2.36              220,244         $ 2.38
$  5.13 - $  7.00          67,034           0.7 years           $ 0.79               55,035         $ 0.87
$  10.95 - $23.25         105,935           0.3 years           $ 3.13              105,935         $ 4.32
</TABLE>

Earnings Per Share
------------------

     The Company calculates  earnings per share in accordance with SFAS No. 128.
The following is the  reconciliation of the numerators and denominators used for
basic and diluted earnings per share (in thousands except per share data):

<TABLE>
<S>                                                  <C>                  <C>                  <C>

Numerators:                                                     2002                 2001              2000
                                                                ----                 ----              ----
(Loss) from continuing operations -
      for basic and diluted EPS                         $    (20,486)        $    (15,590)        $   (8,481)

Income from discontinued operations                     $     29,613         $      8,516         $   11,335

Net income (loss) - for basic and
      diluted EPS                                       $      9,127         $     (7,074)        $    2,854

Denominators:
Weighted average common shares - basic                      8,293,261           8,277,190          8,249,774
Common shares from options                                         -               12,749             98,885
Other common stock equivalents                                123,220             113,803            117,724
                                                           -----------          ----------         ----------
Weighted average common shares - for
      diluted EPS                                           8,416,481           8,403,742          8,466,383
</TABLE>

     In years where net losses are incurred, the dilutive effects of options and
other common stock  equivalents  are not used in the calculation of diluted EPS,
as they  would be  anti-dilutive.  In  addition,  options to  purchase  526,000,
544,000 and 278,000  weighted-average  shares of common stock during 2002,  2001
and 2000 were not  included in the  calculation  of diluted EPS as the  options'
exercise prices were greater than the average market price.

<PAGE>F-25


12.  Employee Benefit Plans
---------------------------

401(k) Plan
-----------

     The  Company   sponsors  a  defined   contribution   401(k)  plan  covering
substantially all of its full-time employees. Additionally, the Company provides
matching  contributions  up to a  maximum  of 2.5% of  participating  employees'
salaries and wages.  Total  expenses under the plan for the years ended December
28,  2002,  December 29, 2001 and  December  30, 2000 were $1.8,  million,  $2.0
million and $2.1 million, respectively.

Postretirement Benefits Other Than Pensions
-------------------------------------------

     The Company  provides life and health care  benefits to retired  employees.
Generally,  employees  who have attained an age of 60, have rendered 10 years of
service and are currently  enrolled in the medical benefit plan are eligible for
postretirement  benefits.  The  Company  accrues the  estimated  cost of retiree
benefit  payments during the employee's  active service  period.  As part of the
Company's  Lanoga Sale, the Company recorded a curtailment gain of approximately
$0.6 million related to its post-employment benefit obligation.

     The following  tables  reconcile  the  postretirement  benefit,  the plan's
funded  status  and  actuarial  assumptions,   as  required  by  SFAS  No.  132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits."

<TABLE>
<S>                                                                         <C>                  <C>

                                                                               Postretirement Welfare Benefits
                                                                             December 28,            December 29,
                                                                                 2002                    2001
                                                                                 ----                    ----
                                                                                         (in thousands)
Change in accumulated postretirement benefit obligation
      Benefit obligation at beginning of year                                $      2,384            $    2,247
      Service cost                                                                    371                   336
      Interest cost                                                                   186                   179
      Participant contributions                                                          -                    -
      Claims paid                                                                    (517)                 (703)
      Actuarial losses                                                                540                   325
      Plan amendments                                                                   -                     -
      Curtailments                                                                   (745)                    -
                                                                                  --------              --------
      Benefit obligation at end of year                                      $      2,219            $    2,384

Change in plan assets
      Fair value of plan assets at end of year                               $          -            $        -

<PAGE>F-26


Reconciliation of funded status
      Funded status                                                          $     (2,219)           $   (2,384)
      Unrecognized transition obligation / (asset)                                      -                     -
      Unrecognized prior service cost                                                  (7)                  (20)
      Unrecognized actuarial loss / (gain)                                              -                  (442)
                                                                                  ---------             --------

      Net amount recognized                                                  $     (2,226)           $   (2,846)

Amounts recognized in statements of financial position consist of:
      Prepaid benefit cost                                                   $          -            $        -
      Accrued benefit liability                                                    (2,226)               (2,846)
      Intangible asset                                                                N/A                   N/A
      Accumulated other comprehensive income                                            -                     -
                                                                                  ----------            ---------
      Net amount recognized                                                  $     (2,226)           $   (2,846)

Weighted average assumptions as of December 31
      Discount rate                                                                  6.50%                 7.25%
      Expected return on assets                                                       N/A                   N/A
      Medical trend                                                                  10.0%  *              6.00%

      * Graded rates from 10% in 2003 to 5% in 2009 and after



                                                                                Postretirement Welfare Benefits
                                                                     2002               2001                2000
                                                                     ----               ----                ----
                                                                                    (in thousands)
Components of net periodic benefit cost
      Service cost                                               $   371            $   336             $   264
      Interest cost                                                  185                179                 157
      Expected return on assets                                       NA                 NA                  NA
      Amortization of transition obligation / (asset)                  -                  -                   -
      Amortization of prior service cost                             (10)               (10)                (10)
      Amortization of actuarial loss / (gain)                          -                (27)                (80)
                                                                     ----               ----                ----
      Net periodic benefit cost                                  $   546            $   478             $   331

      Other comprehensive income                                 $     -            $     -             $     -

      Special termination benefits                               $     -            $     -             $     -

Weighted  average  assumptions  used in computing net periodic benefit
cost
      Discount rate                                                   7.25%              7.50%               8.00%
      Expected return on assets                                        N/A                N/A                 N/A
      Medical trend                                                   6.00%              6.00%               6.00%

                                                                1 % Increase           1 % Decrease
                                                               -------------          -------------
Health care cost trend sensitivity
      Effect on total of service cost and
        interest cost components                                 $   31                 $    (29)
      Effect on postretirement benefit obligation                    66                 $    (62)
</TABLE>

<PAGE>F-27


Post-employment Benefits
------------------------

     The Company provides certain  post-employment  benefits to qualified former
or inactive employees who are not retirees. The Company had accrued $173,000 and
$219,000 at  December  28,  2002 and  December  29,  2001,  respectively.  These
benefits  include  salary  continuance,   severance,   and  healthcare.   Salary
continuance  and severance pay are based on  compensation  and years of service.
Additional  severance  pay is granted to eligible  employees who are 40 years of
age or older and have been  employed  by the  Company  five or more  years.  The
Company  accrues the estimated  cost of benefits  provided to former or inactive
employees who have not yet retired over the  employees'  service period or as an
expense at the date of the event triggering the benefit.


13.  Income Taxes
-----------------

     The Company and its  subsidiaries  file a  consolidated  federal income tax
return.   As  of  December  28,  2002,   the  Company  has  net  operating  loss
carryforwards  available to offset future taxable income of approximately  $22.4
million expiring in the years 2011 through 2021.

     The income tax provision consists of both current and deferred amounts. The
components of the income tax provision for continuing operations are as follows:

<TABLE>
<S>                                             <C>                   <C>                    <C>

                                                 December 28,                 December 29,            December 30,
                                                      2002                       2001                    2000
                                                      ----                       ----                    ----
                                                                             (in thousands)
   Taxes currently payable:
      State income tax                             $    417                    $    731              $    982
      Federal income tax                                  -                           -                     -

   Deferred benefit                                 (13,920)                     (9,379)               (4,727)
                                                  -----------                 -----------           -----------
                                                  -----------                 -----------           -----------
   Income tax benefit                              $(13,503)                   $ (8,648)             $ (3,745)
                                                  ===========                 ===========           ===========

</TABLE>


     The  Company's  effective  tax rates were 39.7%,  35.7% and 30.6% for 2002,
2001 and 2000,  respectfully.  The Company's  provision includes franchise taxes
and other  non-deductible  items.  State franchise  taxes of $0.4 million,  $0.7
million and $1.0 million were  reported for 2002,  2001 and 2000,  respectively.
The following table summarizes significant differences between the provision for
income taxes and the amount  computed by applying the statutory  federal  income
tax rates to income before taxes for continuing operations:

<PAGE>F-28
<TABLE>
<S>                                   <C>                     <C>                    <C>

                                        December 28,              December 29,         December 30,
                                            2002                    2001                  2000
                                            ----                    ----                  ----
                                                               (in thousands)
   Tax/(benefit) computed assets:
      U.S. statutory tax rate           $ (11,896)               $  (8,483)           $  (4,279)
   State and local taxes                                              (967)                (464)
                                           (1,397)
   Other                                     (210)                     802                  998

                                       ----------------      -------------------  -------------------
   Total tax provision                   $(13,503)               $  (8,648)           $  (3,745)
                                       ================      ===================  ===================

</TABLE>

     Tax provision  and credits are recorded at statutory  rates for the taxable
items included in the  consolidated  statements of operations  regardless of the
period for which such items are reported for tax purposes. Deferred income taxes
reflect the net effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for
income  tax  purposes.  The  valuation  allowance  primarily  relates  to losses
incurred  on certain  investments  which the Company  believes  may not be fully
deductible for tax purposes.  Management  has determined  that taxable income of
the Company  will more  likely than not be  sufficient  to fully  recognize  its
remaining net deferred tax assets. The components of the deferred tax assets and
liabilities at December 28, 2002 and December 29, 2001 are as follows:

<TABLE>
<S>                                                       <C>                      <C>

                                                           December 28,             December 29,
                                                              2002                      2001
                                                              ----                      ----
                                                                     ( in thousands )
   Deferred income tax assets:
   Trade accounts receivable                                 $ 793                    $  446
   Inventories                                               1,437                     2,040
   Accrued personnel cost                                      991                       982
   Other accrued liabilities                                 4,687                     4,325
   Net operating loss                                        7,825                    14,487
   Goodwill and trademark                                    3,364                    (3,104)
   Other                                                     2,687                     6,132
                                                         ---------------          ----------------
   Gross deferred income tax assets                         21,784                    25,308
   Less: valuation allowance                                  (349)                   (1,190)
                                                         ---------------          ----------------

   Total deferred income tax assets                         21,435                    24,118
                                                         ---------------          ----------------
</TABLE>

<PAGE>F-29


<TABLE>
<S>                                                      <C>                          <C>




   Deferred income tax liabilities:
   Property, plant and equipment                             899                     1,189
   Other accrued liabilities                               1,041                     1,188
                                                       ---------------          ----------------
   Total deferred income tax liabilities                   1,940                     2,377
                                                       ---------------          ----------------

   Net deferred tax assets                                $19,495                   $21,741
                                                       ===============          ================
</TABLE>



14.  Financial Instruments
--------------------------

     The fair value of the  Company's  cash and cash  equivalents,  accounts and
notes  receivable   (including  related  party  amounts)  and  accounts  payable
approximates the carrying value due to the short maturity of these instruments.

Long-Term Debt
--------------

     The fair  value  of the  Company's  long-term  debt is  estimated  based on
limited and infrequent trading  information for the same or similar issues or on
the  current  rates  offered  to the  Company  for  debt of the  same  remaining
maturities.
<TABLE>
<S>                                                    <C>                    <C>

                                                          Fair Value            Carrying Value
                                                          ----------            --------------
                                                                    (in thousands)
         2002 Financial Liabilities
         Long-term Debt-
         Revolving Credit Facility
            Revolving Notes                              $  20,346              $  20,346
            Term Notes                                      11,168                 11,168
         Senior Subordinated Notes                          35,815                 63,956

         2001 Financial Liabilities
         Long-term Debt-
         Revolving Credit Facility
            Revolving Notes                              $  93,143              $  93,143
            Term Notes                                      45,311                 45,311
         Senior Subordinated Notes                          31,978                 63,956

</TABLE>

Derivative Financial Instruments
--------------------------------

     The Company uses derivative  financial  instruments in the normal course of
business as a tool to manage its exposure to interest rates and commodity lumber
prices. The Company does not hold or issue derivative financial  instruments for
trading  purposes.  Gains and losses relating to hedging contracts are generally

<PAGE>F-30

deferred and recorded in income or as an adjustment to the carrying value of the
related asset or liability at the time the transaction is complete.  Payments or
receipts of interest under interest rate swap  arrangements are accounted for as
an  adjustment  to  interest  expense.  The fair value of  derivative  financial
instruments is determined based upon dealer quotes.

Lumber Futures Contracts
------------------------

     The  Company   enters  into  lumber   futures   contracts  to  hedge  price
fluctuations  related to anticipated future purchases of commodity lumber. While
lumber  futures  contracts  are entered  into on a risk  management  basis,  the
Company's  hedge positions could show a net gain or loss depending on prevailing
market  conditions.  At December 28,  2002,  the Company did not have any lumber
futures contracts outstanding.

Interest Rate Swap
------------------

     The Company  entered into an interest  rate swap  agreement on February 17,
1999 that  effectively  fixed the  Company's  borrowing  cost at 5.75%  plus the
Company's LIBOR  borrowing  spread (as discussed in 9 above) on $40.0 million of
the Company's amended and restated line of credit borrowings.  The interest rate
swap agreement expired in February 2002.



15.  Related Party Transactions
-------------------------------

     As of December 28, 2002,  approximately  34% of the  Company's  outstanding
shares of common stock were owned by Riverside Group, Inc. and approximately 13%
owned by Imagine Investments, Inc. and its parent, Stone Investments, Inc. As of
December 28, 2002, the Chairman and CEO of the Company was also the Chairman and
CEO of Riverside Group, Inc.

     In  February  1998,  as part of the  determination  made by the  Company to
discontinue or sell non-core  programs,  the Company sold certain  operations to
Riverside  Group,  Inc. In exchange  for these  assets,  the Company  received a
three-year  $870,000  unsecured  promissory note and 10% of future net income of
these  operations  (subject to a maximum of $429,000  plus  interest).  In March
2000,  the Company  extended  the terms of its note  receivable  from  Riverside
Group, Inc. Under the revised terms, all previously accrued interest was paid to
the  Company by  Riverside  Group,  Inc.  on March 31,  2000.  Repayment  of the
remaining  principal balance was deferred for one year, with quarterly principal
payments  commencing  on April 1, 2001 and ending June 30, 2002. On December 28,
2001 the Company amended the terms of its note receivable with Riverside  Group,
Inc. in an agreement that extended the payment of principal and interest, due in
full, on December 28, 2002.  Interest  earned for the years ended 2002, 2001 and
2000  was  approximately  $41,000,  $40,000  and  $54,000,  respectively.  As of
December 28, 2002 the Company had not  received  payment for the  principal  and
accrued interest,  and therefore provided a reserve for the outstanding  balance
of approximately $445,000.

<PAGE>F-31


     In 2002,  the  Company  paid  approximately  $1,192,000  in  reimbursements
primarily to affiliates of the Company's Chairman, for costs related to services
provided to the Company  during the year by certain  employees of the affiliated
company and use of a  corporate  aircraft.  Total  payments in 2001 and 2000 for
similar services were approximately $953,000 and $333,000, respectively.

     The Company has been  informed  that on April 4, 2003 Imagine  Investments,
Inc. acquired  2,797,743 shares of common stock from Riverside Group Inc. and an
option to purchase an additional 53,700 shares. As of such date, Imagine and its
affiliates  beneficially  owned  approximately 51% of the Company's  outstanding
common stock. In connection with this transaction,  J. Steven Wilson resigned as
the Chairman and Chief Executive  Officer of the Company  effective  immediately
and entered into an agreement with the Company which provides for the payment to
him of certain compensation.


16. Store Closing Costs and Other Charges
-----------------------------------------

     In 2001,  the  Company's  management  developed  a plan to  reorganize  and
improve   productivity   and   performance.   The  results  were  reductions  in
administrative  expense,  marketing  expense,  headcount and the  elimination of
non-strategic operating units. As a result, the Company recorded charges of $1.2
million related to severance,  $0.5 million  related to property  carrying costs
and other costs.

     Pursuant  to  certain   initiatives  to  improve   performance  and  reduce
under-performing assets, from January through November 2002, the Company closed,
consolidated, or sold nine distributions centers and two component plants. These
closings  resulted in termination of approximately  300 employees that worked at
these locations. Another 27 employees were transferred to surrounding locations.
Store closing costs associated with these activities  typically include employee
termination  costs,  non-cancelable  lease  obligations  and  other  exit  costs
incurred  as a direct  result of closing  facilities.  As a result,  the Company
recorded  charges of $1.8 million of severance  and $1.7 million of property and
other  carrying  costs.  Also  included  in the $1.8  million of  severance  was
$385,000  in  severance  related  to a plan to  reduce  headquarters  and  field
administration by 23 associates.  In addition, the Company recorded a write down
of inventory of  approximately  $1.4 million.  The following is a summary of the
activity  in the  reserve  balances  from 2001  through  December  28,  2002 (in
thousands):

<PAGE>F-32



<TABLE>
<S>                                             <C>           <C>              <C>


                                                  Employee      Property and
                                                 Separation    Other Carrying
                                                   Costs           Costs         Total
                                                   -----           -----         -----
       2001 Store closing and other costs         $1,223         $ 521          $1,744
       2001 Related payments                                      (235)         (1,319)
                                                  (1,084)
                                                 ---------      -----------     --------
       Accrual balance at December 29, 2001          139           286             425
       2002 Store closing and other costs          1,895         1,658           3,553
       2002 Related payments                      (1,649)       (1,929)         (3,578)
                                                 ---------      -----------    ---------
       Accrual balance at December 28, 2002        $ 385          $ 15            $400

</TABLE>

17. Other Operating Income
--------------------------

     Other operating income on the Company's  Statement of Operations  primarily
includes  gains on the early  extinguishment  of debt , the sale or  disposal of
property,  plant and equipment,  service charges assessed  customers on past due
accounts receivable and casualty  gains/losses.  Other operating income was $2.9
million in 2002,  as compared to $3.4 million in 2001 and $13.2 million in 2000.
During  2002,  the Company  sold eight  pieces of real estate and various  fixed
assets for a net gain of approximately $1.8 million.  This is compared with four
real estate  sales and various  fixed asset  disposals in 2001 for a net gain of
approximately $1.2 million, and three real estate sales and various fixed assets
disposals in 2000 for a net gain of approximately $0.3 million. In addition, the
Company  recorded an impairment of $0.9 million for the subsequent  sale of real
estate in Aurora, Co. Additionally,  as part of the adoption of SFAS No. 145 the
Company has changed the  presentation of its gains on debt  extinguishment  from
extraordinary  items to other operating income.  While not required until fiscal
2003,  the Company has elected to early adopt the  provision of this  statement.
The pretax gain of $11.1 million has been reclassified to other operating income
for the fiscal year ended December 30, 2000. The following table  summarizes the
major components of other operating income, in thousands, by year.

<TABLE>
<S>                                                            <C>               <C>               <C>

                                                                         Other Operating Income (Loss)
                                                                   2002               2001                2000
                                                                   ----               ----                ----
    Sale of property, plant & equipment                       $      937           $  1,310          $     345
    Accounts receivable service charges                            1,515              1,562              2,409
    Casualty Losses                                                 (342)              (270)              (559)
    Gain on  Debt Extinguishment                                       -                  -             11,119
    Other                                                            831                819               (151)
                                                                   ------             ------            ------
    Total                                                     $    2,941           $  3,421          $  13,163
                                                                   =====              =====             ======
</TABLE>


18.  Selected Quarterly Financial Data (unaudited)
--------------------------------------------------

     The following table contains selected  unaudited  quarterly  financial data
for the years ended  December 28, 2002 and December 29, 2001.  Quarterly  income
(loss) per common share may not total to year end income (loss) per share due to
the issuance of additional shares of Common Stock during the course of the year.

<PAGE>F-33
<TABLE>

<S>                         <C>                        <C>            <C>           <C>           <C>

                                    QUARTERLY FINANCIAL DATA
                                          (Unaudited)
                                         Fiscal Quarters
                         (in millions, except per share data and percentages)



                                                             2002          2002         2002          2002
                                                           Quarter 1     Quarter 2    Quarter 3     Quarter 4
                                                         ------------  ------------ ------------  ------------

Net sales from continuing operations                       $ 135.3       $ 160.4      $ 153.2       $ 128.8
% of annual net sales                                        23.4%         27.8%        26.5%         22.3%

Gross Profit                                                  25.8          32.3         30.7          25.2

Income (loss) from continuing operations                      (2.8)         (0.6)        (3.1)        (14.0)
Income (loss) from discontinued operations                    (1.0)          2.9          4.2          23.5
                                                         ------------  ------------ ------------  ------------

Net (loss) income                                             (3.8)          2.3          1.1           9.5

Basic earnings (loss) per common share:
Income (loss) from continuing operations                   $ (0.34)      $ (0.07)     $ (0.37)      $ (1.69)
Income (loss) from discontinued operations                   (0.12)         0.35         0.51          2.83
                                                         ------------  ------------ ------------  ------------
Net (loss) income                                            (0.46)         0.28         0.14          1.14

Diluted earnings (loss) per common share:
Income (loss) from continuing operations                     (0.34)        (0.07)       (0.37)        (1.69)
Income (loss) from discontinued operations                   (0.12)         0.35         0.50          2.79
                                                         ------------  ------------ ------------  ------------
Net (loss) income                                          $ (0.46)       $ 0.28       $ 0.13        $ 1.10


                                                             2001          2001         2001          2001
                                                           Quarter 1     Quarter 2    Quarter 3     Quarter 4
                                                         ------------  ------------ ------------  ------------

Net sales from continuing operations                       $ 135.4       $ 194.5      $ 206.9       $ 173.2
% of annual net sales                                        19.1%         27.4%        29.1%         24.4%

Gross Profit                                                  30.1          40.1         41.9          33.5

Income (loss) from continuing operations                      (4.8)         (3.1)        (4.0)         (3.7)
Income (loss) from discontinued operations                    (1.7)          4.1          4.7           1.4
                                                         ------------  ------------ ------------  ------------

Net Income (loss)                                             (6.5)          1.0          0.7          (2.3)

Basic earnings (loss) per common share:
Income (loss) from continuing operations                   $ (0.58)      $ (0.37)     $ (0.48)      $ (0.45)
Income (loss) from discontinued operations                   (0.20)         0.50         0.56          0.18
                                                         ------------  ------------ ------------  ------------
Net (loss) income                                            (0.78)         0.12         0.08         (0.27)

Diluted earnings (loss) per common share:
Income (loss) from continuing operations                     (0.58)        (0.37)       (0.48)        (0.45)
Income (loss) from discontinued operations                   (0.20)         0.49         0.56          0.17
                                                         ------------  ------------ ------------  ------------
Net (loss) income                                          $ (0.78)       $ 0.12       $ 0.08       $ (0.28)




Each fiscal quarter in the table above represents a thirteen-week period.


</TABLE>




<PAGE>F-34


19.  Subsequent Events (unaudited)
----------------------------------

     The Company has been  informed  that on April 4, 2003 Imagine  Investments,
Inc. acquired  2,797,743 shares of common stock from Riverside Group Inc. and an
option to purchase an additional 53,700 shares. As of such date, Imagine and its
affiliates  beneficially  owned  approximately 51% of the Company's  outstanding
common stock. In connection with this transaction,  J. Steven Wilson resigned as
the Chairman and Chief Executive  Officer of the Company  effective  immediately
and entered into an agreement with the Company which provides for the payment of
$1.0 million in severance to Mr. Wilson.

     As a result of (i) the  Company's  failure to deliver  to the  lenders  its
fiscal 2002 audited financial  statements by March 28, 2003 and (ii) as of April
4, 2003,  Riverside  Group Inc. and J. Steven Wilson ceasing between them to own
at least 25% of the Company's  outstanding common stock and Imagine Investments,
Inc.  owning a greater  percentage of such shares than Riverside and Mr. Wilson,
certain  events of  default  arose  under the  Merrill  Credit  Agreement.  Such
defaults were simultaneously  waived by the lenders and the Credit Agreement was
amended in certain respects, including the addition of a provision which permits
the Company to make the severance payment to Mr. Wilson. In connection with such
waiver and amendments, the Company paid to the lenders a fee of $312,500.


<PAGE>S-1




<TABLE>


                          WICKES INC. AND SUBSIDIARIES

                 Schedule II - Valuation and Qualifying Accounts

          For the Years Ended December 28, 2002, December 29, 2001, and
                                December 30, 2000
                             (dollars in thousands)

<S>      <C>                    <C>                 <C>                  <C>              <C>                 <C>

         Col. A                    Col. B                      Col. C                         Col. D           Col. E
         ------                    ------            ---------------------------              -------         --------
                                                              Additions
                                                              ---------
                                                      (1)                    (2)                                 Balance
                                 Balance at        Charged to             Charged to                               at
                                 Beginning          Costs and                Other                               End of
       Description               of Period          Expenses              Accounts(a)        Deductions(b)       Period
       -----------               ---------         ----------             ----------         -------------       ------
2002:
Allowance for doubtful
    accounts                        $2,119             $1,570                ($434)             ($1,336)           $1,919

2001:
Allowance for doubtful
    accounts                        $2,791             $1,470                 $197              ($2,339)           $2,119

2000:
Allowance for doubtful
    accounts                        $4,105               $983                  ($7)             ($2,290)           $2,791

</TABLE>


(a) Net (recoveries) charges from previously closed stores (credited) debited to
other operating income.

(b) Reserved accounts written-off.


<PAGE>




                                  Exhibit Index
                                  -------------
Exhibit
Number                Description
-------               -----------

2.1(a)*             Asset Purchase and Sale  Agreement,  dated as of October 30,
                    2002, by and between the Registrant  and Lanoga  Corporation
                    (incorporated  by  reference  to  Exhibit  2 to the Form 8-K
                    filed as of December 18, 2002).***

3.1(a)*             Amended and Restated  Certificate  of  Incorporation  of the
                    Registrant  (incorporated by reference to Exhibit 3.1 to the
                    Registrant's  Registration  Statement on Form S-1 (the "Form
                    S-1"), Commission File No. 2-67334).

   (b)*             First  Amendment to Second Amended and Restated  Certificate
                    of Incorporation  (incorporated by reference to Exhibit 3.01
                    to the  Registrant's  Quarterly  Report on Form 10-Q for the
                    period ended June 1994).***

   (c)*             Second Amendment to Second Amended and Restated  Certificate
                    of  Incorporation  (incorporated by reference to Exhibit 3.1
                    to the  Registrant's  Quarterly  Report on Form 10-Q for the
                    period ended June 1997).***

3.2*                By-laws  of  the   Registrant,   as  amended  and   restated
                    (incorporated   by   reference   to   Exhibit   3.2  to  the
                    Registrant's  Annual  Report on Form 10-K  (the  "1993  Form
                    10-K") for the year ended December 25, 1993).***

4.1(a)*             Credit   Agreement  dated  February  17,  1999,   among  the
                    Registrant,  as Borrower, each of the financial institutions
                    signatory   thereto,    BankBoston    Business   Credit   as
                    Administrative Agent and Issuing Bank,  BancBoston Robertson
                    Stephens Inc. as Syndication Agent, and Nationsbank, N.A. as
                    Documentation  Agent  (incorporated  by reference to Exhibit
                    4.1 of the  Registrant's  Annual Report on Form 10-K for the
                    year ended December 26, 1998).***

   (b)*             First  Amendment  dated  July  8,  1999   (incorporated   by
                    reference to Exhibit 4.1 to the Registrant's  Report on Form
                    10-Q for the period ended June 26, 1999).***

   (c)*             Second  Amendment dated September 14, 1999  (incorporated by
                    reference  to  Exhibit  4.1  to the  Registrant's  Quarterly
                    Report  on Form  10-Q for the  period  ended  September  25,
                    1999).***

   (d)*             Amended and Restated  Credit  Agreement  dated  December 13,
                    2000 among the Registrant,  Fleet Retail  Financial Inc, and
                    Bank of  America,  N.A.  as agents and the lendors set forth
                    therein  (incorporated  by  reference  to Exhibit 4.1 to the
                    Registrant's  Annual  Report on Form 10-K for the year ended
                    December 29,2000).***

<PAGE>

   (e)*             Amended and  Restated  Credit  Agreement  dated May 14, 2000
                    among the Registrant,  Fleet Retail  Financial Inc, and Bank
                    of  America,  N.A.  as  agents  and the  lendors  set  forth
                    therein.  (incorporated  by reference  to Exhibit  4.1(e) to
                    Registrant's  Annual  Report on Form 10-K for the year ended
                    December 29, 2001 ("2001 Form 10-K))***

   (f)*             Amended and Restated Credit  Agreement dated August 13, 2000
                    among the Registrant,  Fleet Retail  Financial Inc, and Bank
                    of  America,  N.A.  as  agents  and the  lendors  set  forth
                    therein. (incorporated by reference to Exhibit 4.1(f) to the
                    2001 Form 10-K)***

   (g)*             Amended and Restated  Credit  Agreement  dated  February 28,
                    2000 among the Registrant,  Fleet Retail  Financial Inc, and
                    Bank of  America,  N.A.  as agents and the lendors set forth
                    therein. (incorporated by reference to Exhibit 4.1(g) to the
                    2001 Form 10-k)***

   (h)*             Credit  Agreement,  dated as of February 26, 2003, among the
                    Registrant, Merrill Lynch Capital and the Additional Lenders
                    thereto  (incorporated by Reference to Exhibit 1 to the Form
                    8-K filed as of March 5, 2003).***

   (i)*             Indenture, dated as of February 26, 2003, between Registrant
                    and HSBC Bank USA (incorporated by reference to Exhibit 2 to
                    the Form 8-K filed as of March 5, 2003).***

   (j)*             Supplemental  Indenture,  dated  as of  February  26,  2003,
                    between the  Registrant and HSBC Bank USA  (incorporated  by
                    reference  to Exhibit 3 to the Form 8-K filed as of March 5,
                    2003).***

4.2*                Indenture   dated  as  of  October  15,  1993   between  the
                    Registrant and Marine Midland Bank,  N.A.  (incorporated  by
                    reference to Exhibit 4.2 to the 1993 Form 10-K).***

10.1*               Agreement,  dated July 21,  1993,  between  Collins & Aikman
                    Group, Inc. and the Registrant (incorporated by reference to
                    Exhibit 10.12 to the Form S-1).

10.2(a)*            Amended and Restated 1993  Long-Term  Incentive  Plan of the
                    Registrant (incorporated by reference to Exhibit 10.8 to the
                    Registrant's  Annual  Report on Form 10-K for the year ended
                    December 1994 (the "1994 Form 10-K")).***

<PAGE>

    (b)*            Amendment  No.  1  (incorporated  by  reference  to  Exhibit
                    10.8(b) to the  Registrant's  Annual Report on Form 10-K for
                    the year ended December 1996).***

    (c)*            Form of  Option  Agreement  (incorporated  by  reference  to
                    Exhibit 10.22 to the Form S-1).

    (d)*            Form of  Option  Agreement  (incorporated  by  reference  to
                    Exhibit 10.8 to the 1994 Form 10-K).***

    (e)*            Form of Long-Term Stock Option  Agreement  (incorporated  by
                    reference to Exhibit 10.8 to the 1994 Form 10-K).***

    (f)*            Form of Long-Term Performance Bonus Agreement  (incorporated
                    by reference to Exhibit 10.8 to the 1994 Form 10-K).***

    (g)*            Amendment No. 2  (incorporated  by reference to Exhibit 10.4
                    to the Registrant's  Annual Report on Form 10-K for the year
                    ended December 27, 1997 ("1997 Form 10-K"))***

    (h)*            Form of  Option  Agreement  (incorporated  by  reference  to
                    Exhibit 10.4 to the 1997 Form 10-K).***

10.3(a)*            Amended  and  Restated  1993  Director   Incentive  Plan  of
                    Registrant  (incorporated  by reference to Exhibit  10.03 to
                    the  Registrant's  Quarterly  Report  on Form  10-Q  for the
                    period ended March 26, 1994).***

    (b)*            Form of  Option  Agreement  (incorporated  by  reference  to
                    Exhibit 10.24 to the Form S-1).

10.4**              Stay Incentive Bonus Plan

10.5(a)*            Agreement  dated November 4, 1997 between the Registrant and
                    Riverside Group, Inc.  (incorporated by reference to Exhibit
                    10.1 to the  Registrant's  Quarterly Report on Form 10-Q for
                    the period ended September 1997).***

    (b)*            Amendment and Closing  Agreement to Agreement dated November
                    4, 1997 between the  Registrant  and Riverside  Group,  Inc.
                    (incorporated  by reference to Exhibit 10.9 to the 1997 Form
                    10-K).***

10.6*                Agreement  between  the  Registrant  and  Buildscape,  Inc.
                    (incorporated   by   reference   to  Exhibit   10.6  to  the
                    Registrant's  Annual  Report on Form 10-K for the year ended
                    December 25, 1999). ***
<PAGE>


21.1**              List of Subsidiaries of the Registrant.

23.1**              Consent of Deloitte & Touche LLP.

99.1**              Certification of Co-Principal Executive Officer

99.2**              Certification of Co-Principal Executive Officer

99.3**              Certification of Co-Principal Executive Officer
                    and Chief Financial Officer


*    Incorporated by reference.
**   Filed herewith.
*** SEC File No. 1-14967

There have been omitted certain instruments with respect to long-term debt not
in excess of 10% of the consolidated total assets of the Company. The Company
agrees to furnish copies of any such instruments to the Commission upon request.



<PAGE>



                                                                    Exhibit 21.1

                       LIST OF SUBSIDIARIES OF REGISTRANT



Name                                                      State of Incorporation
----                                                      ----------------------
Lumber Trademark Company                                        Illinois

GLC Division, Inc.                                              Delaware




<PAGE>





                                                                    Exhibit 23.1


INDEPENDENT AUDITORS' CONSENT
-----------------------------

We consent to the  incorporation  by reference in  Registration  Statement  Nos.
33-85380,  33-88010, 33-90240 of Wickes Inc. and subsidiaries on Form S-8 of our
report  dated  March 27, 2003 except for Notes 9 and 19, as to which the date is
April 4, 2003 (which  report  expresses an  unqualified  opinion and includes an
explanatory  paragraph  relating to the Company's  adoption of new Statements of
Financial Accounting Standards that required it to (i) classify the 2002 sale of
a portion of the business as discontinued operations,  (ii) record a 2002 charge
for impairment of goodwill and other intangible  assets,  and (iii) reclassify a
2000  gain on the  early  retirement  of debt from  extraordinary  to  operating
income),  appearing  in the  Annual  Report  on Form  10-K of  Wickes  Inc.  and
subsidiaries for the year ended December 28, 2002.



Chicago, Illinois
April 10, 2003



<PAGE>





                                                                   Exhibit 10.4


                                   WICKES INC.
                                   -----------
                            STAY INCENTIVE BONUS PLAN
                            -------------------------


     This STAY  INCENTIVE  BONUS PLAN (the  "Plan")  was adopted by the Board of
Directors of Wickes Inc. (the  "Company") on March 30, 2003, to provide  certain
cash bonus awards to selected key employees of the Company.

                                 1. Definitions
                                 --------------

         For the  purpose  of this Plan,  the  following  terms  shall have the
         meaning shown:

          Affiliate.  As  defined  in the rules and  regulations  adopted by the
          ----------  Securities  and Exchange  Commission  under the Securities
          Exchange  Act of 1934,  as  amended.
          Associate.  Any person (i) with respect to a corporation,  any officer
          ----------
          or  director  thereof or any  Subsidiary  (as  defined  in  Securities
          Exchange Act of 1934, as amended) thereof, or any Beneficial Owner (as
          defined  herein)  of 10% or  more  of any  class  of  equity  security
          thereof, (ii) with respect to an association,  any officer or director
          thereof  or  of  a  Subsidiary  thereof,   (iii)  with  respect  to  a
          partnership,  any  general  partner  thereof  or any  limited  partner
          thereof who is, directly or indirectly,  the Beneficial Owner of a 10%
          ownership interest therein, (iv) with respect to a business trust, any
          officer or  trustee  thereof or of any  Subsidiary  thereof,  (v) with
          respect to any other  trust or an estate,  any  trustee,  executor  or
          similar fiduciary or any person who has a 15% or greater interest as a
          beneficiary  in the income from or  principal of such trust or estate,
          (vi) with respect to a natural person,  any relative or spouse of such
          person, or any relative of such spouse,  who has the same home as such
          person, and (vii) any Affiliate of such person.
          Base  Compensation.  The  greater of (i) the  amount of  "deemed  base
          -------------------
          compensation"  shown by a Participant's  name on his Schedule 1 hereto
          (which may be different than a Participant's actual base compensation)
          or (ii)  the  highest  annual  rate of base  compensation  to  which a
          Participant  becomes  entitled  to  receive  from the  Company  or any
          Company  Related  Entity at any time  after the date  hereof and on or
          before the Group  Transfer Date or Change of Control Date.
          Beneficial   Ownership.   The   beneficial   ownership,   directly  or
          -----------------------
          indirectly,  for purposes of Section 13(d) of the Securities  Exchange
          Act of 1934, as amended,  and  Regulations  13D and 13G thereunder (or
          any  comparable  or successor law or  regulation),  in each case as in
          effect as of the Effective  Date,  of any  securities by any person or
          any of such person's  Affiliates or Associates (and correlative  terms
          shall have correlative meanings).
          Bonus Period.  The period  commencing on the date hereof and ending on
          -------------
          the earliest to occur of (i) 12:00 Midnight  Eastern Time on March 31,
          2004,  (ii) a Group  Transfer  Date or (iii) a Change of Control Date;
          provided,  that if the  Company  or a third  party  shall on or before
          12:00 Midnight Eastern Time on March 31, 2004 have publicly announced,
          or entered into a letter of intent or definitive agreement with

<PAGE>

          respect to, a transaction that would effect a Group Transfer or Change
          of Control  and such Group  Transfer or Change of Control has not been
          completed by 12:00 Midnight  Eastern Time on March 31, 2004, the Bonus
          Period  shall  be  extended  and  shall  end  immediately   after  the
          occurrence of any of the following (w) the public  announcement by the
          Company or third party that such  transaction  or  agreement  has been
          abandoned  or  terminated,  (x)  completion  of the Group  Transfer or
          Change of Control  contemplated by the agreement,  letter of intent or
          announcement,  (y)  the  date  six  months  after  the  date  of  such
          announcement  or  letter  of intent  if a  definitive  agreement  with
          respect to the  transaction  has not been entered into or (z) one year
          after the date a definitive  agreement with respect to the transaction
          is  entered  into.
          Bonus Percentage.  The Bonus Percentage for a Participant shown on his
          -----------------
          Schedule 1 hereto.
          Cause.

               (i) The willful  misconduct of a Participant,  including  without
               limitation,  (a) the intentional  diversion by a Participant of a
               corporate   opportunity   to   himself,   (b)   the   intentional
               misappropriation of the assets of Company, (c) the acceptance for
               his own personal use of cash or other property from any person or
               entity  other  than  the  Company  as an  inducement  to take any
               material  action,  or to refrain  from  taking any such  material
               action,  in his capacity as an employee of the  Company,  (d) the
               commission  by a  Participant  of any  other  fraud  against  the
               Company;
               (ii) the refusal of a Participant to follow or observe a decision
               or policy of the  directors or officers of the Company  senior to
               such   Participant;

               (iii) the failure by a Participant  substantially  to perform his
               duties as a Company Employee (including any failure  attributable
               to  physical  or  mental  incapacity)  other  than as a result of
               termination  of  employment  by a  Participant  under  any of the
               circumstances   described   under   the   heading   "Constructive
               Termination"  below;  or

               (iv) the failure of a Participant to accept employment  requested
               by the  Company as a  Transferee  Employee in  connection  with a
               Group Transfer.

     Change of Control.  The occurrence of any one of the following:
     ------------------
               (i)individuals who, as of December 31, 2002, constitute the Board
               of Directors of the Company (the "Incumbent Board") cease for any
               reason  to  constitute  at  least  a  majority  of the  Board  of
               Directors of the Company; provided,  however, that any individual
               becoming  a  director  subsequent  to  December  31,  2002  whose
               election,   or   nomination   for   election  by  the   Company's
               stockholders,  was  approved  by a vote of at least a majority of
               the  directors  then  comprising  the  Incumbent  Board  shall be
               considered  as  though  such  individual  were  a  member  of the
               Incumbent  Board,  but  excluding  for  this  purpose,  any  such
               individual whose initial  assumption of office occurs as a result
               of an actual or threatened  election  contest with respect to the
               election or removal of directors  or other  actual or  threatened
               solicitation  of proxies or  consents by or on behalf of a Person
               other   than   the   Board   of   Directors   of   the   Company;
               (ii)consummation of a reorganization,  merger or consolidation or
               sale or  other  disposition  of all or  substantially  all of the
               assets of the Company, other than in a transaction with Riverside
               (a "Business Combination"),  in each case, unless, following such
<PAGE>

               Business Combination,  (a) no Person acquires or gains Beneficial
               Ownership, directly or indirectly, of 50% or more of the combined
               voting power of the then  outstanding  voting  securities  of the
               Company  or  the   corporation   resulting   from  such  Business
               Combination (including, without limitation, a corporation that as
               a result of such transaction owns all or substantially all of the
               Company's  assets)  and (b) at least a majority of the members of
               the  board  of  directors  of the  Company  or  such  corporation
               resulting  from such  Business  Combination  were  members of the
               Incumbent  Board  at the  time of the  execution  of the  initial
               agreement,  or of the  action  of the Board of  Directors  of the
               Company,  providing  for such Business  Combination;  or (iii)the
               acquisition  or  gaining  of  Beneficial  Ownership   (including,
               without  limitation,  power  to  vote)  of more  than  50% of the
               Company's then outstanding voting securities  entitled to vote on
               a  regular  basis  for a  majority  of  the  Company's  Board  of
               Directors, by any Person (other than Riverside).

          Change  of  Control  Date.  The time at which a Change of  Control  is
          --------------------------
          effected. Company. Wickes Inc.

          Company Employee.  A person who is an employee of the Company,  one or
          -----------------
          more Company Related Entities,  or the Company and one or more Company
          Related  Entities.
          Company  Severance  Plan.  Any severance  plan or  arrangement  of the
          -------------------------
          Company or any Company  Related  Entity or any employment or severance
          agreement or arrangement  between a Participant and the Company or any
          Company  Related Entity.
          Company Related Entity. A subsidiary of the Company within the meaning
          -----------------------
          of the  Securities  Exchange Act of 1934, as amended.
          Disability.  As used herein,  "Disability" shall have the same meaning
          -----------
          as under the appropriate  provisions of the long-term  disability plan
          maintained  for  the  benefit  of  employees  of the  Company  who are
          regularly  employed on a salaried basis, or, if there shall be no such
          plan, as  reasonably  determined by the Company.
          Election  Form.  The election form attached  hereto as Schedule 2 with
          ---------------
          respect  to a Stay  Incentive  Bonus  payable  under  Section 2.
          Group  Transfer.  Any  transfer by the Company or any Company  Related
          ----------------
          Entity  of  the  operations  of  more  than  one  building  center  or
          manufacturing  facility,  or both, in connection with which transfer a
          Participant is offered  employment by the transferee with compensation
          and non-severance  benefits substantially similar to those provided by
          the Company or such Company  Related Entity  immediately  prior to the
          Group  Transfer  Date and the Company or such Company  Related  Entity
          requests a Participant  to accept such offer of employment and thereby
          to cease being a Company  Employee.
          Group  Transfer  Date. The time at which a Group Transfer is effected.
          ----------------------
          Participants.  Those key  employees  of the  Company  and any  Company
          -------------
          Related Entity selected by the Board of Directors of the Company or by
          a committee  designated  by the Board of Directors of the Company (the
          "Committee")  and who shall have  received  and  executed a Schedule 1
          hereto signed on behalf of the Company.
          Person. An individual,  entity or group (within the meaning of Section
          -------
          13(d)(3)  or  14(d)(2)  of the  Securities  Exchange  Act of 1934,  as
          amended).
          Riverside. Riverside Group, Inc. or Wilson Financial, Inc.
          ----------
<PAGE>

          Stay  Incentive  Bonus.  The amount  determined as set forth under the
          -----------------------
          heading  "Stay  Incentive  Bonus"  below.
          Transferee  Employee.  A  Participant  who  becomes an employee of the
          ---------------------
          transferee  in a  Group  Transfer,  one  or  more  Transferee  Related
          Entities,  or  such  transferee  and one or  more  Transferee  Related
          Entities.
          Transferee Related Entity. A corporation,  partnership or other entity
          --------------------------
          that is an Affiliate of the  transferee in a Group  Transfer.


                             2. Stay Incentive Bonus
                             -----------------------

          (a) If a Participant  shall have  remained a Transferee  Employee or a
          Company  Employee  from the date hereof  through six months  after any
          Group  Transfer Date or Change of Control Date, as  appropriate,  that
          occurs  during the Bonus Period,  or if a  Participant  ceases to be a
          Transferee  Employee or Company  Employee from the date hereof through
          six months after any Group Transfer Date or Change of Control Date, as
          appropriate,  that occurs  during the Bonus  Period as a result of the
          termination  of  his   employment   for  any  reason   (excluding  any
          termination  for Cause or by reason of the  Participant's  Disability,
          death  or  voluntary   termination  (unless  such  termination  was  a
          Constructive  Termination)) a Participant may elect to receive either:
          (i) subject to the  limitations  set forth below in this  Section 2, a
          Stay Incentive Bonus equal to the product  obtained by multiplying the
          Participant's Bonus Percentage by the amount of the Participant's Base
          Compensation or (ii) any severance benefits for which a Participant is
          then otherwise  eligible under any Company  Severance Plan (other than
          this Plan).

          (b) The Company shall give a  Participant  notice of his right to make
          such  election,  and shall  provide the  Participant  with an Election
          Form,  within  ten  business  days  after six  months  after the Group
          Transfer Date or Change of Control Date, as appropriate,  or upon such
          earlier termination of employment as described in the above paragraph.
          In order to elect to receive the Stay  Incentive  Bonus, a Participant
          must (i)  complete,  sign and deliver to the Company an Election  Form
          within twenty-one days of his receipt of notice from the Company; (ii)
          waive all rights to receive  any other  severance  benefits  under any
          Company Severance Plan (other than this Plan) if within one year after
          the Group  Transfer  Date or Change of  Control  Date the  Participant
          ceases to be a  Transferee  Employee  or Company  Employee  because of
          termination  of  his   employment   for  any  reason   (excluding  any
          termination  for Cause or by reason of the  Participant's  Disability,
          death  or  voluntary   termination  (unless  such  termination  was  a
          Constructive  Termination)),  and in such event the  Participant  must
          release the Company from employment-related claims as set forth on the
          Election  Form;  and (iii) not revoke his or her  election  within the
          time period provided for on the Election Form.

          (c) If a  Participant  shall not have made such  election  within such
          ----------------------------------------------------------------------
          time period,  he shall be deemed to have  DECLINED to receive the Stay
          ----------------------------------------------------------------------
          Incentive  Bonus,  in which  event he shall  retain  the  right to any
          ----------------------------------------------------------------------
          severance  benefits for which he is then otherwise  eligible under any
          ----------------------------------------------------------------------
          Company Severance Plan (other than this Plan).
          ----------------------------------------------

          (d)  If a  Participant  elects  to  receive  a Stay  Incentive  Bonus,
          one-half of such Stay Incentive  Bonus shall be paid by the Company in
          one lump sum in cash promptly after the revocation period provided for
          in the Election Form if such election is not revoked, and in any event
          within  20  business   days  after  receipt  by  the  Company  of  the
          Participant's election if such election is not revoked.

<PAGE>

          (e) The remaining  one-half of the Stay Incentive  Bonus shall be paid
          by the  Company in one lump sum in cash on the date one year after the
          Group  Transfer  Date or Change of Control Date,  as  appropriate,  or
          promptly  after the date of such  earlier  termination  of  employment
          described  in  clause  (ii) of this  paragraph  if and only if:  (i) a
          Participant  remains a Transferee  Employee or Company Employee on the
          date one year after the Group Transfer Date or Change of Control Date,
          as  appropriate  or  (ii)  a  Participant  ceases  to be a  Transferee
          Employee or Company Employee one year after the Group Transfer Date or
          Change of Control Date, as appropriate,  because of termination of his
          employment for any reason  (excluding any  termination for Cause or by
          reason of the Participant's Disability, death or voluntary termination
          (unless such termination was a Constructive Termination)).



                          3. Constructive Termination.
                          ----------------------------

          (a) Constructive  Termination  shall mean, for purposes of determining
          whether  a Stay  Incentive  Bonus  is  payable  under  this  Plan to a
          Participant  listed as an Officer on his  Schedule 1, a  Participant's
          resignation within 90 days following the expiration of a 30-day period
          during which the Company or Transferee Related Entity fails to cure or
          otherwise  correct any of the  following  events or  conditions  which
          occurred or was not done with the Participant's written consent:

               (i) a Participant  shall have been assigned any duties materially
               inconsistent  with a Participant's  position  (including  status,
               offices, titles and reporting requirements), authority, duties or
               responsibilities  as in effect on the date  hereof,  or any other
               action shall have been taken by the Company or Transferee Related
               Entity that results in a material  diminution  in such  position,
               authority, duties or responsibilities;

               (ii) a reduction by the employer in a Participant's  compensation
               and  benefits  as in effect on the date hereof or as the same may
               be  increased  from time to time,  unless a similar  reduction is
               made with respect to similarly-situated employees;

               (iii)  the  Company  or  Transferee  Related  Entity  shall  have
               required  a  Participant  to be based at any  office or  location
               other  than  in  the  greater  metropolitan  area  in  which  the
               Participant  is based on December  31,  2002 or if a  Participant
               commences  his  employment  with the Company  after  December 31,
               2002, at any other location than the greater metropolitan area in
               which  a  Participant  is  based  upon  the  commencement  of his
               employment with the Company; or

               (iv) the Company or Transferee Related Entity shall have required
               a Participant  to travel on Company  business to a  substantially
               greater extent than required immediately prior to the date hereof
               without a change in the business  operations  of the Company that
               would in good faith justify such requirement.
<PAGE>

          (b) Constructive  Termination  shall mean, for purposes of determining
          whether  a Stay  Incentive  Bonus  is  payable  under  this  Plan to a
          Participant  not  listed as an Officer  on his  Schedule  1 hereto,  a
          Participant's resignation within 90 days following the expiration of a
          30-day period during which the Company or  Transferee  Related  Entity
          fails to cure or otherwise  correct the following event which occurred
          or was not done with the Participant's written consent: a reduction by
          the employer in a Participant's compensation and benefits as in effect
          on the date hereof or as the same may be increased  from time to time,
          unless a similar reduction is made with respect to  similarly-situated
          employees or unless such reduction is justified by the  performance of
          the Participant.

              4. Mandatory Reduction of Payments in Certain Events
              ----------------------------------------------------

          Anything in this Plan to the contrary notwithstanding, in the event it
          shall be determined that any payment or distribution by the Company to
          or for the  benefit  of a  Participant  (whether  paid or  payable  or
          distributed  or  distributable  pursuant  to the terms of this Plan or
          otherwise) (a "Payment") would be subject to the excise tax imposed by
          Section 4999 of the  Internal  Revenue  Code,  as amended (the "Excise
          Tax"),  then, the amount of any Stay Incentive  Bonus shall be reduced
          to the maximum  amount payable  without  subjecting any Payment to the
          Excise  Tax.  The  determination  of  whether  the Excise Tax would be
          imposed and the determination of the amount of the reduction  referred
          to in  the  immediately  preceding  sentence  shall  be  made  by  the
          Company's  regular  independent  accounting firm at the expense of the
          Company  or, at the  election  and expense of a  Participant,  another
          nationally  recognized  independent  accounting firm (the  "Accounting
          Firm"),  which shall provide  detailed  supporting  calculations.  Any
          determination by the Accounting Firm shall be binding upon the Company
          and a Participant.

                           5. Miscellaneous Provisions
                           ---------------------------

          Reorganization,  etc. The existence of this Stay Incentive  Bonus Plan
          ---------------------
          shall  not  affect  in any way the  right  or  power  of the  Board of
          Directors or the  stockholders of the Company to make or authorize any
          adjustment,  recapitalization,  reorganization  or other change in the
          Company's   capital   structure  or  its   business,   any  merger  or
          consolidation of the Company,  any issue of debt or equity  securities
          ahead  of or  affecting  Common  Stock  or  the  rights  thereof,  the
          dissolution or liquidation of the Company or any sale, lease, exchange
          or other  disposition  of all or any part of its assets or business or
          any other corporate act or proceeding.

          Taxes.  The Company  shall,  to the extent  permitted by law, have the
          ------
          right to  deduct  from any  payment  of any  kind  otherwise  due to a
          Participant  any  federal,  state  or local  income  taxes of any kind
          required  by law to be  withheld  with  respect to any Stay  Incentive
          Bonus.  The  Company,  as a  condition  of the  payment  of  any  Stay
          Incentive Bonus,  may require the payment (through  withholding from a
          Participant's salary or other compensation) of cash by a Participant.

          No Effect on  Employment.  Nothing  contained  in this Plan or related
          -------------------------
          hereto  or  referred  to  herein  shall  affect,  or be  construed  as
          affecting, the terms of employment of a Participant,  or shall impose,
          or be construed as imposing,  an  obligation on (i) the Company or any
          Company  Related Entity to continue the employment of a Participant or
          (ii) a  Participant  to remain in the  employ  of the  Company  or any
          Company Related Entity.
<PAGE>

          No Third-Party Beneficiaries. This Plan shall not confer any rights or
          -----------------------------
          remedies  upon any person other than the parties and their  respective
          successors and permitted assigns upon whom this Plan shall be binding.

          Entire Plan;  Effect on Company  Severance Plans. This Plan supersedes
          -------------------------------------------------
          any prior understandings,  agreements,  or representations by or among
          the Company and any  Participant,  written or oral, to the extent they
          related  in any  way to the  subject  matter  hereof.  This  Plan  is,
          however, not intended to affect any other agreement,  if any, that may
          be or have been entered into by a Participant and the Company,  except
          for the effect on Company Severance Plans set forth herein.

          Transfer.  No interest in any Stay Incentive Bonus or this Plan may be
          ---------
          assigned,  transferred  (except  by will or the  laws of  descent  and
          distribution),  pledged or  hypothecated  in any way by a  Participant
          (whether by operation of law or otherwise), and no such interest shall
          be  subject  to  execution,  attachment  or  similar  proceeding.  Any
          attempted  assignment,   transfer,  pledge,   hypothecation  or  other
          disposition of such an interest  contrary to the provisions  hereof or
          of the Plan and the levy of any attachment or similar  proceeding upon
          any such interest, shall be null and void and without effect.

          Headings.  The  headings  contained  in this  Plan  are  inserted  for
          ---------
          convenience  only and  shall  not  affect  in any way the  meaning  or
          interpretation of this Plan.

          Governing  Law.  This Plan  shall be  governed  by,  interpreted,  and
          ---------------
          enforced in accordance  with Illinois law without giving effect to the
          principles of conflicts of laws thereof.

          Arbitration;  WAIVER OF JURY TRIAL.  Any  dispute or claim  concerning
          -----------------------------------
          this Plan (to the extent  permitted  by law),  including  whether such
          dispute  or  claim  is  attributable,   will  be  settled  by  binding
          arbitration  at Chicago,  Illinois,  in  accordance  with the National
          Rules  for the  Resolution  of  Employment  Disputes  of the  American
          Arbitration  Association;  and judgment upon the award rendered by the
          arbitrator may be entered in any court having jurisdiction.  All costs
          of the arbitration  shall be borne by the Company except to the extent
          otherwise  determined by the  arbitrator.  IN THE EVENT FOR ANY REASON
          ARBITRATION  IS NOT  AVAILABLE OR NOT USED,  THEN THE COMPANY AND EACH
          PARTICIPANT  WHO ELECTS TO RECEIVE A STAY  INCENTIVE  BONUS  HEREUNDER
          HEREBY WAIVE TRIAL BY JURY IN ANY ACTION,  PROCEEDING, OR COUNTERCLAIM
          BROUGHT WITH RESPECT TO THIS PLAN.

          Attorney Fees and Costs. In any arbitration or litigation  involving a
          ------------------------
          Participant's  right to a Stay Incentive  Bonus,  a Participant  shall
          provide  a bill to the  Company  of his  attorney's  fees on a monthly
          basis  in  reasonable  detail,  and  the  Company  shall  reimburse  a
          Participant for his reasonable legal fees and costs (including without
          limitation  fees and  costs  on  appeal)  upon  the  entry of a final,
          unappealable  order in favor of a Participant  for payment of benefits
          under this Plan.
<PAGE>

          Amendment.  The Committee  may amend or  supplement  this Plan but any
          ----------
          such  amendment or supplement  shall have no effect on persons who are
          Participants at the time of such amendment or supplement without their
          written consent.

          Sever  ability.  Any term or provision of this Plan that is invalid or
          ---------------
          unenforceable  in any situation in any  jurisdiction  shall not affect
          the validity or  enforceability  of the remaining terms and provisions
          hereof or the  validity or  enforceability  of the  offending  term or
          provision in any other situation or in any other jurisdiction.



<PAGE>




                                                                    Exhibit 99.1



                                  CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350,
           AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I,  Jimmie  J.  Frank,   Senior  Vice   President  of   Merchandising   and
Manufacturing  and Member of the Executive  Management  Committee  (Co-Principal
Executive Officer) of Wickes Inc. (the "Registrant") hereby certify, pursuant to
18 U.S.C.ss.  1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002,
that to my knowledge:

     (1) the Annual Report on Form 10-K for the period ending  December 28, 2002
as filed  with/submitted  to the U.S.  Securities and Exchange  Commission  (the
"Report"),  fully  complies  with  the  requirements  of  Section  13(a)  of the
Securities Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Registrant.


Date: April 7, 2003                 Signature: /s/ Jimmie J. Frank
      -------------                            ---------------------
                                    Senior Vice President of Merchandising and
                                    Manufacturing and Member of the Executive
                                    Management Committee
                                    (Co-Principal Executive Officer)



<PAGE>







                                                                   Exhibit 99.2



                                  CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350,
           AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I, James R. Detmer, Senior Vice President of Distribution and Logistics and
Member of the Executive Management Committee (Co-Principal Executive Officer) of
Wickes Inc. (the "Registrant") hereby certify, pursuant to 18 U.S.C.ss. 1350, as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1) the Annual Report on Form 10-K for the period ending  December 28, 2002
as filed  with/submitted  to the U.S.  Securities and Exchange  Commission  (the
"Report"),  fully  complies  with  the  requirements  of  Section  13(a)  of the
Securities Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Registrant.


Date: April 7, 2003                 Signature: /s/ James R. Detmer
      -------------                            ---------------------
                                    Senior Vice President of Distribution and
                                    Manufacturing and Member of the Executive
                                    Management Committee
                                    (Co-Principal Executive Officer)





<PAGE>




                                                                   Exhibit 99.3

                                  CERTIFICATION
                       PURSUANT TO 18 U.S.C. SECTION 1350,
           AS ADOPTED BY SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     I, James A. Hopwood,  Senior Vice President and Chief Financial  Officer of
Wickes Inc. (the "Registrant") hereby certify, pursuant to 18 U.S.C.ss. 1350, as
adopted by Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

     (1) the Annual Report on Form 10-K for the period ending  December 28, 2002
as filed  with/submitted  to the U.S.  Securities and Exchange  Commission  (the
"Report"),  fully  complies  with  the  requirements  of  Section  13(a)  of the
Securities Exchange Act of 1934, as amended; and

     (2)  the  information  contained  in the  Report  fairly  presents,  in all
material  respects,  the  financial  condition  and results of operations of the
Registrant.



Date: April 7, 2003                 Signature: /s/ James A. Hopwood
      -------------                            ----------------------
                                    Senior Vice President, Chief Financial
                                    Officer, and Member of the Executive
                                    Management Committee
                                    (Co-Principal Executive Officer)