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  29,  2001

                                       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. [ ]

     As of February 28, 2002,  the  Registrant  had  8,285,026  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  National
Market of Common  Stock on that date) held by  nonaffiliates  was  approximately
$8,800,000  (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 Annual
Meeting of  Stockholders  tentatively  scheduled to be held on May 21, 2002, 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......................................................................23
Item 7.    Management's Discussion and Analysis
                of Financial Condition and Results
                of Operations...........................................................................27
Item 7A.   Quantitative and Qualitative Disclosures
                About Market Risk.......................................................................42
Item 8.    Financial Statements and Supplementary Data..................................................43
Item 9.    Changes In and Disagreements With Accountants
                On Accounting and Financial Disclosure..................................................43


                                                     PART III
                                                     --------

Item 10.  Directors and Executive Officers
                of the Registrant.......................................................................44
Item 11.  Executive Compensation........................................................................44
Item 12.  Security Ownership of Certain Beneficial Owners
                and Management and Related Stockholder Matters..........................................44
Item 13.  Certain Relationships and Related Transactions................................................44


                                                      PART IV
                                                      -------

Item 14.  Exhibits, Financial Statement Schedules,
                and Reports on Form 8-K.................................................................45

SIGNATURES..............................................................................................46
</TABLE>
                                                                  2
<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 29, 2001, the Company operated 98
sales  and  distribution  facilities,  as  well  as 26  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 98 and to strategically  grow its component
manufacturing capabilities to 26 locations.

     For further information see "Business Strategy".


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  $275.6  billion  in  2001.  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 19.5% of the total market
in 2001.

     In general, building material suppliers concentrate their marketing efforts
either on building  professionals or consumers.  Professional-oriented  building
                                       3
<PAGE>4

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 1.47 million in 1997,  1.62  million in 1998,  1.66 million in 1999,
1.57 million in 2000 and 1.60 million in 2001. The Blue Chip Economic Indicators
Consensus  Forecast,  dated March 10, 2002,  projects 2002 housing  starts to be
1.58 million, down slightly from housing starts in 2001. In 2001, housing starts
in the Company's primary geographical  market, the Midwest,  increased 4.0% over
housing  starts in that region 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 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 3.6% to
1.27 million starts in 2001 from 1.23 million starts in 2000.

     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
$52.7  billion,  or  approximately  19.1% of total  2001  sales of the  building
material supply industry, while direct sales to DIY's amounted to $133.1 billion
or 48.3% of such sales.
                                       4

<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 26 component  manufacturing
facilities  that produce  value-added,  wood framed wall panels,  roof and floor
truss systems, and pre-hung interior and exterior doors.

     In 1999, the Company  introduced its "Build 2003" program that outlined its
seven corporate objectives,  using 1998 results as a performance baseline. These
are:  (1)  generate a  compounded  annual  sales growth rate of at least 6%; (2)
internally manufacture 75% of the Company's wall panels, roof and floor trusses,
and pre-hung doors distributed; (3) increase EBITDA (see Part II, Item 6 for the
definition of "EBITDA") as a percentage  of net sales to a minimum of 4.2%;  (4)
improve  debt-to-equity  ratio and achieve 1:1  debt-to-equity by year-end 2003;
(5) generate a return on capital employed in excess of the Company's peer group;
(6) extend its earnings season; and (7) provide consistency in earnings growth.

     In 2001,  the  Company's  management  developed  a plan to  reorganize  and
improve productivity and performance. The results have shown and are expected to
continue  to show  reductions  in  administrative  expense,  marketing  expense,
headcount and the elimination of non-strategic  operating units. As part of this
reorganization, the Company has and intends to relaunch a number of its previous
initiatives   including  tool  rental,   installed   products  and  manufactured
components  throughout  2002.  In  addition,  the Company will work to implement
sales  planning  tools and  technology  to  support  efforts  to retain and grow
customer relations.  Also, management is requiring the operating units to adhere
to stricter standards in customer profitability,  labor productivity and working
asset turnover,  that  management  believes will form the basis for a successful
building materials business.
                                       5
<PAGE>6

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

     The Company operates in 22 Major Markets,  which are served by 32 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, including its unique "Frame A Home in A
Day" program in six markets. 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
programs  seek 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.

     During  1997 and 1998,  the  Company  researched  the  levels  and types of
customer  service it would  provide as part of its Major  Markets  strategy.  By
first  understanding  the cost drivers,  inefficiencies,  and needs of the large
builders who dominate the more  densely  populated  regions of the country,  the
Company  could focus its strategy on meeting  their  needs.  The outcome of that
research  was to  restructure  our Major  Markets  programs  to  address a clear
opportunity  to assist  builders in reducing  their total cost of  production by
utilizing the Company's manufacturing and logistics expertise.

     The Company  initiated a "Target  Major  Markets"  program in 1997.  Target
Major  Markets are those Major  Markets that the Company  aggressively  promotes
with updated sales and distribution centers,  targeted high volume builders, and
concentrated  component  manufacturing  support.  Since  then,  the  Company has
developed Target Major Markets programs in 14 Major Markets. Management believes
that these markets continue to offer  opportunities  for growth as a traditional
building  materials  supplier,  as well as to provide  opportunities to grow and
introduce new, value-added services and product initiatives.

     The Company's value-added  manufacturing  operations constitute an integral
element  supporting  the Target Major  Markets  strategy.  This support  network
enables the Company to provide its customers with custom engineered, value-added
manufactured framing component systems. For instance, in six markets the Company
operates its "Frame a Home in a Day" concept.  This  initiative  allows builders
significant  cost  savings  by  completely  framing  and  sheathing  an  average
two-story  residence  in as little  as one day,  rather  than the  substantially
longer period involved in traditional framing methods.

                                       6
<PAGE>7

     The Company's  operations in Major Markets contributed  approximately 42.7%
of the Company's net sales in 2001, compared to 42.6% in 2000 and 44.3% in 1999.

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

     At  December  29,  2001,  the Company  operates  66 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.

     Since the beginning of 1997, the Company has completed re-merchandising and
re-marketing programs ("Resets") in 16 sales and distribution facilities located
in  Conventional  Markets.  These programs  typically  include  upgrading of the
showroom  layout and product  presentation;  expansion  of product  assortments,
typically  adding a significant  number of stock keeping units  ("SKU's") with a
view towards achieving  category dominance in the market; and increasing service
offerings such as installed sales,  tool rental,  specialized  delivery services
and  additional   in-store  sales  specialists.   The  Company's   manufacturing
operations  also  provide  significant  support for the  Company's  Conventional
Market  sales  activities,  particularly  through  the  manufacture  of pre-hung
interior and exterior doors.

     The Company's operations in Conventional Markets contributed  approximately
57.3% of the Company's net sales in 2001, compared to 57.4% in 2000 and 55.7% in
1999.

     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
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.

                                      7
<PAGE>8


     Manufacturing Operations
     ------------------------

     At  December  29,  2001,  the  Company  owned  and  operates  26  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.  One location was closed in
2001.  These  facilities  include  17  stand-alone  operations  as  well as nine
additional  operations  that  exist  at 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,  including  its  "Frame  A  Home  In A  Day"  concept.  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 2001,  2000 and 1999,  the  Company
internally manufactured approximately 58.2%, 56.7% and 50.9%,  respectively,  of
its total building components distributed.

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

     Since 1997,  the  Company  has also  initiated  several  other  programs to
supplement its Major Markets and Conventional Markets.

     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 30 sales and distribution facilities,
and the Company is relaunching this program in 2002 with new operating standards
and income benchmarks to enhance profitability.

     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 55 sales and distribution facilities at the end of 2001.
Also  relaunching  this program in 2002,  the Company  will  require  consistent
operating standards and high-income contribution from this value-added program.

     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 2001,
the  Company  had 11  installed  siding  and 5  installed  gutter  locations  in
operation

                                       8
<PAGE>9

     The  Company  currently  has in place 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
providing Internet based services to the construction  industry. In addition, in
2000 the  Company  acquired  Tres-Ark  Enterprises,  Inc.,  the  developer  of a
software package  ("BuilderCentral  2000(TM)") designed to provide  professional
building contractors an enterprise system to manage their construction projects.
(See also Note 4 to the Consolidated Financial Statements).

     BuilderCentral 2000 is an integrated software system designed to assist the
professional builder in managing its construction  business. It consists of four
integrated modules representing: (1) construction management, (2) accounting and
finance,  (3)  project  estimating  capabilities,   and  (4)  on-site  hand-held
applications. The Company continues to develop and improve interfaces that allow
BuilderCentral  2000 to  streamline  information  from the builder to the Wickes
distribution  facility.  In 2001 a new  application  was introduced to provide a
direct  Internet  link to the  builders'  customized  Wickes bill of  materials,
pricing and trade account for online ordering.

     In March 2000, the Company entered into an agreement with Buildscape, Inc.,
an entity affiliated with Riverside Group, Inc. and Imagine  Investments,  Inc.,
each of which  may be deemed  an  affiliate  of the  Company.  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 $23.8 million in 2001.

     Acquisition Strategy
     --------------------

     The  Company  intends  to  complement  its  existing   operations   through
acquisitions,  as attractive opportunities present themselves.  The Company made
four acquisitions of component  facilities during 1999. In January,  the Company
acquired  the  assets  of a  wall  panel  manufacturer  located  in  Cookeville,
Tennessee.  In March,  the  Company  acquired  the  assets  of  Porter  Building
Products,  a manufacturer of trusses and wall panels located in Bear,  Delaware.
In October,  the Company acquired the assets of Advanced Truss Systems,  Inc. of
Kings  Mountain,  North  Carolina.  Advanced Truss Systems is a manufacturer  of
engineered wood trusses servicing the greater Charlotte,  North Carolina market.
In November, the Company acquired the assets of United Building Systems, Inc. of
Lexington,  Kentucky.  United Building  Systems is a manufacturer of wall panels
and roof and floor trusses in the Lexington market.

     There were no acquisitions of component  manufacturing  operations in 2000.
However,  there was one plant addition to supplement  the Wisconsin  market that
went  into  operation  at the end of  2000  and the  development  of wall  panel
production capabilities at a distribution center earlier in the year.

                                        9
<PAGE>10

     In addition, in 2000 the Company acquired Tres-Ark  Enterprises,  Inc., the
developer of a software package ("BuilderCentral  2000(TM)") designed to provide
professional  building  contractors  with an  enterprise  system to manage their
construction projects.

     During  2001,  the Company  acquired  the real estate and other assets of a
local lumber  distributor in Kenvil,  New Jersey. 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.  (See
also Note 4 to the Consolidated Financial Statements).


Markets
-------

     The Company operates in 22 Major Markets,  which are served by 32 sales and
distribution  facilities  and 12  manufacturing  facilities.  The  Company  also
operates 66 building  centers in less populous areas,  or Conventional  Markets.
For a further discussion of Major Markets and Conventional Markets see "Business
Strategy."

     The following table sets forth the  distribution of the Company's sales and
distribution  facilities  located  in  Conventional  and  Major  Markets,  as of
December 29, 2001 by size of the local market:
<TABLE>


                                                     Number of Sales and
           Total                                   Distribution Facilities
        Households in                       Conventional                 Major
     Thirty Mile Radius                       Markets                   Markets
     ------------------                       -------                   -------
     <S>                                         <C>                      <C>

      Under 50,000                                16                        0
      50,000-100,000                              15                        2
      100,000-250,000                             20                       10
      250,000-500,000                             12                        9
      500,000 and over                             3                       11
                                                  --                       --
      Total                                       66                       32
                                                  ==                       ==

</TABLE>



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

     The Company's 98 sales and distribution facilities are located in 23 states
in the Midwest,  Northeast and South.  The Company's 26 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 29, 2001:


                                       10
<PAGE>11

<TABLE>



                     Midwest                                   Northeast                            South
                     -------                                   ---------                            -----
                    Number of                                  Number of                          Number of
                    Sales and                                  Sales and                          Sales and
                  Distribution                                Distribution                       Distribution
  State            Facilities            State                Facilities         State            Facilities
  -----            ----------            -----                ----------         -----            ----------
<S>                    <C>           <C>                          <C>        <C>                     <C>

Michigan                 29            Pennsylvania                 5          Alabama                  3
Wisconsin                14            New York                     3          Kentucky                 3
Indiana                  11            Maine                        2          Texas                    2
Ohio                      5            New Hampshire                2          Florida                  2
Illinois                  3            Connecticut                  1          Mississippi              2
Colorado                  3            New Jersey                   1          North Carolina           2
                         --            Massachusetts                1          Georgia                  1
                                       Maryland                     1          Louisiana                1
                                                                   --          Tennessee                1
                                                                                                       --
        Total            65                     Total              16                   Total          17
                         ==                                        ==                                  ==
</TABLE>

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

     During  1999  the  Company  acquired  four  manufacturing  facilities.  See
"Business  Strategy  -Acquisition  Strategy."  There  were  no  acquisitions  of
component  manufacturing  operations  in  2000.  However,  there  was one  plant
addition to supplement our Wisconsin  market that went into operation at the end
of  2000  and  the  development  of  wall  panel  production  capabilities  at a
distribution  center  earlier  in the  year.  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. Through February
28, 2002 the Company has sold 3 distribution centers; Pearl, MS, Pascagoula, MS,
Baton Rouge,  LA. and one  manufacturing  plant,  Ocean Springs,  MS, as well as
closed one distribution center in Wilkes Barre, PA.

     The  following  table  reconciles  the  number  of sales  and  distribution
facilities and component  manufacturing  facilities operated by the Company from
December 26, 1998 through February 28, 2002.

                                       11
<PAGE>12
<TABLE>




                                            Sales and               Component
                                           Distribution           Manufacturing
                                            Facilities             Facilities
                                            ----------             ----------

<S>                                          <C>                     <C>
As of December 26, 1998                        101                     12

     Expansion                                                          1
     Acquisition                                --                      4
                                               ---                    ---
As of December 25, 1999                        101*                    17

     Expansion                                                          1
     Acquisition                                --                     --
                                               ---                    ---
As of December 30, 2000                        101*                    18
                                               ===                    ===

     Acquisition                                 1                     --
     Closings                                   (2)                    (1)
     Consolidations                             (2)                    --
                                                ---                    ---
As of December 29, 2001                         98                     17

     Sold                                       (3)                    (1)
     Closings                                   (1)                    --
     Consolidations                            (--)                    --
                                               ---                    ---
As of February 28, 2002                         94                     16

</TABLE>

*As of the fiscal  year-end for 2001,  2000 and 1999,  respectively,  there were
nine, nine and eight 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 1.9% of net sales in 2001.  In 2001,  87.1%  (compared
with  86.9% in 2000)  of the  Company's  sales  were on trade  credit,  with the
remaining 12.9% as cash and credit card transactions.

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

     The Company's primary customers are single-family  home builders.  In 2001,
all home builder customers accounted for 63.1% of the Company's sales,  compared
with 61.8% in 2000. 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 intense focus on
this customer segment,  offering new products and developing additional services
to meet their needs.

                                       12
<PAGE>13


     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 2001, sales to these customers
accounted for approximately 18.6% of the Company's sales, compared with 19.3% in
2000.  The  Wickes  Direct  program  is closely  integrated  with the  Company's
component manufacturing operations.

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

     In 2001, R&R customers  accounted for  approximately  9.2% of the Company's
sales,  compared with 9.1% in 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 9.1% of the
Company's sales in 2001,  compared with 9.7% in 2000. 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.


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.

                                       13
<PAGE>14

     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,
2002 the Company's 332 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, 2002 the Company  employed 107 specialty  salespeople in
its sales and distribution  facilities who provide expert advice to customers in
project design,  product selection and  applications.  A staff of 30 trained R&R
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 72 kitchen  and bath  specialists.  The  Company  also  employs 5 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 87.1%
of the  Company's  sales during 2001 were on credit,  with the  remaining  12.9%
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.

                                       14
<PAGE>15

     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, 2002, the fleet included approximately 197 heavy duty trucks, 89
of which  provide  roof-top  or  second  story  delivery  and 56 other  vehicles
equipped with truck mounted forklifts. In addition, the Company's fleet includes
448 medium duty trucks,  502 light duty trucks and  automobiles,  538 forklifts,
109 specialized millwork delivery vehicles,  and 62 vehicles equipped to install
blown insulation. The Company will continue to add these specialized vehicles to
other markets where there is sufficient demand for such services.

     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.  The  program  is in  place  in 30  sales  and
distribution facilities and the Company is relaunching this program in 2002 with
new operating standards and income benchmarks to enhance profitability.

     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. There are 55 sales and distribution facilities that offer
this service.  Also  relaunching  this program in 2002, the Company will require
consistent   operating   standards  and  high-income   contribution   from  this
value-added program.

     In 2000,  the Company  initiated its installed  aluminum  siding and gutter
programs  in several of its sales and  distribution  centers.  Currently,  it is
operating 11 installed  siding and five 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

                                       15
<PAGE>16

requirements.  During 1999, the Company  completed Resets in two facilities;  in
2000,  two  facilities,  and in 2001  one  facility  was  completed.  Since  the
beginning of 1997, the Company has completed Resets in 16 sales and distribution
facilities located in Conventional Markets. Additional showroom improvements are
contemplated for 2002 and future years.

     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.


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 2001,
approximately  37% of the Company's sales were of special order items,  compared
with  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 95%,
96% and 97% of the  Company's  net sales in 2001,  2000 and 1999,  respectively,
into four groups. These include Wood Products (lumber,  plywood, treated lumber,
sheathing,  wood siding and specialty lumber); Building Products (roofing, vinyl
siding,  doors,  windows,   mouldings,  and  insulation);   Hardlines  (hardware

                                       16
<PAGE>17

products,  paint,  tools,  kitchen and  bathroom  cabinets,  plumbing  products,
electrical  products,  light  fixtures and floor  coverings);  and  Manufactured
Housing  Components  (roof and floor  trusses,  and interior  and exterior  wall
panels). Wood Products,  Building Products,  Hardlines, and Manufactured Housing
Components  represented  34.8%,  36.8%, 10.4% and 18.0% of the Company's product
sales  respectively,  for 2001 and  36.7%,  35.6%,  10.5%  and  17.2%  for 2000,
respectively.


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

     The Company operates 26 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  17  stand-alone  operations  as  well  as  nine  additional
operations that exist at 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 2001,  the
Company's  manufacturing  operations supplied  approximately 58.2% of the framed
wall panels, roof and floor trusses, and pre-hung doors sold by the Company. The
Company  believes  that  these  value-added,  engineered  manufactured  products
improve  customer  service and  provide an  attractive  alternative  to job-site
construction. As resources permit, the Company plans to expand its manufacturing
facilities to take advantage of these  increased  opportunities  and to supply a
greater number of its sales and distribution facilities with these products.


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
4.7% of the Company's  purchases in 2001 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  54% 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 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.

                                       17
<PAGE>18

     The Company's  computerized  inventory tracking and forecasting  system, as
part of its inventory  replenishment  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 60 of its sales and distribution and  manufacturing  facilities,
enabling  suppliers to ship products  purchased by the Company directly to these
facilities by rail. The Company also utilizes one distribution center owned by a
third party, located in Chicago, Illinois, through which approximately 2% of the
Company's wood products inventory is delivered.


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."


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 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.

                                       18
<PAGE>19

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

     Many of the  sales  and  distribution  facilities  presently  and  formerly
operated by the Company contained  underground petroleum storage tanks. All such
tanks  known to the  Company  located on  facilities  owned or  operated  by the
Company  have been  decommissioned  or removed.  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 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 $2.0 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 previously had been identified as a potential responsible party
in two Superfund landfill clean up sites. Both of these actions were settled for
immaterial amounts.

     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,  2002,  the Company had 3,222  employees,  of whom 2,935
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  favorable  relations  with its employees.  None of the Company's
employees are covered by a collective bargaining agreement.


Safety
------

     Wickes  Lumber is committed to the safety and well being of our  employees,
customers and the  communities we serve.  One of the  cornerstones of our safety
program is "Build on Safety," an  innovative  employee  training  and  awareness
program conceived by Wickes'  Corporate Safety Committee.  "Build on Safety" was
launched in April 2001 and has  established  safety  standards and processes for
all aspects of our business.  It has also provided  critical safety training for
every  manager and  employee.  "Build on Safety"  fosters an  environment  where
responsibility for safety is shared amongst all employees,  with each individual

                                       19
<PAGE>20

having a duty and  responsibility  for his or her own safety, as well as for the
safety of  others.  "Build on  Safety"  has  helped  integrate  safety  into our
corporate culture, and we believe our commitment to the highest safety standards
will be reflected in our overall corporate performance


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".
                          _________________________

Forward-looking  statements  in this Item 1 are made pursuant to the safe harbor
provisions of the Private  Securities  Litigation  Reform Act of 1995. There are
certain  important  factors that could cause results to differ  materially  from
those anticipated by the forward-looking statements made above. These statements
are based on the current plans and  expectations  of the Company and readers are
cautioned that all  forward-looking  statements  involve risks and  uncertainty.
Among the factors that could cause actual  results to differ  materially are the
effects of seasonality  and cyclicality  discussed under the headings  "Industry
Overview"  and  "Seasonality".  Also,  there  are the  effects  of  competition;
interest rates and the Company's ability to service and comply with the terms of
its debt; lumber prices; the success of the Company's  operational  initiatives;
and the outcome of the  contingencies  discussed  in Note 8 to the  Consolidated
Financial Statements included elsewhere herein.


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

     As of December 29, 2001 the Company's 98 sales and distribution  facilities
are located in 23 states,  with 65 in the Midwest, 16 in the Northeast and 17 in
the South.  When combined with its 26 component  manufacturing  operations,  the
Company  operates in 24 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 Conventional Markets sales and distribution centers generally
consist of a showroom  averaging 9,600 square feet and covered storage averaging
38,400 square feet. The Company's sales and distribution  facilities  located in
Major  Markets tend to be more  specialized.  Since the  beginning of 1997,  the
Company has completed Resets in 16 sales and distribution  facilities located in
Conventional  Markets.  The  Company's  sales and  distribution  facilities  are
situated on  properties  ranging from 1.0 to 28.2 acres and averaging 9.3 acres.
The Company also operates 18  stand-alone  component  manufacturing  facilities,
which have an average of 40,300 square feet under roof on 6.9 acres.

     The Company owns 82 of its sales and distribution  facilities and 80 of the
sites  on which  such  facilities  are  located.  The  remaining  16  sales  and
distribution  facilities  and 18 sites are leased.  As of December 29, 2001, the
Company  also held for sale the  assets of 3 closed  facilities  with a net book

                                       20

<PAGE>21

value of $1.5 million. In addition to its sales and distribution facilities, the
Company operates 17 stand-alone component  manufacturing plants, 12 of which are
owned  sites and 5 of which are on leased  sites.  Nine  additional  plants  are
located on sales and  distribution  facility sites.  All of the owned properties
are pledged as  collateral  under the Company's  Amended and Restated  Revolving
Credit Agreement.

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

     The Company also owns or leases 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, 2002, the fleet included  approximately  197 heavy
duty trucks,  89 of which provide roof-top or second story delivery and 56 other
vehicles equipped with truck mounted forklifts. In addition, the Company's fleet
includes  448 medium duty  trucks,  502 light duty trucks and  automobiles,  538
forklifts,  109 specialized millwork delivery vehicles, and 62 vehicles equipped
to install blown insulation.

     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 by  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 424 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 68
similar actions for insignificant amounts, and another 262 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.
While the Company  does not believe  that any of these  proceedings  will have a

                                       21
<PAGE>22

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  is the  defendant  in an  arbitration  claim  filed  with the
American  Arbitration  Association  on July 17, 2001 by David T.  Krawczyk,  the
former President and Chief Operating Officer of the Company. Mr. Krawczyk claims
he was constructively terminated by the Company as the result of certain actions
and directions given to him which were  inconsistent  with his position,  duties
and  responsibilities.  Mr.  Krawczyk  claims  that as a result of this  alleged
constructive termination, he is entitled to receive a Special Severance Bonus of
$1,000,000  pursuant to the Company's Special Severance and Stay Incentive Bonus
Plan  (the"Plan").  The Company has defended the action and although it believes
that Mr. Krawscyk was not entitled to any Special  Severance  Bonus, the Company
has  elected  to pay the  Special  Severance  Bonus to Mr.  Krawczyk  because it
believes that the cost  associated with the obligation of the Company to pay Mr.
Krawczyk's  attorneys fees with respect to such litigation could equal or exceed
his claim.

     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.


                                       22
<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 National
Market  under the  trading  symbol  "WIKS." As of  February  28, 2002 there were
8,285,026 shares  outstanding held by approximately  118 stockholders of record.
In addition,  the Company believes  approximately 2,000 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  National
Market System. Prices do not include retail markups, markdowns or commissions.
<TABLE>

     Three Months Ended                                High               Low
     ------------------                                ----               ---
     Fiscal 2001
     -----------
    <S>                                                <C>                   <C>

     March 31                                          $5.000             $3.000
     June 30                                            4.570              4.000
     September 29                                       4.440              2.670
     December 29                                        3.080              2.370

     Fiscal 2000
     -----------
     March 25                                          $7.500             $5.000
     June 24                                            6.500              4.656
     September 23                                       6.375              4.125
     December 30                                        6.188              3.375
</TABLE>


     The Company  does not declare or pay any  dividends  on Common Stock due to
restrictions  included in its  revolving  credit  facility  and trust  indenture
related  to the  Company's  11-5/8%  senior  subordinated  notes.  See  "Item 7.
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations" and Note 7 to the Consolidated Financial Statements.


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 29, 2001. 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.

                                       23
<PAGE>24

<TABLE>


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


                                                         Dec. 29,     Dec. 30,      Dec. 25,     Dec. 26,      Dec. 27,
                                                           2001         2000          1999         1998          1997
                                                           ----         ----          ----         ----          ----
<S>                                                  <C>          <C>          <C>            <C>           <C>
Income Statement Data:
   Net sales                                           $1,000,999   $1,027,604   $1,087,402     $ 912,190     $ 885,901
   Gross profit                                           211,553      223,092      224,604       195,119       186,006
   Selling, general and administrative expense            194,608      199,889      185,884       166,420       167,790
   Depreciation, goodwill and trademark
        amortization                                        6,508        5,877        5,295         4,513         4,422
   Provision for doubtful accounts                          1,470          983        1,724         2,915         1,707
   Other operating income                                   4,344        3,292        4,932         6,017         9,673
   Restructuring and unusual items (1)                         -            -            -          5,932          (559)
   Severance and other items (2)                            1,744           -            -             -             -
   Income from operations                                  11,567       19,635       36,633        21,356        22,319
   Interest expense (3)                                    21,787       24,322       23,302        21,632        21,417
   Equity in loss of affiliated company                        -            -            -             -          1,516
   (Loss) income before income taxes                      (10,220)      (4,687)      13,331          (276)         (614)
   Income tax (benefit) provision                          (3,146)        (735)       5,743           689           946
   (Loss) income before extraordinary gain                 (7,074)      (3,952)       7,588          (965)       (1,560)
   Extraordinary gain, net of taxes (4)                        -         6,806           -             -             -
   Net (loss) income                                       (7,074)       2,854        7,588          (965)       (1,560)
   Ratio of earnings to fixed charges (5)                      -            -          1.48            -             -
   Interest coverage (6)                                     0.98         1.17         1.97          1.32          1.36
   Adjusted interest coverage (7)                            0.98         1.17         1.97          1.61          1.33

Per Share Data:
   Net (loss) income before extraordinary gain per
     common share - basic and diluted                      ($0.85)      ($0.48)       $0.92        ($0.12)       ($0.19)
   Net (loss) income per common share - basic              ($0.85)       $0.35        $0.92        ($0.12)       ($0.19)
   Net (loss) income  per common share - diluted           ($0.85)       $0.34        $0.91        ($0.12)       ($0.19)
   Weighted average common shares -basic                8,277,190    8,249,774    8,216.265     8,197,542     8,168,257
   Weighted average common shares -diluted              8,277,190    8,466,383    8,330,571     8,197,542     8,168,257

Operating and Other Data:
   EBITDA (8)                                          $   20,024   $   26,982   $   43,106     $  26,609     $  27,182
   Adjusted EBITDA (9)                                     21,768       26,982       43,106        32,541        26,623
   Cash interest expense (10)                              20,338       23,048       21,792        20,185        20,016
   Depreciation and amortization                            6,508        5,877        5,295         4,513         4,422
   Deferred financing cost amortization                     1,449        1,274        1,510         1,447         1,401
   Capital expenditures                                    10,269        9,734        8,624         5,854         7,758
   Same store sales growth (11)                             (1.5%)       (6.1)%        18.1%         9.0%          4.7%
   Sales & distribution centers open at end of period          98          101          101           101           111
   Net cash provided by (used in) operating activities     12,775       14,669       (9,565)          522       (20,455)
   Net cash (used in) provided by investing activities     (8,001)     ( 9,243)     (17,597)       (1,623)        6,040
   Net cash (used in) provided by financing activities     (4,818)      (5,255)      27,169         1,087        12,561

Balance Sheet data (at period end):
   Working capital                                     $  123,210   $  141,901   $  162,523     $ 135,345     $ 134,459
   Total assets                                           295,170      300,936      334,009       292,183       283,352
   Total long-term debt, less current maturities          193,253      200,403      220,742       191,961       193,061
   Total stockholders' equity                              26,771       33,896       30,819        23,148        24,001

</TABLE>

                                                                 24
<PAGE>25

                  Notes to Selected Consolidated Financial Data
                  ---------------------------------------------

(1)  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.  In 1997, the Company recorded
     a $0.6  million  credit as a result of  finalizing  the 1995  restructuring
     plan.

(2)  During 2001,  the Company  incurred  severance  and other items  related to
     managements'  reorganization  initiative  that  resulted in a $1.7  million
     charge primarily relating to severance pay and distribution  center closing
     costs. (See additional  discussion in Item 7.  Management's  Discussion and
     Analysis)

(3)  Interest  expense  includes  cash  interest  expense  and  amortization  of
     deferred financing costs (see note 10 below).

(4)  As further explained in Note 7 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.  The net gain, after
     appropriate state and federal income taxes was $6.8 million.

(5)  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 $10.2 million,  $4.7 million,  $0.3
     million and $0.8 million for the years ended  December  29, 2001,  December
     30, 2000, December 26, 1998 and December 27, 1997, respectively.

(6)  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 10 below).

(7)  For purposes of computing this ratio,  earnings  consist of Adjusted EBITDA
     (as defined in note 9 below), which is divided by cash interest expense (as
     defined in note 10 below).

(8)  EBITDA  represents  income (loss)  before  income taxes,  equity in loss of
     affiliated company, 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

                                       25
<PAGE>26

     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)  Adjusted EBITDA  represents EBITDA (as defined in note 8 above) adjusted to
     exclude  restructuring and unusual items,  severance and other items and is
     used in the  adjusted  interest  coverage  ratio to  reflect  debt  service
     capability  before the effect of these items,  and  provides an  additional
     measure of debt service capability for ongoing operations.

(10) 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 ended
     December 29, 2001 (in thousands).

<TABLE>

                                             2001            2000           1999           1998            1997
                                             ----            ----           ----           ----            ----
<S>                                     <C>             <C>            <C>            <C>             <C>
Interest expense                          $21,787         $24,322        $23,302        $21,632         $21,417
Less:
   Amortization of deferred
      financing costs                       1,449           1,274          1,510          1,447           1,401
                                            -----           -----          -----          -----           -----
Cash interest expense                      20,338          23,048         21,792         20,185          20,016

Decrease (increase) in
   accrued interest                          (880)            155           (289)           700           (225)
                                             ----             ---           ----            ---           ----

Interest paid                             $19,458         $23,203        $21,503        $20,885         $19,791
                                          =======         =======        =======        =======         =======
</TABLE>


(11) 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:
<TABLE>

                                    Year             No. of Facilities
                                    ----            ------------------
                                  <S>                  <C>
                                    2001                  98
                                    2000                 101
                                    1999                 101
                                    1998                 101
                                    1997                 107

</TABLE>

                                       26
<PAGE>27




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


General
-------

     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 and
subsequent  discussion  should  be read in  conjunction  with  the  consolidated
financial statements and notes thereto appearing elsewhere herein.

<TABLE>

                                                                             Years Ended
                                                                             -----------
                                                              Dec 29,           Dec. 30,         Dec. 25,
                                                                2001               2000             1999
                                                                ----               ----             ----
<S>                                                            <C>              <C>               <C>
         Net sales                                                100.0%           100.0%            100.0%
         Gross profit                                              21.1             21.7              20.7
         Selling, general and administrative
           expense                                                 19.4             19.5              17.1
         Depreciation, goodwill and trademark
           amortization                                             0.7              0.6               0.5
         Provision for doubtful accounts                            0.1              0.1               0.2
         Severance and other items                                  0.2              0.0               0.0
         Other operating income                                    (0.4)            (0.3)             (0.5)
         Income from operations                                     1.2              1.9               3.4

</TABLE>


     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 more heavily focused on consumers.

     The  Company's  first  quarter and,  occasionally,  its fourth  quarter are
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.  In December of 2001,  the Midwest and  Northeast  recorded
above  normal  to  record  warm   temperatures   with  normal  to  below  normal
precipitation,  while during the second  quarter of 2001,  the Midwest and South
experienced  unusually wet  conditions.  During 2000,  the Midwest and Northeast
experienced  mild winter  weather  but  significant  precipitation  in the first
quarter,  and in the fourth  quarter  these  regions  experienced  a more severe
winter with  respect to cold  temperatures  and snow than in the  previous  four
years.

                                       27
<PAGE>28

     The following table contains selected  unaudited  quarterly  financial data
for the years ended December 29, 2001 and December 30, 2000.  Quarterly earnings
(loss) per share may not total to year-end  earnings (loss) per share due to the
issuance of additional shares of Common Stock during the course of the year.

<TABLE>

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

                                                            Income (loss)                        Basic / Diluted
                              Net Sales as a                   before                          Net income (loss)
                               % of Annual        Gross     Extraordinary     Net Income        per share before
                Net Sales       Net Sales         Profit       Item               (Loss)       Extraordinary Item
                ---------       ---------         ------       ----               ------       ------------------
<S>            <C>              <C>            <C>         <C>                 <C>          <C>
2001
----
Quarter 1        $184.8           18.5%           $42.0       $(6.5)              $(6.5)       $(.78)/(.78)
Quarter 2         274.1           27.4             58.6         1.0                 1.0          .12 / .12
Quarter 3         295.3           29.5             61.3         0.7                 0.7          .08 / .08
Quarter 4         246.8           24.6             49.7        (2.3)               (2.3)        (.27)/(.27)

2000
Quarter 1        $216.5           21.1%           $46.0       $(3.2)              $(3.2)       $(.39)/(.39)
Quarter 2         280.4           27.3             60.1         1.5                 1.5          .19 / .18
Quarter 3         282.7           27.5             62.6         2.1                 2.1          .26 / .25
Quarter 4         248.0           24.1             54.4        (4.4)                2.4         (.53)/(.53)


</TABLE>

     Each fiscal quarter in the table above  represents a thirteen-week  period,
with the exception of Quarter 4 in 2000, which was a fourteen-week period.

     In the fourth quarter of 2000, the Company recorded an  extraordinary  gain
on the early  extinguishment of $36.0 million of its 11-5/8% Senior Subordinated
Notes due in 2003. See Note 7 to the Consolidated  Financial Statements included
elsewhere herein for further description.

     The Company historically  generates  approximately 15% to 20% of its annual
revenues  during the first  quarter of each year and records a  significant  net
loss for this  quarter.  As a result of these  seasonal  factors,  the Company's
inventories  and  receivables  reach  peak  levels  during  the second and third
quarters and generally are lower during the first and fourth quarters, depending
on sales volume and lumber prices.
                          ___________________________

     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.

                                       28
<PAGE>29

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

     Net Sales
     ---------

     Net sales for 2001 decreased  $26.6 million,  or 2.6%, to $1,001.0  million
from $1,027.6 million in 2000. Sales for all facilities operated throughout both
years ("same store sales") decreased 1.5%. During 2001, the Company  experienced
a 0.2% increase in same store sales to its primary  customer,  the  professional
home builder,  and a 4.8%  decrease in same store sales to commercial  builders.
Consumer sales declined 7.2% on a same store basis.

     Sales to building  professionals  as a percentage of total sales were 63.1%
in 2001 compared to 61.8% in 2000. Lumber and building  materials  accounted for
85.3% of total sales in 2001, compared with 86.2% 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 $10.1 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 10.5%),  drywall (down 32.5%),  windows (up 5.0%),  trusses (up 3.2%), and
roofing (up 8.0%).

     Sales of internally  manufactured building components increased to 58.2% of
total  distributed  building  components from 56.7% in the prior year.  Sales of
internally   manufactured  building  components  increased  in  2001  3.3%  from
approximately  $96.5 million in 2000 to approximately  $99.7 million in 2001. As
with dimensional lumber,  sales of internally  manufactured  building components
are impacted by the effects of lumber deflation.

                                       29
<PAGE>30


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

     Gross  profit  decreased  $11.5  million to $211.6  million or 21.1% of net
sales for 2001 compared with $223.1  million or 21.7% of net sales for 2000. The
Company  believes  that  deflation in lumber and drywall  prices  decreased  the
dollar value of gross profit by  approximately  $2.6 million for the fiscal year
ended  December 29, 2001.  Commodity  wood  products,  drywall and  manufactured
building  components  accounted for  approximately  54.0% of sales for the year,
compared with 56.1% for 2000.  The gross margin for these  products  declined to
19.0% in 2001 from 19.1% in 2000.

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

     Total selling,  general, and administrative expense ("SG&A") decreased $5.3
million or 2.6% to $194.6  million in 2001 compared with $199.9 million in 2000.
SG&A  decreased  slightly as a percent of net sales to 19.4% compared with 19.5%
of net sales in 2000.

     The decrease in SG&A primarily is  attributable to reductions in labor that
reduced  salaries  and  management  incentives  by  1.4%,  and  an  increase  in
co-operative  marketing and cost recovery programs of 26.8%. These benefits were
partially  offset by increases in employee  benefits,  specifically  medical and
workers' compensation  insurances of 31.4%, and increases in marketing of 60.6%.
The Company's  believes the  management  plan  developed and put in place in the
last half of 2001 to reorganize and improve  productivity and  performance,  has
resulted and should continue to result in reductions to administrative expenses,
marketing expenses, insurance expenses and other SG&A expense.

     Depreciation, Goodwill and Trademark Amortization
     -------------------------------------------------

     Depreciation,   goodwill  and  trademark   amortization   costs   increased
approximately $0.6 million or 10.7% to $6.5 million in 2001,  compared with $5.9
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 $1.5 million or
0.1% of sales in 2001 from approximately $1.0 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.

     Severance and Other Items
     -------------------------

     In 2001,  the  Company's  management  developed  a plan to  reorganize  and
improve productivity and performance. The results have shown and are expected to
continue  to show  reductions  in  administrative  expense,  marketing  expense,
headcount and the  elimination of  non-strategic  operating  units.  The Company
incurred  severance  and other  items of $1.7  million,  primarily  relating  to
severance  pay  and   distribution   center  closing  costs.  As  part  of  this


                                       30
<PAGE>31

reorganization, the Company has and intends to relaunch a number of its previous
initiatives   including  tool  rental,   installed   products  and  manufactured
components  throughout  2002.  In  addition,  the Company will work to implement
sales  planning  tools and  technology  to  support  efforts  to retain and grow
customer relations.  Also, management is requiring the operating units to adhere
to stricter standards in customer profitability,  labor productivity and working
assets turnover,  that management  believes will form the basis for a successful
building materials business.


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

     Other operating  income  increased  approximately  $1.1 million or 32.0% to
$4.3 million in 2001, compared with $3.3 million in 2000. Other operating income
primarily  includes  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.

     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,  December  30, 2000 and December 25, 1999 was  approximately
8.87%, 9.96% and 9.34%, respectively.

     Income Tax Benefit before Extraordinary Item
     --------------------------------------------

     In 2001,  the  Company  recorded a net income tax  benefit of $3.1  million
versus a net income tax benefit  before  extraordinary  item of $0.7  million in
2000.  An  effective  federal  and  state  income  tax rate of 38.9% was used to
calculate income taxes for 2001 and 38.8% for 2000. In addition to the effective
income tax rate,  state  franchise  taxes of $1.1  million and $1.4 million were
calculated  for 2001 and 2000,  respectively,  and are included in the provision
reported.

     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 before extraordinary item
     ----------------------------------

     The Company  recorded a net loss in 2001 of $7.1 million  versus a net loss
before  extraordinary  item of $4.0 million in 2000, a decline of $3.1  million.
Net loss  was  negatively  impacted  by a  decrease  in  gross  profit  of 5.2%,
increased employee benefits, specifically workers compensation and medical costs
which rose $5.0 million or 33.2%, as well as additional marketing  expenditures,

                                     31
<PAGE>32
up $2.2 million.  Results were  positively  impacted by a decrease in management
incentives of $1.7 million, decrease in interest expense of $2.5 and an increase
in the income tax benefit of $2.4 million.

     Extraordinary item
     ------------------

     As further explained in Note 7 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.  The net gain,  after  appropriate  state and
federal income taxes, was $6.8 million.


2000 Compared with 1999
-----------------------

     Net Sales
     ---------

     Net sales for 2000 decreased  $59.8 million,  or 5.5%, to $1,027.6  million
from $1,087.4 million in 1999. Sales for all facilities operated throughout both
years ("same store sales") decreased 6.1%. During 2000, the Company  experienced
a 6.6%  decrease  in same  store  sales to its  primary  type of  customer,  the
professional home builder, and a 0.3% increase in same store sales to commercial
builders. Consumer sales declined 10.6% on a same store basis.

     Sales to building  professionals  as a percentage of total sales were 61.8%
in 2000 compared to 62.3% in 1999. Lumber and building  materials  accounted for
86.1% of total sales in 2000 compared with 87.8% in 1999.

     Total  housing  starts in the United  States  decreased  4.5% in 2000,  and
starts in the Company's  primary  geographical  market,  the Midwest,  decreased
approximately 7.8%. The Company's two other geographical  markets, the Northeast
and South,  experienced  decreases of 1.4% and 4.9%,  respectively.  Nationally,
single family housing starts, which generate the majority of the Company's sales
to building  professionals,  experienced  a decrease of 5.5% in 2000,  from 1.33
million starts in 1999 to 1.26 million starts in 2000.

     Sales for 2000 were  positively  impacted by investments in new initiatives
such as Tool Rental and Installed  Programs,  sales of which  increased 38.8% in
2000 over sales in 1999.  However,  these  increases were offset for the year by
the effects of lumber deflation and by  weather-related  issues in the first and
fourth quarters.  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


                                       32
<PAGE>33

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  estimates that
deflation in lumber and drywall  prices  negatively  impacted  2000 net sales by
approximately $74.3 million, when compared with lumber and drywall prices during
1999.

     Products  that  exhibited  the greatest  change in sales for the year ended
December 30, 2000 versus sales of such  products in 1999 were lumber and plywood
(down  16.0%),  drywall (down  19.0%),  treated wood (down 7.8%),  roofing (down
4.8%), and kitchen and bath (up 6.2%).

     For  the  year,  sales  of  internally   manufactured  building  components
increased to 56.7% of total  distributed  building  components from 50.9% in the
prior  year.  The  dollar  value of sales of  internally  manufactured  building
components   increased  10.4%  from  approximately  $87.4  million  in  1999  to
approximately  $96.5  million  in 2000.  As with  dimensional  lumber,  sales of
internally  manufactured  building  components  are  impacted  by the effects of
lumber deflation.

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

     Gross profit decreased $1.5 million to $223.1 million or 21.7% of net sales
for 2000  compared  with  $224.6  million  or 20.7% of net sales  for 1999.  The
Company  believes  that  deflation in lumber and drywall  prices  decreased  the
dollar value of gross profit by approximately  $15.2 million for the fiscal year
ended  December 30, 2000.  Commodity  wood  products,  drywall and  manufactured
building  components  accounted for  approximately  56.1% of sales for the year,
compared with 58.9% for 1999.  The gross margin for these  products  improved to
19.1% for 2000 versus 17.5% last year.

     The  increase  in gross  profit  as a  percentage  of sales  resulted  from
increased  sales and gross profit  margins  relating to internally  manufactured
products,  improved  buying  leverage,  and the expansion of the Company's other
initiatives. These substantially offset the effects of lumber deflation.

     As previously noted, sales of internally  manufactured  building components
improved during the fiscal year. The Company's  margins from sales of internally
manufactured  building components typically are higher than the margins on sales
of purchased components.

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

     In 2000, selling, general, and administrative expense ("SG&A") increased as
a percent of net sales to 19.5% compared with 17.1% of net sales in 1999.  Total
SG&A  expense  increased  $14.0  million or 7.5% from $185.9  million in 1999 to
$199.9  million  in  2000.  Much of  this  increase  is  attributable  to  costs
associated  with new  initiatives  such as Tool Rental and  Installed  Programs.
These programs increased  salaries,  wages and benefits;  delivery expense;  and
other fixed  charges.  In  addition,  higher fuel and natural gas prices  caused
delivery expense and utility costs to increase.

                                       33
<PAGE>34


     Salaries,  wages and benefits increased  approximately $7.8 million or 6.1%
over the prior year. Higher unit sales volumes,  initiatives such as Tool Rental
and Installed  Programs,  and higher  administrative  compensation and benefits,
increased  compensation  and  benefits by  approximately  $9.6  million or 7.8%.
Offsetting these increases was a $1.4 million decrease in management incentives.
In addition,  the culmination of changes in the  administration  of vacation pay
resulted in a $1.3 million  improvement  in SG&A expenses for 2000,  following a
comparable $1.0 million improvement in 1999.

     Delivery expense for the year increased approximately $2.4 million or 17.4%
over the prior year. The increase was driven by various Company  initiatives and
by the  significant  increase  in fuel  prices  over last year.  With  regard to
initiatives, the expansion of Installed Programs, such as insulation, siding and
gutters, has caused the Company to incur additional delivery expense through the
trucks involved in these programs. As a result,  vehicle repair and maintenance,
lease  costs,  and  licensing  increased  approximately  $1.4  million or 14.1%.
Finally,  the effects of increased fuel costs nationwide in 2000, plus expansion
of the fleet resulted in additional fuel expense of approximately  $1.1 million,
a 25.4% increase over the prior year.

     Promotional  expenses,   including  travel  and  entertainment,   increased
approximately  $0.9 million or 12.0%.  Fixed expenses,  other than depreciation,
associated  with the operation of the Company's sales and  distribution  and its
headquarters facilities increased approximately $0.8 million or 10.8%.

     Depreciation, Goodwill and Trademark Amortization
     -------------------------------------------------

     Depreciation,   goodwill  and  trademark   amortization   costs   increased
approximately  $0.6 million or 11.0% in 2000,  compared with 1999. This increase
primarily is due to  depreciation  on delivery  vehicles,  equipment used in the
Tool Rental program and capital  improvements  made as a result of the Company's
Major Markets and re-merchandising programs, as well as its other initiatives.

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

     The  Company  extends  credit,  generally  due on the 10th day of the month
following  the sale,  to  qualified  and  approved  contractors.  Provision  for
doubtful  accounts  decreased to approximately  $1.0 million or 0.1% of sales in
2000 from approximately $1.7 million or 0.2% of sales for 1999.

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

     Other operating  income  decreased  approximately  $1.6 million or 33.3% in
2000 as compared to 1999. The decrease primarily is the result of a reduction in
gains  reported  on the sale of excess  property  and  various  fixed  assets of
approximately  $1.5 million.  During 1999,  the Company sold five pieces of real
estate and  recorded  total gains on the sale of real  estate and various  fixed
assets of  approximately  $1.8 million.  This is compared with three real estate
sales and various  fixed asset  disposals  in 2000,  resulting in total gains of
approximately $0.3 million.

                                       34
<PAGE>35

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

     Interest  expense  increased to $24.3 million in 2000 from $23.3 million in
1999.  This  increase  was the result of an increase  in the  overall  effective
borrowing rate of 72 basis points as floating  interest rates increased over the
course of fiscal  2000  compared  to 1999,  partially  offset by a $4.5  million
decrease in average outstanding debt.

     Income Tax Benefit before Extraordinary Item
     --------------------------------------------

     In 2000, the Company recorded a net income tax benefit before extraordinary
item of $0.7 million  versus an income tax expense of $5.7 million in 1999.  Net
operating loss  carryforwards  were used to substantially  offset current income
taxes payable in 1999.  An effective  federal and state income tax rate of 38.8%
was used to calculate income taxes for 2000,  compared with an effective rate of
38.7% for 1999. In addition to the effective  income tax rate,  state  franchise
taxes of $1.4  million  and $1.1  million  were  calculated  for 2000 and  1999,
respectively, and are included in the provision reported.

     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) income before extraordinary item
     -------------------------------------------

     The Company recorded a net loss before  extraordinary  item in 2000 of $4.0
million  versus net income of $7.6 million in 1999, a decline of $11.5  million.
The loss  primarily  resulted  from a  reduction  of  gross  profit  dollars  of
approximately  $1.5  million;  increased  salaries,  wages and  benefits of $7.8
million;  increased  vehicle  maintenance,  lease  and  licensing  costs of $1.4
million;  a $1.1  million  increase in fuel costs;  a $1.0  million  increase in
interest  expense and a $1.7 million  decline in other income.  These  decreases
were  partially  offset  by a  $0.7  million  decrease  provision  for  doubtful
accounts.

     Extraordinary item
     ------------------

     As further explained in Note 7 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.  The net gain,  after  appropriate  state and
federal income taxes, was $6.8 million.

                                       35
<PAGE>36


     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.  On an ongoing
basis, management evaluates its estimates and judgments, including those related
to inventory valuation; the allowance for uncollectible accounts;  depreciation,
amortization  and  recoverability  of long-lived  assets,  including  intangible
assets;  self-insurance  and  other  reserves;  the  calculation  of  retirement
benefits and revenue  recognition.  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.  See Note 2 to
the  Company's  Consolidated  Financial  Statements  for  a  discussion  of  the
Company's significant  accounting policies.  While the Company believes that the
historical  experience and other factors  considered  provide a meaningful basis
for the  accounting  policies  applied in the  preparation  of the  consolidated
financial  statements,  the Company  cannot  guarantee  that its  estimates  and
assumptions  will  be  accurate,   which  could  require  the  Company  to  make
adjustments to these estimates in future periods.

                                       36
<PAGE>37


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 2001, net cash provided by operating activities was $13.2 million.  This
compares  with net cash  provided by operating  activities  of $14.9  million in
2000. The net cash provided by operations in 2001 primarily is due to a decrease
in  inventory  and  increases  in accounts  payables  and  accrued  liabilities,
partially offset by an increase in accounts receivable.

     Accounts  receivable at the end of 2001 were $83.4 million,  an increase of
$6.7 million or 8.8% from 2000, primarily due to an increase in product sales of
11.9% in the month of December 2001 over last year. Inventory at the end of 2001
was $17.6 million or 14.9% lower than at the end of 2000,  primarily as a result
of better  inventory  management.  Accounts payable at the end of 2001 was $44.0
million, an increase of $8.7 million or 24% from 2000, primarily due to improved
terms with vendors.

     During  2001,  the  Company  increased  its capital  expenditures  to $10.3
million  compared  to $9.7  million.  Investing  cash  flows in both  years were
partially  offset  by  proceeds  on the sale of fixed  assets.  Net cash used in
investing activities in 2001 was $8.0 million compared to $9.2 million in 2000.

     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 credit agreement allows the Company to spend up to $30
million, subject to certain restrictions,  for acquisitions. The Company expects
to fund capital  expenditures  through  borrowings and its internally  generated
cash flow.

     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 is 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
Company  has  accrued a  liability  for  payments  to be paid over a  three-year
period.

     The  Company  made  one   acquisition   during  2000,   acquiring   TresArk
Enterprises,  Inc.  TresArk  Enterprises,  Inc.  is a producer  of  construction
management software designed for lumberyards and their professional  contractors
and was  acquired  for  $0.8  million,  paid for in cash in  2000.  The  amounts
previously  classified  as  goodwill  have been  reclassified  to  software.  In
addition, the Company built a state-of-the-art  component manufacturing facility

                                       37
<PAGE>38

in Mackville,  WI and expanded its facility in Decatur,  IL to  accommodate  the
manufacturing of wall panels during 2000.

     At December 29, 2001 the Company operated 98 sales and distribution centers
and  26  component   manufacturing   facilities  compared  with  101  sales  and
distribution  facilities and 27 component  manufacturing  facilities at December
30,  2000.  At December 29, 2001,  there were no material  commitments  to third
parties for future capital expenditures.

     The Company  maintained  excess  availability  under its  revolving  credit
facilities  throughout 2001. 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  facility  because of the increased
inventory and receivables needed for the peak building season. At March 2, 2002,
the Company had  outstanding  working  asset  borrowings of $84.6  million.  The
minimum  availability  requirement was $25.0 million and the unused availability
was $31.3 million.

     The  Company's  assessment  of its future  funds  availability  constitutes
Forward-Looking  Information made pursuant to the Private Securities  Litigation
Reform Act of 1995 and is  inherently  subject to  uncertainty  resulting  from,
among other  things,  the factors  discussed  under  "Results  of  Operations  -
Provision for Income  Taxes".  The Company  anticipates  that funds  provided by
operations  and under this facility  will be adequate for the  Company's  future
needs.

     The Company's amended and restated credit agreement and the trust indenture
relating to the Company's  11-5/8%  Senior  Subordinated  Notes contain  certain
covenants and  restrictions.  Generally,  the agreement and the trust  indenture
restrict, among other things, capital expenditures, the incurrence of additional
debt,  asset sales,  dividends,  investments,  acquisitions and other restricted
payments.  Furthermore, the agreement considers a change in control, as defined,
as an event of default. In addition, upon a change in control of the Company, as
defined in the trust  indenture,  the Company must offer to purchase the 11-5/8%
Senior  Subordinated  Notes  at  101% of the  principal  thereof,  plus  accrued
interest.

     On May 14,  2001,  the Company  amended the credit  agreement to reduce the
level of net worth  required on March 31,  2001.  On August 13, 2001 the Company
amended the credit  agreement  to remove the net worth  covenant,  increase  the
required  minimum unused  availability  from $15 million to $25 million,  and to
allow for certain corporate  structure changes.  The amendment also requires the
Company to maintain certain average  borrowing levels. On February 28, 2002, the
Company amended the credit  agreement to modify the approved  average  borrowing
levels for the next 12 months,  and to reduce the  capital  spending  limit from
$9.0 million to $7.0 million for 2002. In March 2002,  the Company's  bank group
waived  compliance  with  sections 9.3, 9.6 and 9.10 of the amended and restated
credit agreement to allow a sale-leaseback  transaction on the Company's Aurora,
CO. property. (See Note 7 to the Consolidated Financial Statements)

                                       38
<PAGE>39

     As further explained in Note 7 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.  The net gain,  after  appropriate  state and
federal income taxes was $6.8 million.

     To provide the funds  necessary  to complete  the  Redemption,  the Company
entered into an amended and restated  credit  agreement  with its existing  bank
group on December 13, 2000.  The amended and restated  credit  agreement,  among
other things,  increased the total  commitment  to $251.7  million,  removed the
seasonal  reduction in borrowing  capacity  provided for in the previous  credit
agreement,  increased both the base rate and LIBOR based borrowing spreads,  and
extended the final maturity of the revolving  credit agreement to June 30, 2005.
A portion of the credit  facility  was  provided as a one-time  term loan in the
principal amount of $51.7 million that requires  quarterly  principal  payments,
which began on March 31, 2001.  The term loan contains  provisions for mandatory
principal  prepayments in the event that the Company receives cash in connection
with certain transactions, as defined.

     A  commitment  fee of 0.38% is payable on the unused  amount of the amended
and restated credit agreement. Interest on amounts outstanding under the amended
and restated credit  agreement bear interest at a spread of 0.75% above the base
rate of Fleet  National  Bank  (5.50% at December  29,  2001) or 2.50% above the
applicable LIBOR rate (4.69% at December 29, 2001). Depending upon the Company's
rolling  four-quarter  interest  coverage  ratio  and  unused  availability,  as
defined,  amounts outstanding will bear interest at a spread above the base rate
from 0.0% to 0.75% or from 2.00% to 2.75% above the  applicable  LIBOR rate.  At
December 29, 2001, the Company had designated $21.1 million and $72.0 million as
base rate and LIBOR borrowings,  respectively.  Amounts  outstanding at December
29,2001  under the $45.3  million term loan portion bear interest at a spread of
3.00% above the applicable LIBOR rate. All interest is payable monthly.

     The Company  entered into an interest rate swap agreement that  effectively
fixes the Company's  borrowing cost at 5.75% plus the Company's  LIBOR borrowing
spread on $40.0  million of the  Company's  amended and restated  line of credit
borrowings. The interest rate swap agreement expired in February 2002.

     Substantially  all of the  Company's  accounts  receivable,  inventory  and
general  intangibles  are pledged as  collateral  under the amended and restated
credit  agreement.  In addition,  substantially  all of the Company's owned real
estate assets were provided as additional collateral in connection with the term
loan.  Availability  is limited to 85.0% of eligible  accounts  receivable  plus
60.0% of eligible  inventory,  with these  percentages  subject to change at the
permitted discretion of the agent for the lenders.

                                       39
<PAGE>40

     The Company's weighted-average interest rate on all outstanding borrowings,
excluding  amortization  of debt issue costs,  for the years ended  December 29,
2001, December 30, 2000 and December 25, 1999 was approximately 8.87%, 9.96% and
9.34%, respectively.


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

     To facilitate an understanding of the Company's contractual obligations and
commercial commitments, the following data are provided. Note that approximately
$1.1 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>

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

     Contractual Obligations
     -------------------------------------------
     Long-Term Debt                               $ 203,527      $ 9,717      $ 88,225      $ 105,585     $     -
     Operating Leases                                75,548       14,899        22,132          7,222       31,296
                                                 -------------- ------------ ------------- ------------- ------------

     Total Contractual Cash Obligations           $ 279,075      $ 24,616     $110,357      $ 112,807     $ 31,296
                                                 ============== ============ ============= ============= ============
</TABLE>


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


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

     At December 29, 2001 the Company and its  subsidiaries  had federal  income
tax net operating loss  carryforwards  ("NOLs") of approximately  $41.4 million.
The NOLs will expire in the years 2006 to 2021 if not previously  utilized.  See
also Note 11 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.

                                       40
<PAGE>41



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

     In October 2001, the Financial  Accounting Standards Board issued Statement
of Accounting Standards No. 144 ("SFAS 144"),  "Accounting for the Impairment or
Disposal of Long-Lived  Assets." SFAS 144 supersedes SFAS 121, and requires that
long-lived  assets  held for use and those to be  disposed  of be  measured  for
impairment.  The standard became  effective for fiscal year 2002. The Company is
in the process of evaluating the adoption of this statement.

     In July 2001, the Financial  Accounting Standards Board issued Statement of
Accounting  Standards  No.  142 ("SFAS  142"),  "Goodwill  and Other  Intangible
Assets." SFAS 142 requires  companies to assess impairment of goodwill and other
intangible  assets on at least an annual  basis to  determine  whether  the fair
value of those intangible assets continues to exceed the book value.  Instead of
amortization of goodwill,  companies are required to record an impairment charge
if the fair value is below carrying value. The standard became effective for the
Company in fiscal year 2002. Goodwill  amortization for the years ended December
29, 2001 and  December 30, 2000 was $515,000  and  $621,000,  respectively.  The
Company is in the process of evaluating  the adoption of this  statement.  It is
possible the Company could incur an impairment  charge  related to adopting this
statement.

    On December 31, 2000,  the Company  adopted SFAS No. 133,  "Accounting  for
Derivative  Instruments and Hedging  Activities," as amended ("SFAS 133"), which
establishes  accounting and reporting  standards for derivative  instruments and
hedging  activities.  This standard  requires that all  derivative  instruments,
including  certain  derivative  instruments  embedded  in  other  contracts,  be
recognized  as assets or  liabilities  in the balance sheet and measured at fair
value. If a derivative is designated as a fair value hedge,  changes in the fair
value of the derivative and the hedged item will be recognized in earnings. If a
derivative is designated as a cash flow hedge,  changes in the fair value of the
derivative will be recorded in other comprehensive income and will be recognized
in the  statement of  operations  when the hedged item affects  earnings.  For a
derivative  that does not  qualify  as a hedge,  changes  in fair  value will be
recorded  in  earnings.  As a result of adopting  SFAS 133 in 2000,  the Company
recorded a pre-tax  charge of  approximately  $0.1 million in the year 2000 as a
cumulative  transition  adjustment to other comprehensive income for derivatives
designated in cash flow-type  hedges prior to adopting SFAS 133. At December 29,
2001 the Company's  interest rate swap qualified as a hedge under SFAS 133 which
resulted in an  adjustment  to Other  Comprehensive  Income of  $93,000,  net of
income taxes of $57,000, and $116,000 interest expense for the year. The Company
did not have any commodity hedges open at December 29, 2001.

                                       41

<PAGE>42


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

     As discussed in Note 7 to the Consolidated Financial Statements, to provide
the funds  necessary to complete the  redemption  of a portion of the  Company's
11-5/8% Senior  Subordinated Notes due 2003, the Company entered into an amended
and restated credit agreement with its existing bank group on December 13, 2000.
The amended and restated  credit  agreement,  among other things,  increased the
total commitment to $251.7 million,  removed the seasonal reduction in borrowing
capacity provided for in the previous credit agreement,  increased both the base
rate and LIBOR based borrowing  spreads,  and extended the final maturity of the
revolving  credit  agreement to June 30, 2005. A portion of the credit  facility
was provided as a one-time  term loan in the  principal  amount of $51.7 million
that requires quarterly principal payments beginning on March 31, 2001. Interest
on amounts  outstanding under the amended and restated  revolving line of credit
bear  interest at a spread of 0.75% above the base rate of Fleet  National  Bank
(5.50% at December 29, 2001) or 2.75% above the applicable  LIBOR rate (4.69% at
December 29, 2001).  Depending upon the Company's rolling four-quarter  interest
coverage ratio and unused  availability,  as defined,  amounts  outstanding will
bear  interest at a spread  above the base rate from 0.0% to 0.75% or from 2.00%
to 2.75% above the applicable  LIBOR rate. At December 29, 2001, the Company had
designated  $21.1 million and $72.0  million as base rate and LIBOR  borrowings,
respectively. Amounts outstanding at December 29, 2001 under the remaining $45.3
million  term  loan  portion  bear  interest  at a  spread  of 3.00%  above  the
applicable LIBOR rate.

     The Company  entered into an interest rate swap agreement that  effectively
fixes the Company's  borrowing cost at 5.75% plus the Company's  LIBOR borrowing
spread on $40.0  million of the  Company's  amended and restated  line of credit
borrowings. The interest rate swap agreement expired in February 2002.

     Based on the  Company's  average  borrowings  under  its  revolving  credit
agreements  during  2001,  including  amounts  outstanding  under  the term loan
portion  and net of the impact of the  interest  rate swap  agreement  described
above,  a  hypothetical  25 basis point  movement in the base rate or LIBOR rate
would  result in an  approximate  $161,876  annualized  increase  or decrease in
interest expense.  (See Note 12 of Consolidated  Financial  Statements  included
elsewhere herein).

     The fair value of the  Company's  outstanding  11 5/8% Senior  Subordinated
Notes was $32.0  million and $38.3 million at December 29, 2001 and December 30,
2000,  respectively.  As  discussed  in  Note  7 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 29, 2001, the fair value
of the fixed rate debt would have increased by $0.3 million.

                                       42
<PAGE>43


     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 29, 2001, 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.







                                       43






<PAGE>44

                                    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 2001 Annual Meeting
of Stockholders tentatively scheduled to be held on May 21, 2002.


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  2001
Annual Meeting of Stockholders tentatively scheduled to be held on May 21, 2002.


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 2001 Annual Meeting of Stockholders  tentatively  scheduled to be held
on May 21, 2002.


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  2001
Annual Meeting of Stockholders tentatively scheduled to be held on May 21, 2002.

                                       44
<PAGE>45

<TABLE>

                                     PART IV
                                     -------

Item 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
-------------------------------------------------------------------------------



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

(1)  Financial Statements:                                                                           Page No.
--------------------------                                                                           --------
<S>                                                                                                     <C>
Independent Auditors' Report                                                                              F-1
Consolidated balance sheets as of December 29, 2001
     and December 30, 2000                                                                                F-2
Consolidated statements of operations for the years ended
     December 29, 2001, December 30, 2000 and December 25, 1999                                           F-3
Consolidated statements of changes in common stockholders'
     equity for the years ended December 29, 2001, December 30,
     2000 and December 25, 1999                                                                           F-4
Consolidated statements of cash flows for the years ended
     December 29, 2001, December 30, 2000 and December 25, 1999                                           F-5
Notes to consolidated financial statements                                                                F-6

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

Report of Independent Accountants                                                                         S-1
Schedule II.  Valuation and Qualifying Accounts                                                           S-2
</TABLE>

(3)  Exhibits
-------------

See Exhibit Index included elsewhere herein.

(b)  Reports on Form 8-K
------------------------
     The Company has filed no reports on Form 10-k with the Securities and
Exchange Commision during the last quarter of the fiscal year.

(c)      See item 14(a)(3) above
--------------------------------
(d)      See item 14(a)(2) above
--------------------------------

                                       45
<PAGE>46





                                   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: March 29, 2002                                    By: /s/ J. Steven Wilson
                                                        ------------------------
                                                                J. Steven Wilson
                                            Chairman and Chief Executive Officer

     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>

         Signature                                        Title                                      Date
         ---------                                        -----                                      ----
<S>                                 <C>                                                        <C>

/s/ J. Steven Wilson                  Chairman and Chief Executive Officer                       March 29, 2002
--------------------
J. Steven Wilson                      (Principal Executive and Financial Officer)
                                      Director

/s/ James A. Hopwood                  Senior Vice President, Chief Financial                     March 29, 2002
--------------------
James A. Hopwood                      Officer (Principal Accounting Officer)

/s/ Harry T. Carneal                  Director                                                   March 29, 2002
--------------------
Harry T. Carneal

/s/ Albert Ernest, Jr.                Director                                                   March 29, 2002
----------------------
Albert Ernest, Jr.

/s/ William H. Luers                  Director                                                   March 29, 2002
--------------------
William H. Luers

/s/ Robert E. Mulcahy III             Director                                                   March 29, 2002
-------------------------
Robert E. Mulcahy III

/s/ Frederick H. Schultz              Director                                                   March 29, 2002
------------------------
Frederick H. Schultz

/s/ Robert T. Shaw                    Director                                                   March 29, 2002
------------------
Robert T. Shaw

/s/ Claudia B. Slacik                 Director                                                   March 29, 2002
---------------------
Claudia B. Slacik
</TABLE>

                                       46
<PAGE>47








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

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

We have audited the accompanying  consolidated balance sheets of Wickes Inc. and
subsidiaries  (the "Company") as of December 29, 2001 and December 30, 2000, and
the related  consolidated  statements of operations,  stockholders'  equity, and
cash flows for each of the three years in the period  ended  December  29, 2001.
Our audits also included the financial statement schedules for each of the three
years in the period ended  December  29,  2001,  listed in the Index at Item 14.
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  consolidated  financial  statements.  An audit also includes  assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall  consolidated  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 29, 2001 and December 30, 2000, and the results of their operations and
their cash flows for each of the three years in the period  ended  December  29,
2001, 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.


/s/Deloitte & Touche LLP
Chicago, IL

March 5, 2002,  except for the last paragraph of Note 7, as to which the date is
March 29, 2002.


<PAGE>48

<TABLE>


                                                    WICKES INC. AND SUBSIDIARIES
                                                    ----------------------------

                                                     CONSOLIDATED BALANCE SHEETS

                                               December 29, 2001 and December 30, 2000
                                                  (in thousands except share data)


                                                                                  2001                    2000
                                                                                  ----                    ----
                ASSETS
<S>                                                                     <C>                     <C>
Current assets:
   Cash                                                                    $         198           $         243
   Accounts receivable, less allowance for doubtful
     accounts of $2,119 in 2001 and $2,791 in 2000                                83,369                  76,659
   Notes receivable from affiliate                                                   430                     201
   Inventory                                                                     100,357                 117,910
   Deferred tax asset                                                              7,474                   6,692
   Prepaid expenses                                                                3,155                   3,405
                                                                                   -----                   -----

       Total current assets                                                      194,983                 205,110
                                                                                 -------                 -------

   Notes receivable from affiliate                                                     -                     282
   Property, plant and equipment, net                                             58,452                  55,474
   Trademark (net of accumulated amortization of
     $11,163 in 2001 and $10,941 in 2000)                                          5,856                   6,079
   Deferred tax asset                                                             16,557                  12,990
   Rental equipment (net of accumulated depreciation
     of $2,186 in 2001 and $1,582 in 2000)                                         2,287                   2,296
   Other assets (net of accumulated amortization of
     $14,456 in 2001 and $12,440 in 2000)                                         17,035                  18,705
                                                                                  ------                  ------

       Total assets                                                        $     295,170             $   300,936
                                                                                ========                ========

                LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
   Current maturities of long-term debt                                    $       9,157             $     6,339
   Accounts payable                                                               43,956                  35,294
   Accrued liabilities                                                            18,660                  21,576
                                                                                  ------                  ------

       Total current liabilities                                                  71,773                  63,209
                                                                                  ------                  ------

Long-term debt, less current maturities                                          193,253                 200,403
Other long-term liabilities                                                        3,373                   3,428

Commitments and contingencies (Note 8)

Stockholders' equity:
   Common stock  $0.01 par (8,281,585 and 8,271,313
     shares issued and outstanding in 2001 and 2000,respectively)                     83                      83
   Accumulated comprehensive loss                                                    (93)                      -
   Additional paid-in capital                                                     87,134                   87,092
   Accumulated deficit                                                           (60,353)                 (53,279)
                                                                                 -------                  -------

       Total stockholders' equity                                                 26,771                   33,896
                                                                                  ------                   ------

       Total liabilities and stockholders' equity                            $   295,170              $    300,936
                                                                                ========                  ========
</TABLE>

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

                                                                 F-2
<PAGE>49


<TABLE>

                                                    WICKES INC. AND SUBSIDIARIES
                                                    ----------------------------

                                                CONSOLIDATED STATEMENTS OF OPERATIONS

                           For the Years Ended December 29, 2001, December 30, 2000, and December 25, 1999
                                                (in thousands, except per share data)


                                                                     2001              2000             1999
                                                                     ----              ----             ----
<S>                                                           <C>               <C>              <C>
Net sales                                                        $1,000,999        $1,027,604       $1,087,402
Cost of sales                                                       789,446           804,512          862,798
                                                                    -------           -------          -------
     Gross profit                                                   211,553           223,092          224,604
                                                                    -------           -------          -------

Selling, general and administrative expenses                        194,608           199,889          185,884
Depreciation, goodwill and trademark amortization                     6,508             5,877            5,295
Provision for doubtful accounts                                       1,470               983            1,724
Severance and other items                                             1,744                 -                -
Other operating income                                               (4,344)          (3,292)           (4,932)
                                                                     ------           ------            ------
                                                                    199,986           203,457           187,971
                                                                    -------           -------           -------

     Income from operations                                          11,567            19,635            36,633

Interest expense                                                     21,787            24,322            23,302
                                                                     ------            ------            ------

     (Loss) income before income taxes                             (10,220)           (4,687)            13,331

(Benefit) provision for income taxes:                               (3,146)             (735)             5,743
                                                                    ------              ----              -----

     (Loss) income before extraordinary item                        (7,074)           (3,952)             7,588

Extraordinary gain on early extinguishment
  of debt, net of taxes of $4,313                                        -             6,806                  -
                                                                    ------             -----              -----

     Net (loss) income                                           $  (7,074)        $   2,854        $     7,588
                                                                    ======            ======             ======


(Loss) income before extraordinary gain per
  common share - basic                                           $   (0.85)        $  (0.48)        $      0.92
                                                                    ======           ======              ======
(Loss) income before extraordinary gain per
  common share - diluted                                         $   (0.85)        $  (0.48)        $      0.91
                                                                    ======           ======              ======

Net (loss) income per common share - basic                       $   (0.85)        $   0.35         $      0.92
                                                                    ======           ======              ======
Net (loss) income per common share - diluted                     $   (0.85)        $   0.34         $      0.91
                                                                    ======           ======              ======

Weighted average common shares - for basic                       8,277,190        8,249,774           8,216,265
                                                                 =========        =========           =========
Weighted average common shares - for diluted                     8,277,190        8,466,383           8,330,571
                                                                 =========        =========           =========

</TABLE>

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

                                                                 F-3
<PAGE>50




<TABLE>

                                           WICKES INC. AND SUBSIDIARIES
                                           ----------------------------

                            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                  For the Years Ended December 25, 1999, December 30, 2000 and December 29, 2001
                                       (in thousands, except for share data)



                                                                Additional                    Accumulated
                                         Common Stock             Paid-in     Accumulated    Comprehensive      Total
                                       Shares      Amount         Capital       Deficit         Loss           Equity
                                       ------      ------         -------       -------         ----           ------
<S>                                 <C>           <C>          <C>             <C>           <C>             <C>

Balance at December 26, 1998          8,207,268     $  82        $ 86,787        $ (63,721)     $              $ 23,148

Net income                                              -             -              7,588                        7,588
Issuance of common stock                 17,620         -              83                -                           83
                                         ------      ----              --          -------                           --

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)
Other comprehensive loss                                                                              (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
                                      =========     =====        ========        =========           =====     ========
</TABLE>







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

                                                                 F-4
<PAGE>51

<TABLE>


                                                    WICKES INC. AND SUBSIDIARIES
                                                    ----------------------------

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                           For the Years Ended December 29, 2001, December 30, 2000, and December 25, 1999
                                                           (in thousands)

                                                                             2001             2000         1999
                                                                             ----             ----         ----
<S>                                                                   <C>                 <C>            <C>

Cash flows from operating activities:
   Net (loss) income                                                   $    (7,074)        $  2,854      $ 7,588
   Adjustments to reconcile net (loss) income to
     net cash from operating activities:
   Extraordinary gain                                                            -           (6,806)           -
   Depreciation expense                                                      7,719            6,507        5,852
   Amortization of trademark                                                   222              222          222
   Amortization of goodwill                                                    515              621          399
   Amortization of deferred financing costs                                  1,449            1,274        1,510
   Provision for doubtful accounts                                           1,470              983        1,724
   Gain on sale of assets and other items                                   (1,270)              77       (1,375)
   Deferred tax (benefit) provision                                         (4,349)          (2,116)       4,460
   Changes in assets and liabilities, net of the effects of acquisitions:
     (Increase) / decrease in accounts receivable                           (8,153)          32,461      (16,904)
     Decrease / (increase) in inventory                                     17,728            2,795      (15,831)
     Decrease / (increase) in accounts payable and accrued liabilities       4,569          (22,150)       3,539
     Increase in prepaids and other assets                                     372           (1,830)        (666)
                                                                             -----           ------         ----

NET CASH PROVIDED BY / (USED IN) OPERATING ACTIVITIES                       13,198           14,892       (9,482)
                                                                            ------           ------       ------

Cash flows from investing activities:
   Purchases of property, plant and equipment                              (10,269)          (9,734)      (8,624)
   Payments for acquisitions                                                  (760)            (800)     (12,999)
   Proceeds from sales of property, plant and equipment                      2,646            1,291        4,026
                                                                             -----            -----        -----

NET CASH USED IN INVESTING ACTIVITIES                                       (8,383)          (9,243)     (17,597)
                                                                            ------           ------      -------

Cash flows from financing activities:
   Decrease / (increase) in notes receivable                                    53               (2)         614
   Debt issuance cost                                                         (581)          (2,595)      (2,294)
   Net borrowing / (repayments) under revolving line of credit              (4,332)          22,044       28,782
   Reductions of notes payable                                                 -            (24,925)         (16)
                                                                            -------          -------       -----

NET CASH (USED IN) / PROVIDED BY FINANCING ACTIVITIES                       (4,860)          (5,478)      27,086
                                                                            ------           ------       ------

NET (DECREASE) / INCREASE IN CASH                                              (45)             171            7
Cash at beginning of year                                                      243               72           65
                                                                             -----            -----        -----

CASH AT END OF YEAR                                                    $       198         $    243      $    72
                                                                           =======         ========      =======

Supplemental schedule of cash flow information:
   Interest paid                                                       $    19,458         $ 23,203      $21,503
   Income taxes paid                                                         1,141            1,457        1,524
Supplemental schedule of non-cash investing and financing activities:
  The Company purchased assets in conjunction with acquisitions
  made during the period.  In connection with these acquisitions,
  liabilities were assumed as follows:
   Assets acquired                                                     $     1,789         $   800       $14,850
   Liabilities assumed                                                 $     1,030         $     -       $   529
   Purchase price payable                                              $       759         $     -       $ 1,322

</TABLE>


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

                                                                F-5
<PAGE>52



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

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 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.

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

     The  Company  recognizes  revenues  at the time  products  are  shipped  or
services are  provided.  For contracts  that have  material or service  elements
provided over extended  periods of time,  revenue  generally is  recognized,  as
materials are delivered,  services have been performed and manufactured building
components  have been  delivered  or  installed.  Prepayments  for  materials or
services are deferred  until such materials have been delivered or services have
been provided.

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

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


                                      F-6
<PAGE>53



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 management's  assessment of the
amount  which may become  uncollectable  in the future  and is  estimated  using
specific  review of problem  accounts,  overall  portfolio  quality  and current
economic  conditions  that  may  affect  the  borrower's  ability  to  pay,  and
historical experience.

Inventory
---------

     Inventory consists  principally of finished goods. The Company utilizes the
first-in,  first-out  (FIFO) cost flow  assumption  for  valuing its  inventory.
Inventory  is valued at the  lower of cost or  market,  but not in excess of net
realizable value.

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,  lives  range  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  consist  primarily of deferred  financing  costs and goodwill
which are being amortized on the  straight-line  method,  goodwill over 10 to 35
years and deferred  financing  costs 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.

Trademark
---------

     The cost of  Company's  "Flying  W"  trademark  is being  amortized  over a
40-year period.

                                      F-7
<PAGE>54



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 Statement of Financial  Accounting  Standards ("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 some  portion of the related
tax asset will be realized.

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.

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.


                                      F-8
<PAGE>55



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

     The Company  evaluates  assets held for use and assets to be disposed of in
accordance  with SFAS No. 121,  "Accounting  for the  Impairment  of  Long-Lived
Assets and for  Long-Lived  Assets to be Disposed Of." This  statement  requires
that long-lived assets and certain identifiable  intangibles held and used by an
entity be reviewed for impairment  whenever  events or changes in  circumstances
indicate  that the  carrying  amount  of an asset  may not be  recoverable.  The
Company  historically  has  reviewed  excess  property  held for sale,  and when
appropriate, recorded these assets at the lower of their carrying amount or fair
value (see Note 5).

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
123, the Company  elected to continue the  intrinsic  value method of accounting
prescribed  by APB Opinion 25. As required,  the Company has  disclosed  the pro
forma net income  and pro forma  earnings  per share as if the fair value  based
accounting  methods had been used to account for stock-based  compensation  cost
(see Note 9).

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 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.  No
single customer  represented more than 10% of the Company's total sales in 2001,
2000, and 1999.

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

     In October 2001, the Financial  Accounting Standards Board issued Statement
of Accounting Standards No. 144 ("SFAS 144"),  "Accounting for the Impairment or
Disposal of Long-Lived  Assets." SFAS 144 supersedes SFAS 121, and requires that
long-lived  assets  held for use and those to be  disposed  of be  measured  for
impairment.  The standard became  effective for fiscal year 2002. The Company is
in the process of evaluating the adoption of this statement.

                                      F-9
<PAGE>56


     In July 2001, the Financial  Accounting Standards Board issued Statement of
Accounting  Standards  No.  142 ("SFAS  142"),  "Goodwill  and Other  Intangible
Assets." SFAS 142 requires  companies to assess impairment of goodwill and other
intangible  assets on at least an annual  basis to  determine  whether  the fair
value of those intangible assets continues to exceed the book value.  Instead of
amortization of goodwill,  companies are required to record an impairment charge
if the fair value is below carrying value. The standard became effective for the
Company in fiscal year 2002. Goodwill  amortization for the years ended December
29, 2001 and  December 30, 2000 was $515,000  and  $621,000,  respectively.  The
Company is in the process of evaluating  the adoption of this  statement.  It is
possible the Company could incur an impairment  charge  related to adopting this
statement.

     On December 31, 2000,  the Company  adopted SFAS No. 133,  "Accounting  for
Derivative  Instruments and Hedging  Activities," as amended ("SFAS 133"), which
establishes  accounting and reporting  standards for derivative  instruments and
hedging  activities.  This standard  requires that all  derivative  instruments,
including  certain  derivative  instruments  embedded  in  other  contracts,  be
recognized  as assets or  liabilities  in the balance sheet and measured at fair
value. If a derivative is designated as a fair value hedge,  changes in the fair
value of the derivative and the hedged item will be recognized in earnings. If a
derivative is designated as a cash flow hedge,  changes in the fair value of the
derivative will be recorded in other comprehensive income and will be recognized
in the  statement of  operations  when the hedged item affects  earnings.  For a
derivative  that does not  qualify  as a hedge,  changes  in fair  value will be
recorded  in  earnings.  As a result of adopting  SFAS 133 in 2000,  the Company
recorded a pre-tax  charge of  approximately  $0.1 million in the year 2000 as a
cumulative  transition  adjustment to other comprehensive income for derivatives
designated in cash flow-type  hedges prior to adopting SFAS 133. At December 29,
2001 the Company's  interest rate swap qualified as a hedge under SFAS 133 which
resulted in an  adjustment  to Other  Comprehensive  Income of  $93,000,  net of
income taxes of $57,000, and $116,000 interest expense for the year. The Company
did not have any commodity hedges open at December 29, 2001.

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.


                                      F-10
<PAGE>57


3. Other Comprehensive Income
-----------------------------

     The components of comprehensive  (loss) income for the years ended December
29, 2001 and December 30, 2000 are as follows (in thousands):

<TABLE>

                                        Dec. 29,           Dec. 30,
                                          2001              2000
                                          ----              ----
<S>                                  <C>              <C>

    Net (loss) income                  $ (7,074)        $    2,854
                                       --------         ----------

     Change in fair value of interest
      rate swap, net of tax of
      $57                                   (93)                -
                                            ---               ---

    Comprehensive (loss) income       $  (7,167)        $   2,854
                                      ---------         ----------
</TABLE>


4. 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 is 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
Company  has  accrued a  liability  for  payments  to be paid over a  three-year
period.

     The  Company  made  one   acquisition   during  2000,   acquiring   TresArk
Enterprises,  Inc.  TresArk  Enterprises,  Inc.  is a producer  of  construction
management software designed for lumberyards and their professional  contractors
and was  acquired  for  $0.8  million,  paid for in cash in  2000.  The  amounts
previously classified as goodwill have been reclassified to software.

     During 1999, the Company made four acquisitions,  all component facilities.
The total purchase  price of these  acquisitions  was $14.3 million.  In January
1999, the Company  acquired the assets of a wall panel  manufacturer  located in
Cookeville,  Tennessee. In March 1999, the Company acquired the assets of Porter
Building Products,  a manufacturer of trusses and wall panels,  located in Bear,
Delaware.  In October 1999,  the Company  acquired the assets of Advanced  Truss
Systems,  Inc. of Kings Mountain,  North  Carolina.  Advanced Truss Systems is a
manufacturer of engineered wood trusses,  servicing the greater Charlotte, North
Carolina,  market.  In November 1999, the Company  acquired the assets of United
Building  Systems,  Inc. of Lexington,  Kentucky.  United Building  Systems is a
manufacturer  of wall  panels  and roof and  floor  trusses,  in the  Lexington,
Kentucky, market.

     The costs of these  acquisitions  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

                                      F-11
<PAGE>58

goodwill,  which is being amortized on a straight-line  basis.  All acquisitions
have been accounted for as purchases.  Operations of the companies acquired have
been included in the accompanying  consolidated  financial statements from their
respective acquisition dates.

     The  results  of all  acquisitions  were  not  material  to  the  Company's
consolidated operations.


5.  Property, Plant, and Equipment
----------------------------------

Property, plant and equipment is summarized as follows:
<TABLE>


                                                              December 29,              December 30,
                                                                  2001                      2000
                                                                  ----                      ----
                                                                         (in thousands)
<S>                                                            <C>                        <C>

     Land and improvements                                     $15,168                    $14,356
     Buildings                                                  35,432                     32,997
     Machinery and equipment                                    41,979                     39,410
     Leasehold improvements                                      3,537                      3,680
     Construction in progress                                    3,110                      2,246
                                                                 -----                      -----

     Gross property, plant, and equipment                       99,226                     92,689
     Less:  accumulated depreciation                           (42,278)                   (39,822)
                                                               -------                    -------

     Property, plant, and equipment
       in use, net                                              56,948                     52,867
     Assets held for sale, net                                   1,504                      1,517
                                                                 -----                      -----

     Property, plant, and equipment, net                       $58,452                    $54,384
                                                               =======                    =======
</TABLE>


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

     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 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.

                                      F-12

<PAGE>59

     In 1999, the Company sold five pieces of real estate for a net gain of $1.4
million.  One property,  which had been held for sale since the first quarter of
1990,  had been  previously  written down by $200,000 from its original net book
value and sold at a net loss of $23,000. The other four properties, one held for
sale since 1992 and the others since 1998, had not been previously  written down
and each were sold for net gains.

     The Company  reviews assets held for sale in accordance  with SFAS No. 121.
At December 30, 2000, the Company held three properties for resale that had been
written down to their  estimated  fair market values prior to 1998.  The Company
did not record any impairment to the cost of assets held for sale in 2001,  2000
or 1999.  Certain of these  properties are leased to others until such time that
appropriate disposition can be affected.


6.  Accrued Liabilities
-----------------------

Accrued liabilities consist of the following:
<TABLE>

                                                December 29,            December 30,
                                                    2001                    2000
                                                    ----                    ----
                                                            (in thousands)
       <S>                                      <C>                    <C>
         Accrued payroll                          $6,965                  $9,038
         Accrued liability insurance               2,034                   5,183
         Other                                     9,661                   7,355
                                                   -----                   -----
         Total accrued liabilities               $18,660                 $21,576
                                                 =======                 =======
</TABLE>



7.  Long-Term Debt
------------------

Long-term debt obligations are summarized as follows:
<TABLE>
                                                December 29,            December 30,
                                                    2001                    2000
                                                    ----                    ----
                                                           (in thousands)
        <S>                                       <C>                     <C>
         Senior subordinated notes              $ 63,956                $ 63,956
         Revolving credit facility:
             Revolving notes                      93,143                  91,136
             Term notes                           45,311                  51,650
                                                  ------                  ------
         Total long-term debt                    202,410                 206,742
         Less current maturities                   9,157                   6,339
                                                   -----                   -----
         Total long-term debt less current
            maturities                          $193,253                $200,403
                                                ========                ========
</TABLE>

                                      F-13
<PAGE>60

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

     The remaining  outstanding  principal balance of the Notes,  totaling $64.0
million,  matures on December 15, 2003. The amended and restated credit facility
has an expiration  date of June 30, 2005. The term loan portion of the revolving
credit facility includes required quarterly principal payments as follows:  $2.1
million from March 31, 2001 through  December 31, 2001;  $2.3 million from March
31, 2002 through  December  31,  2002;  $3.0 million from March 31, 2003 through
December 31, 2004; $4.7 million on March 31, 2005; with the remaining  principal
balance due June 30,2005.  In addition,  the term loan contains  provisions  for
mandatory  principal  prepayments in the event that the Company receives cash in
connection with certain transactions, as defined.

Senior Subordinated Notes
-------------------------

     On October 22, 1993, the Company issued $100.0 million  principal amount of
10-year   unsecured   senior   subordinated   notes,   due   December  15,  2003
(collectively,  the "Notes"). Interest on the Notes is 11-5/8%, which is payable
semi-annually.  Covenants  under the  related  indenture  restrict,  among other
things, the payment of dividends, the prepayment of certain debt, the incurrence
of additional debt if certain  financial ratios are not met, the sale of certain
assets  unless  the  proceeds  are  applied  to the Notes  and other  restricted
payments.  In addition,  the Notes require that, upon a change in control of the
Company, as defined, the Company must offer to purchase the Notes at 101% of the
principal thereof, plus accrued interest.

     On  November  21, 2000 the  Company  commenced a cash tender  offer for the
Notes, 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  (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.  The net gain, after appropriate state and federal income taxes was
$6.8 million.

Revolving Line of Credit / Term Debt
------------------------------------

     The Company's amended and restated credit agreement and the trust indenture
relating to the Company's  11-5/8%  Senior  Subordinated  Notes contain  certain
covenants and  restrictions.  Generally,  the agreement and the trust  indenture
restrict, among other things, capital expenditures, the incurrence of additional
debt,  asset sales,  dividends,  investments,  acquisitions and other restricted
payments.  Furthermore, the agreement considers a change in control, as defined,
as an event of default. In addition, upon a change in control of the Company, as
defined in the trust  indenture,  the Company must offer to purchase the 11-5/8%
Senior  Subordinated  Notes  at  101% of the  principal  thereof,  plus  accrued
interest.

                                      F-14
<PAGE>61


     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. The net gain, after appropriate state and
federal income taxes was $6.8 million.

     To provide the funds  necessary  to complete  the  Redemption,  the Company
entered into an amended and restated  credit  agreement  with its existing  bank
group on December 13, 2000.  The amended and restated  credit  agreement,  among
other things,  increased the total  commitment  to $251.7  million,  removed the
seasonal  reduction in borrowing  capacity  provided for in the previous  credit
agreement,  increased both the base rate and LIBOR based borrowing spreads,  and
extended the final maturity of the revolving  credit agreement to June 30, 2005.
A portion of the credit  facility  was  provided as a one-time  term loan in the
principal amount of $51.7 million that requires  quarterly  principal  payments,
which began on March 31, 2001.  The term loan contains  provisions for mandatory
principal  prepayments in the event that the Company receives cash in connection
with certain transactions, as defined.

     A  commitment  fee of 0.38% is payable on the unused  amount of the amended
and restated revolving line of credit. Interest on amounts outstanding under the
amended and restated revolving line of credit bear interest at a spread of 0.75%
above the base rate of Fleet National Bank (5.50% at December 29, 2001) or 2.50%
above the applicable LIBOR rate (4.69% at December 29, 2001). Depending upon the
Company's rolling four-quarter  interest coverage ratio and unused availability,
as defined,  amounts  outstanding  will bear interest at a spread above the base
rate from 0.0% to 0.75% or from 2.00% to 2.75% above the applicable  LIBOR rate.
At December 29, 2001, the Company had designated $21.1 million and $72.0 million
as base rate and LIBOR borrowings,  respectively.  Amounts outstanding under the
$45.3  million term loan  portion  bear  interest at a spread of 3.00% above the
applicable LIBOR rate. All interest is payable monthly.

     The  Company  has  entered  into  an  interest  rate  swap  agreement  that
effectively fixes the Company's borrowing cost at 5.75% plus the Company's LIBOR
borrowing spread on $40.0 million of the Company's  amended and restated line of
credit borrowings. The interest rate swap agreement expired in February 2002.

     Substantially  all of the  Company's  accounts  receivable,  inventory  and
general  intangibles  are pledged as  collateral  for the  amended and  restated
revolving line of credit. In addition,  substantially all of the Company's owned
real estate assets were provided as additional collateral in connection with the
term loan. Availability is limited to 85.0% of eligible accounts receivable plus
60.0% of eligible  inventory,  with these  percentages  subject to change at the
permitted discretion of the agent for the lenders.

                                      F-15
<PAGE>62

     The Company's weighted-average interest rate on all outstanding borrowings,
excluding  amortization  of debt issue costs,  for the years ended  December 29,
2001, December 30, 2000 and December 25, 1999 was approximately 8.87%, 9.96% and
9.34%, respectively.

     On May 14,  2001,  the Company  amended the credit  agreement to reduce the
level of net worth  required on March 31,  2001.  On August 13, 2001 the Company
amended the credit  agreement  to remove the net worth  covenant,  increase  the
required  minimum unused  availability  from $15 million to $25 million,  and to
allow for certain corporate  structure changes.  The amendment also requires the
Company to maintain certain average  borrowing levels. On February 28, 2002, the
Company amended the credit  agreement to modify the approved  average  borrowing
levels for the next 12 months,  and to reduce the  capital  spending  limit from
$9.0 million to $7.0 million for 2002. In March 2002,  the Company's  bank group
waived  compliance  with  sections 9.3, 9.6 and 9.10 of the amended and restated
credit agreement to allow a sale-leaseback  transaction on the Company's Aurora,
CO. property.


8.  Commitments and Contingencies
---------------------------------

     At December 29, 2001,  the Company had accrued  approximately  $113,000 for
remediation of certain environmental and product liability matters,  principally
underground storage tank removal.

     Many of the  sales  and  distribution  facilities  presently  and  formerly
operated by the Company contained  underground petroleum storage tanks. All such
tanks  known to the  Company  located on  facilities  owned or  operated  by the
Company  have been  decommissioned  or removed.  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 be held  responsible  for under  certain  circumstances.  Since 1988,  the
Company has incurred  approximately  $2.0 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  previously  had been  identified  as having used two landfills
which are now  Superfund  clean up sites.  The Company's  obligation  related to
these items were settled for immaterial amounts.

     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

                                      F-16
<PAGE>63

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 424 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 68
similar actions for insignificant amounts, and another 262 of these actions have
been dismissed. None of these suits have made it to trial.

     Losses in excess of the  $113,000  reserved  as of  December  29,  2001 are
possible, but an estimate of these amounts cannot be made.

     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.

Leases
------

     The  Company  entered  into a  sale-leaseback  transaction  for a  facility
located in Aurora,  CO. The Company  sold the property  for  approximately  $2.7
million and accepted a 6 month  promissory note with recourse  against the asset
sold. The Company has accounted for this  transaction  under the deposit method,
under the  requirements of SFAS No. 66 "Accounting for the Sale of Real Estate".
Under the deposit  method,  the Company  does not  recognize  any profit or note
receivable, and continues to report in the financial statements the property and
related  debt,  if any. The Company paid cash for the land and building upon the
initial  purchase  and  thus,  does  not  have a  mortgage  associated  with the
building.

     The lease has an initial  20-year  lease term with two  additional  renewal
options of five years  each.  The minimum  lease  payments  are  included in the
minimum lease schedule summarized below.

     The Company has entered into operating  leases for corporate  office space,
retail 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 $18.5 million,  $17.4 million,  and
$14.3  million for the years ended  December  29, 2001,  December 30, 2000,  and
December 25, 1999, respectively.

                                      F-17
<PAGE>64

     Future  minimum  commitments  for  noncancelable  operating  leases  are as
     follows:
<TABLE>

                           Year                         Amount
                           ----                         ------
                                                    (in thousands)
                         <S>                          <C>
                           2002                         $14,899
                           2003                          12,551
                           2004                           9,581
                           2005                           4,649
                           2006                           2,572
                           Thereafter                    31,296
                                                         ------
                             Subtotal                    75,548
                           Less sublease income          (6,273)
                                                         ------
                             Total                      $69,275
                                                        =======
</TABLE>



9.  Stockholders' Equity
------------------------

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

     As of December 29, 2001,  the Company had  authorized  3,000,000  shares of
preferred stock, none of which were issued or outstanding.

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

     The Company  currently  has one class of common stock:  Common  Stock,  par
value $.01 per share.  At December 29,  2001,  there were  20,000,000  shares of
Common  Stock  authorized  and  8,281,585  shares  issued  and  outstanding.  In
addition, at December 29, 2001, there were options to purchase 653,297 shares of
Common Stock under the Company's 1993 Long-Term Incentive Plan and 1993 Director
Incentive Plan.

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

     As of December 29, 2001, 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 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.

                                      F-18
<PAGE>65


     Since the Company  applies APB  Opinion 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 SFAS 123, the
Company's  net income and  earnings per share would have been reduced to the pro
forma amounts  indicated below (in thousands,  except per share data):

<TABLE>

                                                                2001                2000           1999
                                                                ----                ----           ----
<S>                               <C>                        <C>                 <C>           <C>
(Loss) income before
extraordinary  gain                 As reported                $(7,074)            $(3,952)      $7,558
                                    Pro forma                  $(7,166)            $(4,158)      $7,357

Net (loss) income                   As reported                $(7,074)             $2,854       $ 7,558
                                    Pro forma                  $(7,166)             $2,648       $ 7,357
(Loss) income before
  extraordinary gain per
  share - basic                     As reported                  $(.85)            $(.48)           $ .92
                                    Pro forma                    $(.87)            $(.50)           $ .90
(Loss) income before
  extraordinary gain per
  share - diluted                   As reported                  $(.85)            $(.48)           $ .91
                                    Pro forma                    $(.87)            $(.50)           $ .88
Net (loss) income per
  share - basic                     As reported                  $(.85)            $ .35            $ .92
                                    Pro forma                    $(.87)            $ .32            $ .90
Net (loss) income  per
  share - diluted                   As reported                  $(.85)            $ .34            $ .91
                                    Pro forma                    $(.87)            $ .31            $ .88
</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 2001,  2000,  and 1999,  respectively:  dividend
yield of 0% for all years;  expected  volatility of 68%, 60%, and 49%; risk-free
interest rates of 4.9%,  6.7% and 5.1%; and an expected life of 5.5, 5.6 and 5.6
years.


                                      F-19
<PAGE>66








     A summary of the status of the  Company's  fixed stock  option  plans as of
December  29, 2001,  December 30, 2000 and December 25, 1999 and changes  during
the years ended on those dates is presented as follows:
<TABLE>

                                       2001                        2000                         1999
                                    Weighted                    Weighted                     Weighted
                                     Average                     Average                      Average
                                     Exercise                    Exercise                     Exercise
Fixed Options                  Shares         Price         Shares         Price        Shares         Price
-------------                  ------         -----         ------         -----        ------         -----

<S>                         <C>          <C>                <C>          <C>             <C>           <C>
Outstanding beginning
     of year                   776,797      $ 7.23            788,072      $ 7.22          734,263       $  7.67
Granted                         75,500      $ 4.49             83,500      $ 6.90          121,475       $  4.85
Exercised                            -                        (39,433)     $ 3.68           (3,617)      $  3.91
Forfeited, cancelled
     or expired               (199,000)     $ 4.72            (55,342)     $ 9.04          (64,049)      $  8.17
                              --------                        -------                      -------
Outstanding end
    of year                    653,297      $ 7.68            776,797      $ 7.23          788,072       $  7.22

Options exercisable
    at year end                526,532      $ 8.26            443,404      $ 8.86          384,720       $ 10.23

Options available for
    future grant at
    year end                   202,639                         79,139                      107,297
</TABLE>

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

                                                                    2001              2000               1999
                                                                    ----              ----               ----
<S>                                                             <C>                <C>                 <C>
   Exercise price equals market price                             $ 2.84             $ 4.02              $2.51
   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 29, 2001:

<TABLE>
                                    Options Outstanding                           Options Exercisable
                                    -------------------                           -------------------
                                          Weighted-
                                           Average           Weighted-                            Weighted-
      Range of            Number         Remaining           Average               Number         Average
      Exercise        Outstanding        Contractual         Exercise           Exercisable       Exercise
      Prices          at 12/29/01           Life             Price              at 12/29/01       Price
        ------        -----------           ----             -----              -----------       -----
<S>                     <C>               <C>                 <C>                 <C>             <C>

$  3.06 - $  5.00         380,457           6.5 years           $  4.28             291,674         $  4.18
$  5.13 - $  7.00          89,917           6.8 years           $  6.34              51,935         $  5.96
$ 10.95 - $ 23.25         182,923           2.7 years           $ 15.41             182,923         $ 15.41
</TABLE>

                                                                F-20
<PAGE>67

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:

<TABLE>
                                                                     2001               2000             1999
                                                                     ----               ----             ----
Numerators:
<S>                                                         <C>                <C>                 <C>

     Income (loss) before extraordinary
       gain - for basic and diluted EPS                       $(7,074,000)       $(3,952,000)        $7,588,000

     Net income (loss) - for basic and
        diluted EPS                                           $(7,074,000)        $2,854,000         $7,588,000

Denominators:
     Weighted average common
        shares - for basic EPS                                  8,277,190          8,249,774          8,216,265
        Common shares from options                                      -             98,885            82,191
        Other common stock equivalents                                  -            117,724            32,115
                                                                    -----            -------            ------
     Weighted average common
        shares - for diluted EPS                                8,277,190           8,466,383         8,330,571
                                                                =========           =========         =========
</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  544,000,
278,000 and 227,000  weighted-average  shares of common stock during 2001,  2000
and 1999 were not  included in the  calculation  of diluted EPS as the  options'
exercise prices were greater than the average market price.


10.  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
29,  2001,  December 30, 2000,  and  December 25, 1999 were $2.0  million,  $2.1
million and $1.8 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

                                      F-21
<PAGE>68

postretirement  benefits.  The  Company  accrues the  estimated  cost of retiree
benefit payments during the employee's active service period.

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

<TABLE>

                                                                                 December 29,           December 30,
                                                                                     2001                   2000
                                                                                     ----                   ----
                                                                                        (in  thousands)
<S>                                                                            <C>                    <C>
     Change in accumulated  postretirement benefit obligation:
        Benefit obligation at beginning  of year                                   $2,247                 $2,142
        Service  cost                                                                 335                    263
        Interest  cost                                                                179                    157
        Participant  contributions                                                      -                      -
        Claims paid                                                                  (703)                  (317)
        Actuarial  losses (gains)                                                     325                      2
        Plan amendments                                                                 -                      -
                                                                                   ------                 -------
        Benefit obligation at year-end                                             $2,384                 $2,247
                                                                                   ======                 ======

     Change in plan assets:
         Fair value of plan assets                                                   n/a                   n/a

     Reconciliation of funded status:
         Funded status                                                            $(2,384)              $(2,247)
         Unrecognized transition obilgation                                            -                    -
         Unrecognized prior service cost                                              (20)                  (30)
         Unrecognized actuarial gain                                                 (442)                 (794)
                                                                                     ----                  ----
         Net amount recognized as other
             long-term liabilities                                                $(2,846)              $(3,071)
                                                                                  =======               =======

     Weighted-average assumptions as of year-end:
         Discount rate                                                             7.25%                 7.50%
         Expected return on assets                                                  n/a                   n/a
         Medical cost trend                                                        6.00%                 6.00%
</TABLE>
<TABLE>


                                                     December 29,                December 30,           December 25,
                                                         2001                        2000                   1999
                                                         ----                        ----                   ----
                                                                                (in thousands)
<S>                                                 <C>                        <C>                    <C>
     Components of net periodic benefit cost:
         Service cost                                 $   335                    $   264                $   244
         Interest cost                                    179                        157                    151
         Expected return on plan assets                   n/a                        n/a                    n/a
         Amortization of transition obligation             -                           -                     -
         Amortization of prior service cost               (10)                       (10)                   (10)
         Amortization of actuarial gain                   (27)                       (80)                   (39)
                                                          ---                        ---                    ---
     Net periodic benefit cost                        $   478                    $   331                $   346
                                                      =======                    =======                =======
</TABLE>

                                                                F-22
<PAGE>69

<TABLE>

                                                     December 29,                December 30,           December 25,
                                                         2001                        2000                   1999
                                                         ----                        ----                   ----
                                                                                (in thousands)
<S>                                                  <C>                         <C>                   <C>
     Weighted average assumptions used in
       computing net periodic benefit cost:
     Discount rate                                      7.50%                      8.00%                  6.75%
     Expected return on plan assets                      n/a                        n/a                    n/a
     Medical cost trend                                 6.00%                      6.00%                  6.00%
</TABLE>
<TABLE>


     Health care cost trend sensitivity:                            1% Increase      1% Decrease
                                                                    -----------      -----------
<S>                                                                    <C>              <C>
     Effect on total service cost and
       interest cost components                                       $  28            $   (25)
Effect on postretirement benefit obligation                              66                (62)
</TABLE>


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

     The Company provides certain postemployment benefits to qualified former or
inactive  employees who are not retirees.  The Company had accrued  $219,000 and
$152,000 at  December  29,  2001 and  December  30,  2000,  respectively.  These
benefits  include  salary  continuance,   severance,   and  healthcare.   Salary
continuance and severance pay are based on compensation and on 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.










                                      F-23
<PAGE>70

11.    Income Taxes
-------------------

     The Company and its  subsidiaries  file a  consolidated  federal income tax
return.   As  of  December  29,  2001,   the  Company  has  net  operating  loss
carryforwards  available to offset future taxable income of approximately  $41.4
million expiring in the years 2006 through 2021.

     The income tax provision consists of both current and deferred amounts. The
 components of the income tax provision are as follows:
<TABLE>

                                                 December 29,          December 30,        December 25,
                                                     2001                  2000                1999
                                                     ----                  ----                ----
                                                                      (in thousands)
<S>                                               <C>                  <C>                  <C>
   Taxes currently payable:
      State income tax                             $ 1,203              $ 1,372              $ 1,122
      Federal income tax                                 -                    9                  161
   Deferred (benefit) expense                       (4,349)              (2,116)               4,460
                                                    ------               ------                -----
   Income tax (benefit) expense                     (3,146)                (735)               5,743
   Extraordinary expense                                 -                4,313                   -
                                                    ------             --------                -----

   Total income tax (benefit)
   expense                                         $(3,146)             $ 3,578              $ 5,743
                                                   =======              =======              =======
</TABLE>



     An effective  federal and state  income tax rate of 38.9%,  38.8% and 38.7%
was used to calculate  income taxes for 2001,  2000 and 1999,  respectively.  In
addition  to the  effective  income  tax  rate,  state  franchise  taxes of $1.1
million,  $1.4 million and $1.1 million are included in the  provision  reported
for  2001,  2000  and  1999,   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:
<TABLE>

                                                 December 29,           December 30,        December 25,
                                                      2001                     2000                 1999
                                                      ----                     ----                 ----
                                                                        (in thousands)
<S>                                                  <C>                        <C>                  <C>
   Tax/(benefit) computed at
      U.S. statutory tax rate                          $(3,577)              $  2,251             $  4,666
   State and local taxes                                   312                  1,020                1,159
   Alternative minimum tax
      Differential                                           -                      9                  161
   Other                                                   119                    298                 (243)
                                                           ---                    ---                 ----

   Total tax provision                                 $(3,146)              $  3,578             $  5,743
                                                       =======               ========             ========

</TABLE>

                                                                F-24
<PAGE>71

     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,  based on the Company's
positive  earnings in 1999 and 2000, and its expectations  for the future,  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  29, 2001 and  December 30, 2000 are as
follows:
<TABLE>

                                              December 29,              December 30,
                                                  2001                     2000
                                                  ----                     ----
                                                         ( in thousands )
<S>                                              <C>                    <C>

   Deferred income tax assets:
   Trade accounts receivable                     $ 863                   $ 1,139
   Inventories                                   2,822                     3,066
   Accrued personnel cost                        1,249                     1,316
   Other accrued liabilities                     5,201                     3,673
   Net operating loss                           14,487                    13,247
   Other                                         6,132                     3,622
                                                 -----                     -----

   Gross deferred income tax assets             30,754                    26,063
   Less: valuation allowance                    (1,190)                   (1,132)
                                                ------                    ------

   Total deferred income tax assets             29,564                    24,931
                                                ------                    ------

   Deferred income tax liabilities:
   Property, plant and equipment                 1,241                     1,537
   Goodwill and trademark                        3,104                     3,083
   Other accrued liabilities                     1,188                       629
                                                 -----                       ---

   Total deferred income tax liabilities         5,533                     5,249
                                                 -----                     -----


   Net deferred tax assets                     $24,031                   $19,682
                                               =======                   =======
</TABLE>

                                                                F-25







<PAGE>72


12.    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 the
quoted  market  prices for the same or similar  issues or on the  current  rates
offered to the Company for debt of the same remaining maturities.

<TABLE>

                                                 Fair                     Carrying
                                                Value                       Value
                                                -----                     --------
                                                         (in thousands)
<S>                                              <C>                       <C>
         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

         2000 Financial Liabilities:
         Long-term Debt-
         Revolving Credit Facility:
           Revolving Notes                    $ 91,136                   $  91,136
           Term Notes                           51,650                      51,650
         Senior Subordinated Notes              38,374                      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
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.

                                      F-26
<PAGE>73

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 29,  2001,  the Company did not have any lumber
futures contracts outstanding.

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

     The Company has entered  into an interest  rate swap  agreement on February
17, 1999 that effectively  fixes the Company's  borrowing cost at 5.75% plus the
Company's LIBOR borrowing spread (as discussed in Note 7 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.


13.  Related Party Transactions
-------------------------------

     Approximately 35% of the Company's  outstanding  shares of common stock are
owned  by  Riverside  Group,   Inc.  and  approximately  13%  owned  by  Imagine
Investments, Inc. and its parent, Stone Investments, Inc.

     In March 2000, the Company entered into an agreement with Buildscape, Inc.,
an entity affiliated with Riverside Group, Inc. and Imagine  Investments,  Inc.,
each of which  may be deemed  an  affiliate  of the  Company.  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.
Wickes' sales through the Buildscape site were $23.8 million in 2001.

     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.  As of December  29, 2001 the  remaining  principle
balance was approximately $402,000,  with accrued interest of $28,000.  Interest

                                      F-27
<PAGE>74

earned  for the  years  ended  2001,  2000 and 1999 was  approximately  $40,000,
$54,000 and $71,000, respectively.

     In  2001,  the  Company  paid  approximately   $953,000  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 2000 and 1999 for
similar services were approximately $333,000 and $660,000, respectively.


14. Severance and Other Charges
-------------------------------

     In 2001,  the  Company's  management  developed  a plan to  reorganize  and
improve productivity and performance. The results have shown and are expected to
continue  to show  reductions  in  administrative  expense,  marketing  expense,
headcount and the  elimination of  non-strategic  operating  units.  The Company
incurred  severance  and other  items of $1.7  million,  primarily  relating  to
severance  pay  and   distribution   center  closing  costs.


15. Other Operating Income
--------------------------

     Other operating income on the Company's  Statement of Operations  primarily
includes the sale or disposal of property, plant and equipment,  service charges
assessed customers on past due accounts  receivables and casualty  gains/losses.
Other operating  income  increased  approximately  $1.0 million or 32.0% to $4.3
million  in  2001,   compared  with  $3.3  million  in  2000.  The  increase  is
attributable  to gains  realized on the sale of real  estate and  various  fixed
assets.  During 2001, the Company sold four pieces of real estate,  resulting in
recorded gains of approximately  $1.2 million.  This is compared with three real
estate sales and various fixed asset disposals in 2000, resulting in total gains
of  approximately  $0.3  million.  The  following  table  summarizes  the  major
components of other operating income by year.

                                      F-28
<PAGE>75

<TABLE>





                                                                       Other Operating Income

                                                                                Gain/(Loss)
                                                                2001              2000             1999
                                                                ----              ----             ----
                                                                             (in thousands)

<S>                                                          <C>               <C>                <C>
Sale of property, plant and equipment                          $  1,357          $   345           $ 1,821
Accounts receivable service charges                               2,305            2,409             2,460
Casualty losses                                                    (320)            (559)             (556)
Other                                                             1,002            1,096             1,208
                                                                  -----            -----             -----
Total                                                          $  4,344          $ 3,292           $ 4,932
                                                               ========          =======           =======
</TABLE>



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

     The following table contains selected  unaudited  quarterly  financial data
for the  years  ended  December  29,  2001  and  December  30,  2000.  Quarterly
earnings/(loss)  per common share may not total to year end  earnings/(loss) per
share due to the issuance of additional shares of Common Stock during the course
of the year.
<TABLE>


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

                                                            Income (loss)                        Basic / Diluted
                              Net Sales as a                   before                          Net income (loss)
                               % of Annual        Gross     Extraordinary     Net Income        per share before
                Net Sales       Net Sales         Profit       Item               (Loss)       Extraordinary Item
                ---------       ---------         ------       ----               ------       ------------------
<S>            <C>             <C>              <C>         <C>                 <C>          <C>
2001
----
Quarter 1        $184.8           18.5%           $42.0       $(6.5)              $(6.5)       $(.78)/(.78)
Quarter 2         274.1           27.4             58.6         1.0                 1.0            .12/.12
Quarter 3         295.3           29.5             61.3         0.7                 0.7            .08/.08
Quarter 4         246.8           24.6             49.7        (2.3)               (2.3)        (.27)/(.27)

2000
----
Quarter 1        $216.5           21.1%           $46.0       $(3.2)              $(3.2)       $(.39)/(.39)
Quarter 2         280.4           27.3             60.1         1.5                 1.5          .19 / .18
Quarter 3         282.7           27.5             62.6         2.1                 2.1          .26 / .25
Quarter 4         248.0           24.1             54.4        (4.4)                2.4         (.53)/(.53)
</TABLE>



     Each fiscal quarter in the table above  represents a thirteen-week  period,
with the exception of Quarter 4 in 2000, which was a fourteen-week period.

                                                                F-29
<PAGE>76


<TABLE>

                                                    WICKES INC. AND SUBSIDIARIES

                                           Schedule II - Valuation and Qualifying Accounts

                                    For the Years Ended December 29, 2001, December 30, 2000, and
                                                          December 25, 1999
                                                       (dollars in thousands)


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

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

1999:
Allowance for doubtful
    accounts                        $4,393            $1,724                ($40)              $1,972         $4,105

</TABLE>




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

(b) Reserved accounts written-off.

                                                                F-30
<PAGE>77


                                  Exhibit Index
                                  -------------

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

     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).***

     4.1
          (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).***

     4.1

          (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).***

     4.1

          (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).***
                                      F-31
<PAGE>78

     4.1
          (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.

     4.1
          (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.

     4.1
          (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.

     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")).***

          (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
               1997 Form 10-K).***

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

                                      F-32
<PAGE>79

     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*Special  Severance  and Stay  Incentive  Bonus Plan  (incorporated  by
          reference to Exhibit 10.7 to the  Registrant's  Annual  Report on Form
          10-K for the year ended December 1997 (the "1997 Form 10-K")).***

     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 teh  Registrant's  Annual  Report on Form
          10-K for the year ended December 25, 1999).***


     21.1** List of Subsidiaries of the Registrant.


     23.1** Consent of Deloitte & Touche LLP.


*    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.

                                      F-33
<PAGE>80







                                                                    Exhibit 21.1

                       LIST OF SUBSIDIARIES OF REGISTRANT



Name                                                     State of Incorporation
----                                                     ----------------------

Lumber Trademark Company                                               Illinois

GLC Division, Inc.                                                     Delaware








                                      F-34
<PAGE>81

                                                                    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 5, 2002, except for the last paragraph of Note 7, as to which
the date is March  29,  2002,  appearing  in the  Annual  Report on Form 10-K of
Wickes Inc. and subsidiaries for the year ended December 29, 2001.


/s/ Deloitte & Touche LLP
Chicago, IL
March 29, 2002