##### Table of Contents





SECURITIES AND EXCHANGE
    COMMISSION
 WASHINGTON, D.C.
    20549
 FORM 10-K
  (Mark one)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934For the fiscal year ended February 2,
    2008ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   000-21543
  Wilsons The Leather Experts
    Inc.
 (Exact name of registrant as
    specified in its charter)
  Minnesota

41-1839933(State or other jurisdiction of
    incorporation or organization)

(I.R.S. Employer
    Identification No.)7401 Boone Ave. N., Brooklyn
    Park, MN

55428(Address of principal executive
    offices)

(Zip Code)   (763) 391-4000
   Common stock, $.01 par value

Nasdaq Global Market(Title of Class)

(Name of Exchange on Which
    Registered)   Securities registered pursuant to
    Section 12(g) of the Act:  None
  o þ
  o þ
  þ o
  Regulation S-K Form 10-K Form 10-K. o
    Large accelerated filer
    o

Accelerated filer
    o

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company þ   Rule 12b-2 o þ
  sm Form 10-K
    DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K (Form 10-K). Form 10-K.




---



##### 





WILSONS
    THE LEATHER EXPERTS INC.
  FORM 10-K
  For the
    fiscal year ended February 2, 2008
  TABLE OF
    CONTENTS
   
 description

pagePART IItem 1.


Business


1Item 1A.


Risk Factors


10Item 1B.


Unresolved Staff Comments


18Item 2.


Properties


18Item 3.


Legal Proceedings


18Item 4.


Submission of Matters to a Vote of Security
    Holders


19Item 4A.


Executive Officers of the Registrant


19PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


20Item 6.


Selected Financial Data


20Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operations


20Item 7A.


Quantitative and Qualitative Disclosure About
    Market Risk


31Item 8.


Financial Statements and Supplementary Data


31Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


31Item 9A(T).


Controls and Procedures


32Item 9B.


Other Information


33PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


33Item 11.


Executive Compensation


33Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


33Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


33Item 14.


Principal Accountant Fees and Services


33PART IVItem 15.


Exhibits and Financial Statement Schedules


34Signatures


35SubsidiariesConsent of KPMG LLPCertification of Chairman Pursuant to Section 302Certification of Chief Financial Officer Pursuant to Section 302Certification of Chairman Pursuant to Section 906Certification of Chief Financial Officer Pursuant to Section 906




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##### Table of Contents



PART I  When we refer to we, our,
    us, or Wilsons Leather, we mean Wilsons
    The Leather Experts Inc. and its subsidiaries, including its
    predecessor companies. Unless otherwise indicated, references to
    our fiscal year mean the year ended on the Saturday closest to
    January 31. The periods that will end or have ended on February 2, 2008,
    February 3, 2007, and January 28, 2006 are referred to
    herein as 2008, 2007, 2006, and 2005, respectively. The results
    of operations for fiscal year 2006 consisted of 53 weeks.
    All other fiscal years referenced consist of 52 weeks.
  Item 1.
    Business  Disclosure
    Regarding Forward-Looking Statements
  Form 10-K Form 10-K Form 10-K. Form 10-K Form 10-K.
  Overview
    sm Wilsons Leather
 1




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##### Table of Contents



Financial
    Strategy
      Increase Accessories Penetration.
  Emphasis on Designer Brands.
  New Store Environment Test.
  Develop a Wholesale Business.
    Reorganization and Partial Store
    Liquidation.
 2




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New Mall Accessories Store Concept.
    Revitalize/Enhance Our Outlet and Airport
    Channels.
  Merchandising
    Strategy and Product Design
        New Mall Accessories Store Concept.
  Target Core Customer Base.
 3




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##### Table of Contents



Pursue Multiple Selling Channels. e-commerce
    Merchandise Category

2007


2006Accessories


44.9
%


41.4
%Womens apparel


27.0
%


28.0
%Mens apparel


28.1
%


30.6
%Total


100.0
%


100.0
%   Sourcing
    and Quality Assurance
      Store
    Formats and Locations
    e-commerce
 4




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##### Table of Contents



Store Locations as of February 2, 2008:
  Liquidation StoresState

Mall


Outlet


Airport


Total


Mall


OutletAlabama






1







1







Arizona


2



1







3



1



California


24



14



1



39



15



Colorado


4



4







8



2



Connecticut


6



1







7



3



Delaware


2



1







3



1



Florida


8



8



1



17



5



Georgia


8



5



3



16



5



Iowa


4



1







5



3



Idaho


1











1



1



Illinois


22



4



5



31



19



Indiana


6



2







8



5



Kansas


2



1







3



1



Kentucky


2











2



2



Louisiana






2







2







Massachusetts


8



2







10



5



Maryland


8



4







12



3



Maine


1



2







3



1



Michigan


16



3







19



11



1Minnesota


11



3



1



15



5



Missouri


3



3







6



2



Mississippi






2







2







North Carolina


7



3







10



3



North Dakota


3











3



1



Nebraska


1











1







New Hampshire


4



2







6



2



New Jersey


7



3







10



2



New Mexico


2



1







3



2



Nevada


1



3







4







New York


15



4







19



9



1Ohio


14



4







18



11



1Oklahoma


2











2







Oregon


5



1







6



2



Pennsylvania


14



5



1



20



8



South Carolina






5







5







1South Dakota


2











2



2



Tennessee


6



4







10



3



Texas


10



8







18



4



Utah


1



1



1



3







Virginia


7



3



1



11



5



Washington


9



3







12



3



Wisconsin


11



4







15



7



GRAND TOTAL


259



118



14



391



154



4   Site Selection for Store Openings and
    Closings.
  
    customer segment and demographic data derived from our
    point-of-sale network and outside sources;
    information relating to population density in concentric circles
    surrounding the center;
    the performance of past temporary seasonal stores within the
    center;
    the proposed location within the center; and
    projected profitability, cost, return on investment, and
    cash-flow objectives.   5




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##### Table of Contents



Mall


Outlet


Airport


TotalStore count as of January 28, 2006


298



110



14



422Fiscal year ended February 3, 2007Stores opened


3



6







9Stores closed


(14
)










(14
)End of year count


287



116



14



417Fiscal year ended February 2, 2008Stores opened


1



4







5Stores closed


(29
)


(2
)






(31
)End of year count


259



118



14



391Liquidation stores February 15, 2008


154



4







158   Mall Stores.
    Outlet Stores. sm ® sm sm
  Airport Stores. Wilsons
    Leather
  e-commerce. e-commerce e-mail e-commerce e-commerce
  Store Operations.
 6




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Distribution
  15-year
  Marketing
    and Advertising
      Wilsons Leather e-commerce
   7




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##### Table of Contents



Licensing
    ®
  Information
    Systems
      Competition
   8




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##### Table of Contents



Trademarks
  ® ® ® tm ® tm ® tm sm tm tm Wilsons Leather e-commerce
  Employees
    Available
    Information
  Form 10-K, Form 10-Q, Form 8-K,
 9




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##### Table of Contents



Item 1A.
    Risk
    Factors    We
    will need funding during the second quarter of fiscal 2008, and
    there is no assurance that funding will be
    available.
    We may
    not be able to maintain our listing on the Nasdaq Global Market
    if we are unable to satisfy the minimum bid price requirements
    and, if we fail to do so, the price and liquidity of our common
    stock may decline.
      180-day
 10




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We may
    not be able to exit store leases for the 158 liquidation stores
    on terms that are acceptable to us and to our
    lender.
    We may
    not be able to utilize our tax net operating loss
    carryforwards.
    We may
    not be able to expand our accessories business or acquire
    suitable accessories brands.
   11




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Our
    growth is dependent on strengthening the operating performance
    of our existing stores and development of our accessories
    concept.
    Our
    comparable store sales declined during each of the last three
    years.
    
    general economic conditions and, in particular, the retail sales
    environment;
    consumer shopping preferences;
    transition of our target customer base;
    level of acceptance of our designer brand merchandise offerings;
    level of acceptance of the Wilsons Leatherbrand;
    actions by competitors or mall anchor tenants;
    weather conditions;
    fashion trends;
    changes in our merchandise mix;
    the timing of new store openings and the relative proportion of
    new stores to mature stores;
    maintaining appropriate inventory levels;
    calendar shifts of seasonal periods; and
    timing of promotional events.    We are
    dependent upon our key suppliers to implement our merchandising
    strategy to offer designer brands in our stores
    accessories and outerwear product mix.
   12




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##### Table of Contents



Changes
    in customer shopping patterns could harm our
    sales.
  e-commerce
  We may
    need to record additional impairment losses in the future if our
    stores operating performance does not
    improve.
  page F-8
  The
    high level of competition in our markets may lead to reduced
    sales and profits.
    Uncertainty
    in general economic conditions may lead to reduced consumer
    demand for our outerwear, accessories and apparel and could
    adversely affect our business and liquidity.
    
    general economic conditions, including recessionary periods;
    rising energy prices;
    interest rates; 13




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
    the availability of consumer credit;
    continued hostilities in the Middle East and other significant
    national and international events; and
    taxation and consumer confidence in future economic conditions.      Unseasonably
    warm weather, particularly during the fall and winter, has in
    the past and may in the future negatively effect our sales
    performance.
    Our
    inability to effectively respond to changes in fashion trends
    and consumer demands could adversely affect our
    sales.
  hoof-and-mouth
  A
    decrease in the availability of leather or an increase in its
    price could harm our business.
    We
    could have difficulty obtaining merchandise from our foreign
    suppliers.
   14




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##### Table of Contents




    transportation delays and interruptions, including delays
    relating to labor disputes;
    economic and political instability;
    restrictive actions by foreign governments;
    trade and foreign tax laws;
    fluctuations in currency exchange rates and restrictions on the
    transfer of funds; and
    the possibility of boycotts or other actions prompted by
    domestic concerns regarding foreign labor practices or other
    conditions beyond our control.    The
    seasonality of our business could affect our
    profitability.
      
    merchandise mix offered during the peak selling season;
    the timing and level of markdowns and promotions by us during
    the peak selling season;
    the timing and level of markdowns and promotions by our
    competitors during the peak selling season;
    consumer shopping patterns and preferences;
    the timing of certain holidays; and 15




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
    the number of shopping days and weekends between Thanksgiving
    and Christmas.  The
    public sale of our common stock issued pursuant to our employee
    benefit plans or the sale into the market of the shares issued
    in our equity financing in April 2004 or issuable upon exercise
    of the warrants delivered in connection with our April 2004
    equity financing, as well as shares issuable upon conversion of
    the Preferred Stock and exercise of the Warrants issued in
    connection with the June 2007 preferred stock financing
    described in this report, could decrease the price of our common
    stock or make it more difficult to obtain additional financing
    in the future.
  payment-in-kind
  Our
    accounting policies and methods are key to how we report our
    financial condition and results of operations and they may
    require management to make estimates about matters that are
    inherently uncertain.
    and/or
  
    significantly increase our lower of cost or market allowance for
    slow moving or obsolete inventory; or 16




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
    recognize a significant fixed asset impairment charge.    Changes
    to financial accounting standards may affect our results of
    operations and cause us to change our business
    practices.
    Loss
    of key members of our senior management team could adversely
    affect our business.
    Ownership
    of our common stock is concentrated.
    
    the election of individuals to our board of directors;
    the adoption of amendments to our Amended and Restated Articles
    of Incorporation; and
    the approval of certain mergers, additional financing, sales of
    assets, and other business acquisitions or dispositions.    The
    market price for our common stock may be volatile.
    
    any future sales of our common stock or other securities;
    a decline in any quarter of our net sales or earnings;
    a decline in any quarter of comparable store sales;
    a deviation in our net sales, earnings or comparable store sales
    from levels expected by securities analysts;
    changes in financial estimates by securities analysts;
    changes in market valuations of other companies in the same or
    similar markets; 17




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##### Table of Contents




    our inability to develop our new mall accessories store concept
    and the market perception of this new concept; or
    difficulty obtaining alternative funding sources or other
    limitations on our liquidity.  sm
  We
    rely on third parties for upgrading and maintaining our
    information systems.
    War,
    acts of terrorism or the threat of either may negatively impact
    the availability of merchandise and otherwise adversely impact
    our business.
      Any
    significant interruption in the operation of our corporate
    offices and distribution center could have a material adverse
    effect on our business.
    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties   18




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##### Table of Contents



15-year
  Item 3.
    Legal
    Proceedings    Item 4.
    Submission
    of Matters to a Vote of Security Holders   Item 4A.    Executive
    Officers of the Registrant    Name

Age

PositionStacy A. Kruse


48


Chief Financial Officer and TreasurerM. Adam Boucher


47


Chief Operating OfficerWilliam S. Hutchison


34


Chief Merchandising and Sourcing OfficerMichael J. Tripp


39


Vice President, Global Logistics and
    e-Commerce   Stacy A. Kruse
  M. Adam Boucher
  William S. Hutchison
  Michael J. Tripp e-Commerce
 19




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##### Table of Contents



PART II  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder Matters
    and Issuer Purchases of Equity Securities  Market
    Information
  sm
  Quarterly Common Stock Price RangesFiscal quarter ended

High


LowApril 29, 2006

$
3.98


$
3.14July 29, 2006

$
4.12


$
3.25October 28, 2006

$
3.70


$
2.46February 3, 2007

$
2.84


$
1.68May 5, 2007

$
2.10


$
1.30August 4, 2007

$
2.36


$
1.01November 3, 2007

$
1.97


$
1.16February 2, 2008

$
1.39


$
0.65     Cash
    Dividends
    Purchases
    of Equity Securities
    Item 6.
    Selected
    Financial Data    Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations  Form 10-K.
  Executive
    Overview
     20




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##### Table of Contents



Comparable





Sales per SellingSales


Store Sales


Average Size


Square
    Foot(1)(in millions)





(in sellingsquare feet)Mall stores

$
145.2



(10.5
)%


2,000


$
248Outlet stores


115.6



(11.0
)%


3,250



297Airport stores


10.4



(4.0
)%


600



1,197e-commerce


7.4











Wholesale


1.8











Total

$
280.4     Comparable





Sales per SellingSales


Store Sales


Average Size


Square
    Foot(1)(in millions)





(in sellingsquare feet)Mall stores

$
173.1



(22.7
)%


2,000


$
296Outlet stores


128.7



(8.9
)%


3,250



347Airport stores


10.7



(12.7
)%


600



1,289e-commerce


6.7











Wholesale


1.5











Seasonal


0.6











Total

$
321.3     (1)
    
    Sales per square foot is defined as net sales for stores open a
    full 12 months divided by total selling square feet for
    stores open a full 12 months. 21




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##### Table of Contents



Increase Accessories Penetration.
  Emphasis on Designer Brands.
  New Store Environment Test.
  Develop a Wholesale Business.
      Reorganization and Partial Store
    Liquidation.
  New Mall Accessories Store Concept.
 22




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##### Table of Contents



Revitalize/Enhance Our Outlet and Airport
    Channels.
      Critical
    Accounting Policies
  page F-7
  Inventories
  last-in, first-in,
   23




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##### Table of Contents



Property
    and Equipment Impairment
    Results
    of Operations
  Overview
    For the years endedFebruary 2,


February 3,2008


2007NET SALES


100.0
%


100.0
%COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS


80.4



72.9Gross margin


19.6



27.1SELLING, GENERAL AND ADMINISTRATIVE EXPENSES


35.6



34.1DEPRECIATION AND AMORTIZATION


4.0



3.9ASSET IMPAIRMENTS


7.0



0.2Operating loss


(27.0
)


(11.1
)INTEREST EXPENSE, NET


0.5



0.6Loss before income taxes


(27.5
)


(11.7
)INCOME TAX PROVISION (BENEFIT)


0.2



(1.4
)Net loss


(27.7
)


(10.3
)  24




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##### Table of Contents



2007
    Compared to 2006
  Net Sales.
        Cost of Goods Sold, Buying and Occupancy
    Costs.
        Selling, General and Administrative
    Expenses.
   25




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##### Table of Contents



Depreciation and Amortization.
  Asset Impairments.
  Operating Loss.
  Interest Expense, Net.
  Income Tax Provision (Benefit).
    Net Loss.
  Net Loss Available to Common
    Shareholders. paid-in-kind
 26




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##### Table of Contents



Liquidity
    and Capital Resources
  Liquidity.
  Capital resources.
      
    100% of the book value of credit card receivables;
    plus the lesser of $10 million or 100% of the book value of
    eligible wholesale accounts receivable;
    plus 102.5% of the then applicable discount rate applied in
    appraising eligible retail inventories times the appraised
    eligible retail inventories, plus 102.5% of such discount rate
    times our future retail inventories subject to trade letters of
    credit;
    plus the lesser of $10 million, or 60% of the book value of
    our wholesale inventory, including in-transit inventory but
    minus the book value of in-transit inventory in excess of
    $5 million; 27




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##### Table of Contents




    plus 60% of the book value of our future wholesale inventories
    related to trade letters of credit;
    minus a reserve equal to 10% of the lesser of
    $115.0 million and the maximum amount calculated under the
    formula described above, plus $10.0 million, plus other
    reserves as set forth by GECC.               28




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##### Table of Contents



payment-in-kind
          Cash Flow
    Analysis
    For the years endedFebruary 2,


February 3,2008


2007(in thousands)


(in thousands)Net cash used in operating activities

$
(28,213
)

$
(14,550
)Net cash used in investing activities


(5,686
)


(11,033
)Net cash provided by (used in) financing activities


21,352



(60
)NET DECREASE IN CASH AND CASH EQUIVALENTS

$
(12,547
)

$
(25,643
)  29




---



##### Table of Contents



Operating Activities.
          Investing Activities.
    Financing Activities.
   30




---



##### Table of Contents



Commercial
    Commitments
  Amount of
    Commitment by Period (in thousands)
  Total











After FiveObligations


2008


2009-2010


2011-2012


YearsDocumentary letters of credit

$
8,604


$
8,604


$



$



$
Standby letters of credit


3,580



3,580











Total commercial commitments

$
12,184


$
12,184


$



$



$
     Off-Balance
    Sheet Arrangements
    Seasonality
    and Inflation
      Recently
    Issued Accounting Pronouncements
    Item 7A.
    Quantitative
    and Qualitative Disclosure About Market Risk    Item 8.
    Financial
    Statements and Supplementary Data  page F-1 Form 10-K.
  Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure   31




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Item 9A(T).
    Controls
    and Procedures  Evaluation
    of Disclosure Controls and Procedures
    Managements
    Report on Internal Controls and Procedures
                Change in
    Internal Control Over Financial Reporting
   32




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##### Table of Contents



Item 9B.
    Other
    Information   PART III    Form 10-K Form 10-K.
  Item 10.
    Directors,
    Executive Officers and Corporate Governance  Form 10-K Form 10-K.
  Form 10-K.
  Item 11.
    Executive
    Compensation  Form 10-K
  Item 12.
    Security
    Ownership of Certain Beneficial Owners and Management and
    Related Stockholder Matters  Form 10-K
  Item 13.
    Certain
    Relationships and Related Transactions, and Director
    Independence  Form 10-K
  Item 14.
    Principal
    Accountant Fees and Services  Form 10-K
 33




---



##### Table of Contents



PART IV  Item 15.
    Exhibits
    and Financial Statement Schedules  (a) Documents filed as part of this report:
                     34




---



##### Table of Contents



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 on April 11,
    2008:
  Wilsons the Leather
    Experts Inc.
  By:
    /s/  Stacy
    A. Kruse  Stacy A. Kruse
    Chief Financial Officer and Treasurer
    (principal financial and accounting officer)
  Pursuant to the requirements of the Securities Exchange Act
    of 1934, this report has been signed below on April 11,
    2008 by the following persons on behalf of the registrant and in
    the capacities indicated:
  /s/  Michael
    T. SweeneyMichael
    T. Sweeney

Chairman of the Board of Directors 
    (acting principal executive officer)/s/  Stacy
    A. KruseStacy
    A. Kruse

Chief Financial Officer and Treasurer 
    (principal financial and accounting officer)/s/  Darren
    L.  AchesonDarren
    L.  Acheson

Director/s/  Gail
    A. CottleGail
    A. Cottle

Director/s/  William
    F. FarleyWilliam
    F. Farley

Director/s/  Peter
    V. HandalPeter
    V. Handal

Director/s/  Bradley
    K. JohnsonBradley
    K. Johnson

Director/s/  David
    L. RogersDavid
    L. Rogers

Director/s/  Mark
    G. SchoeppnerMark
    G. Schoeppner

Director/s/  R.
    Ted WeschlerR.
    Ted Weschler

Director  35




---



##### 



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  Index to
    Consolidated Financial Statements and Financial Statement
    Schedule
   
 PageReport of Independent Registered Public
    Accounting Firm


F-2Consolidated Balance Sheets as of
    February 2, 2008 and February 3, 2007


F-3Consolidated Statements of Operations for the
    years ended February 2, 2008 and February 3, 2007


F-4Consolidated Statements of Shareholders
    Equity for the years ended February 2, 2008 and
    February 3, 2007


F-5Consolidated Statements of Cash Flows for the
    years ended February 2, 2008 and February 3, 2007


F-6Notes to Consolidated Financial Statements


F-7Financial Statement Schedule:Schedule II  Valuation and
    Qualifying Accounts


F-29   F-1




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Report of
    Independent Registered Public Accounting Firm               
    F-2




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##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
 CONSOLIDATED
    BALANCE SHEETS(In thousands, except share and per share amounts) February 2,


February 3,2008


2007ASSETSCURRENT ASSETS:Cash and cash equivalents

$
7,362


$
19,909Accounts receivable, net of allowance of $48 and $71 in 2007 and
    2006, respectively


3,462



3,132Inventories


58,307



74,897Prepaid expenses


6,821



7,267Income taxes receivable


141



TOTAL CURRENT ASSETS


76,093



105,205Property and equipment, net


13,681



38,890Other assets, net


815



1,250TOTAL ASSETS

$
90,589


$
145,345LIABILITIES, PREFERRED STOCK AND COMMON SHAREHOLDERS
    EQUITYCURRENT LIABILITIES:Accounts payable

$
16,288


$
14,337Accrued expenses


12,718



14,534Income taxes payable






921Deferred income taxes


723



220TOTAL CURRENT LIABILITIES


29,729



30,012Long-term debt






20,000Income taxes payable


1,367



Other long-term liabilities


15,441



16,832TOTAL LIABILITIES


46,537



66,844COMMITMENTS AND CONTINGENCIESPreferred stock, $.01 par value; 200,000 shares
    authorized; 46,667 and no shares issued and outstanding on
    February 2, 2008 and February 3, 2007, respectively
    (liquidation preference of $47,309)


39,033



COMMON SHAREHOLDERS EQUITY:Common stock, $.01 par value; 150,000,000 shares
    authorized; 39,336,903 and 39,204,299 shares issued and
    outstanding on February 2, 2008 and February 3,2007,
    respectively


393



392Additional paid-in capital


140,500



136,441Accumulated deficit


(135,876
)


(58,334
)Accumulated other comprehensive income


2



2TOTAL COMMON SHAREHOLDERS EQUITY


5,019



78,501TOTAL LIABILITIES, PREFERRED STOCK AND COMMON SHAREHOLDERS
    EQUITY

$
90,589


$
145,345    F-3




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF OPERATIONS  (In
    thousands, except per share amounts)
  For the years endedFebruary 2,


February 3,2008


2007NET SALES

$
280,438


$
321,262COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS


225,523



234,251Gross margin


54,915



87,011SELLING, GENERAL AND ADMINISTRATIVE EXPENSES


99,657



109,423DEPRECIATION AND AMORTIZATION


11,319



12,462ASSET IMPAIRMENTS


19,705



736Operating loss


(75,766
)


(35,610
)INTEREST EXPENSE, NET


1,333



1,862Loss before income taxes


(77,099
)


(37,472
)INCOME TAX PROVISION (BENEFIT)


443



(4,377
)Net loss


(77,542
)


(33,095
)Less: Preferred stock
    paid-in-kind
    dividends


(3,415
)


Beneficial conversion feature on preferred stock


(14,877
)


Deemed dividend to warrant holders


(967
)


Net loss available to common shareholders

$
(96,801
)

$
(33,095
)BASIC LOSS PER SHARE:Basic loss per share

$
(2.46
)

$
(0.85
)Basic weighted average common shares outstanding


39,277



39,154DILUTED LOSS PER SHARE:Diluted loss per share

$
(2.46
)

$
(0.85
)Diluted weighted average common shares outstanding


39,277



39,154    F-4




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF COMMON SHAREHOLDERS EQUITY  (In
    thousands, except share amounts)
  AccumulatedAdditional





other


TotalCommon stock


paid-in


Accumulated


comprehensive


shareholdersShares


Amount


capital


deficit


income (loss)


equityBALANCE, January 28, 2006


39,087,652


$
391


$
133,853


$
(26,201
)

$
11


$
108,054Cumulative effect of adjustment resulting from adoption of
    SAB No. 108, net of tax














962







962BALANCE, January 28, 2006 as adjusted


39,087,652



391



133,853



(25,239
)


11



109,016Net loss














(33,095
)






(33,095
)Other comprehensive loss-foreign currency translation adjustment


















(9
)


(9
)Comprehensive loss






















(33,104
)Compensation expense for options issued to employees










2,267











2,267Stock options exercised


44,040







128











128Shares issued under the Companys employee stock purchase
    plan


55,487



1



130











131Shares issued to non-employee directors


17,120







63











63BALANCE, February 3, 2007


39,204,299



392



136,441



(58,334
)


2



78,501Net loss














(77,542
)






(77,542
)Other comprehensive loss-foreign currency translation adjustment






















Comprehensive loss






















(77,542
)Issuance of warrants in connection with Preferred Stock










5,266











5,266Paid-in-kind
    cumulative preferred stock dividend










(2,984
)










(2,984
)Preferred stock beneficial conversion feature (BCF)






















Paid-in-kind
    cumulative preferred stock dividend  BCF component






















Deemed dividend to warrant holders






















Compensation expense for options issued to employees










1,608











1,608Shares issued under the Companys employee stock purchase
    plan


79,385



1



92











93Shares issued to non-employee directors


53,219







77











77BALANCE, February 2, 2008


39,336,903


$
393


$
140,500


$
(135,876
)

$
2


$
5,019    F-5




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
 CONSOLIDATED
    STATEMENTS OF CASH FLOWS  (In
    thousands)
  For the years endedFebruary 2,


February 3,2008


2007OPERATING ACTIVITIES:Net loss

$
(77,542
)

$
(33,095
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation and amortization


11,318



12,462Amortization of deferred financing costs


513



698Loss (gain) on disposal of assets


107



(13
)Asset impairments


19,705



733Stock compensation expense


1,608



2,267Deferred income taxes


503



167Changes in operating assets and liabilities:Accounts receivable, net


(330
)


931Inventories


16,590



10,748Prepaid expenses


305



(4,805
)Accounts payable and accrued expenses


(44
)


733Income taxes payable and other liabilities


(946
)


(5,376
)Net cash used in operating activities


(28,213
)


(14,550
)INVESTING ACTIVITIES:Additions to property and equipment


(5,706
)


(11,112
)Proceeds from sale of property and equipment


20



79Net cash used in investing activities


(5,686
)


(11,033
)FINANCING ACTIVITIES:Proceeds from issuance of common stock, net


171



322Net proceeds from issuance of preferred stock


36,049



Net proceeds from issuance of common stock warrants


5,266



Debt acquisition costs


(134
)


(373
)Repayments of long-term debt


(20,000
)


Other






(9
)Net cash provided by (used in) financing activities


21,352



(60
)NET DECREASE IN CASH AND CASH EQUIVALENTS


(12,547
)


(25,643
)CASH AND CASH EQUIVALENTS, beginning of year


19,909



45,552CASH AND CASH EQUIVALENTS, end of year

$
7,362


$
19,909SUPPLEMENTAL CASH FLOW INFORMATION:Cash paid (refunded) during the year for Interest

$
1,531


$
2,829Income taxes

$
(364
)

$
219    F-6




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
 NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  February 2,
    2008 and February 3, 2007
  1    Summary
    of significant accounting policies
  Nature of
    organization
    Basis of
    presentation
    Fiscal
    year
    Use of
    estimates
    Fair
    values of financial instruments
    Cash and
    cash equivalents
    Inventories
  last-in, first-in,
 F-7




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
            February 2,


February 3,2008


2007Raw materials

$
1,348


$
2,940Finished goods


56,959



71,957Total

$
58,307


$
74,897   Property
    and equipment
  No. FAS 13-1 FAS 13-1).
  Store
    closing and impairment of long-lived assets
   F-8




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
        Debt
    issuance costs
    Operating
    leases
   F-9




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
  FAS 13-1.
  Revenue
    recognition
    Store
    opening costs
    Advertising
    costs
    Income
    taxes
     F-10




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    Sales
    taxes
    Foreign
    currency translation
    Income
    (loss) per share
  paid-in-kind
  For the years endedFebruary 2,


February 3,2008


2007Weighted average common shares outstanding 
    basic


39,277



39,154Effect of dilutive securities: stock options






Effect of dilutive securities: warrants






Weighted average common shares outstanding 
    diluted


39,277



39,154  F-11




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    For the years endedFebruary 2,


February 3,2008


2007Stock options


2,990,651



1,471,660Warrants


20,022,364



4,000,000Preferred
    stock(1)


31,111,333



Total potentially dilutive shares


54,124,348



5,471,660     (1)
    
    Weighted average shares of preferred stock using an as if
    converted method.  Stock-based
    compensation
  Share-Based Payment Accounting for Stock Issued to
    Employees Accounting for Stock-Based Compensation
      For the years endedFebruary 2,


February 3,2008


2007Expected term (in years)


3.8



4.1Expected volatility


63.3%



68.4%Risk-free interest rate


4.3%



4.8%Dividend yield


0.0%



0.0%Weighted average fair value of options granted

$
0.59


$
1.82    F-12




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
          New
    accounting pronouncements
  No. 48-1, (FIN 48-1), FIN 48-1 FIN 48-1
   F-13




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
      2
    Liquidity/going
    concern    3
    Accounts
    receivable    February 2,


February 3,2008


2007Trade receivables

$
3,238


$
2,359Other receivables


388



929Total


3,626



3,288LessAllowance for doubtful accounts


(48
)


(71
)LessDeferred
    sales(1)


(116
)


(85
)Total

$
3,462


$
3,132     (1)
    
    Deferred in-transit
    e-commerce
    sales. F-14




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
   4
    Other
    assets    February 2,


February 3,2008


2007Debt issuance costs

$
4,578


$
5,219LessAccumulated amortization


(3,763
)


(4,027
)Debt issuance costs, net


815



1,192Other intangible assets, net






58Total

$
815


$
1,250     5
    Property
    and equipment    February 2,


February 3,2008


2007Equipment and furniture

$
66,324


$
74,420Leasehold improvements


31,373



42,700Total


97,697



117,120LessAccumulated depreciation and amortization


(84,016
)


(78,230
)Net property and equipment

$
13,681


$
38,890   6
    Accrued
    expenses    February 2,


February 3,2008


2007Compensation and benefits

$
4,708


$
5,137Taxes other than income taxes


1,893



2,002Rent


2,722



2,695Other


3,395



4,700Total

$
12,718


$
14,534   7
    Long-term
    debt    February 2,


February 3,2008


2007Term B promissory note

$



$
20,000LessCurrent portion






Total long-term debt

$



$
20,000  F-15




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
  Senior
    credit facility and Term B promissory note
           F-16




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    8
    Income
    taxes    For the years endedFebruary 2,


February 3,2008


2007CurrentFederal

$



$
(2,708
)State


(60
)


(1,836
)Deferred


503



167Total

$
443


$
(4,377
)     For the years endedFebruary 2,


February 3,2008


2007Tax at statutory rate (35)%

$
(26,985
)

$
(13,115
)State income taxes, net of federal benefit


(4,850
)


(3,076
)Change in valuation allowance


31,862



12,188Adjustment of deferred tax balances


503



167Adjustment of tax contingency reserves


(167
)


(947
)Other


80



406Total

$
443


$
(4,377
)     For the years endedFebruary 2,


February 3,2008


2007Statutory rate


(35.0
)%


(35.0
)%State income taxes


(6.3
)%


(8.2
)%Change in valuation allowance


41.3
%


32.5
%Adjustment of deferred tax balances


0.7
%


0.4
%Adjustment of tax contingency reserve


(0.2
)%


(2.5
)%Other


0.1
%


1.1
%Total


0.6
%


(11.7
)%  F-17




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    February 2,


February 3,2008


2007Net deferred tax asset (liability)  currentAccrued liabilities

$
1,989


$
1,854Inventories


(14,100
)


(3,641
)Other


(150
)


(469
)LessValuation allowance


11,538



2,036Total deferred tax liability  current


(723
)


(220
)Net deferred tax asset (liability)  long-termAccrued liabilities


7,746



5,408State net operating loss carryforwards


12,191



6,556Property and equipment


5,942



842Federal net operating loss


47,897



19,606Other


606



606Less  Valuation allowance


(74,382
)


(33,018
)Total deferred tax asset (liability)  long-term






Net deferred tax liability

$
(723
)

$
(220
)        F-18




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    For the year endedFebruary 2, 2008At adoption  February 4, 2007

$
889Additions based on tax positions of current year


24Additions for tax positions of prior years


Reductions for tax provisions of prior years


Settlements


Lapse in statute of limitations


(112
)Balance at February 2, 2008

$
801Total reserve

$
1,367Difference

$
(566
)Interest and penalties

$
566At adoption  February 4, 2007

$
558Increase  penalty


1Increase  interest


44Decrease  penalty


(14
)Decrease  interest


(23
)Interest and penalties at February 2, 2008

$
566   9
    Preferred
    stock and warrant financing     F-19




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    payment-in-kind
        No. 00-27, No. 98-5 No. 00-27), No. 00-27, No. 98-5,
 F-20




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    payment-in-kind
      No. 96-18,
  10
    Employee
    stock benefit plans  Stock
    options
     F-21




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    As of and for the years endedFebruary 2, 2008


February 3, 2007Weighted


Weighted





WeightedAverage


Average





AverageExercise


Remaining





ExerciseShares


Price


Life


Shares


PriceOutstanding, beginning of year


2,722,247


$
5.50







3,470,736


$
6.79Granted


978,000


$
1.16







429,000


$
3.20Exercised





$








(44,040
)

$
2.92Forfeited


(394,663
)

$
4.05







(380,329
)

$
5.52Expired


(314,933
)

$
6.29







(753,120
)

$
10.28Outstanding, end of year


2,990,651


$
4.19



3.5



2,722,247


$
5.50Exercisable, end of year


1,471,660


$
5.77



3.4



1,122,283


$
6.10Available for grant, end of year


936,551











1,439,568       Options Outstanding and Exercisable by Price Range as of
    February 2, 2008Options Outstanding


Options ExercisableWeighted


Weighted








WeightedAverage


Average








AverageRange of

Number of


Remaining


Exercise


Aggregate


Number of


Exercise


AggregateExercise Prices

Options


Life


Price


Intrinsic Value


Options


Price


Intrinsic Value$  0.00 - $  2.07


967,000



4.2


$
1.15


$







$



$
$  2.07 - $  4.14


288,084



3.4


$
3.20







154,427


$
3.28



$  4.14 - $  6.21


1,541,331



3.2


$
5.69







1,165,996


$
5.63



$  6.21 - $  8.28


138,414



2.6


$
6.72







95,415


$
6.72



$  8.28 - $10.34


8,028



0.5


$
9.33







8,028


$
9.33



$10.34 - $12.41


8,288



0.5


$
11.19







8,288


$
11.19



$12.41 - $14.48


8,550



2.4


$
14.16







8,550


$
14.16



$14.48 - $16.55


30,431



2.2


$
16.03







30,431


$
16.03



$16.55 - $18.62


525



2.4


$
16.94







525


$
16.94



2,990,651



3.5


$
4.19


$




1,471,660


$
5.77


$
   in-the-money in-the-money
 F-22




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    WeightedAverage GrantShares


Date Fair ValueUnvested, beginning of period


1,599,964


$
2.92Granted


978,000


$
0.59Vested


(664,310
)

$
3.15Forfeited


(394,663
)

$
2.34Unvested, end of period


1,518,991


$
1.47   Non-vested
    shares and other stock-related awards
      Employee
    stock purchase plan
   F-23




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
  11
    Warrants  time-to-time and/or
  As of February 2, 2008Weighted


WeightedAverage


AverageExercise





Exercise


RemainingPrice


Shares


Price


LifeWarrants issued April 25,
    2004(1)

$
2.39



2,511,182


$
2.39



1.23Warrants issued July 2,
    2004(1)

$
2.39



2,511,182


$
2.39



1.41Warrants issued June 15,
    2007(2)

$
2.00



15,000,000


$
2.00



4.37Outstanding, end of period

$
2.00-$2.39



20,022,364


$
2.10



3.60Exercisable, end of period

$
2.00-$2.39



20,022,364


$
2.10



3.60     (1)
    
    In connection with an equity financing transaction completed in
    July of 2004, the Company issued four million warrants
    exercisable for five years to certain institutional investors at
    an exercise price of $3.00 per share of the Companys
    common stock. Pursuant to the anti-dilution provisions of the
    terms of these warrants, as a result of the June 2007 Preferred
    Stock and Warrant financing (see Note 9, Preferred
    stock and warrant financing), the exercise price of the
    warrants was reduced to $2.39 and the number of underlying
    shares of common stock increased from 4,000,000 to 5,022,364.(2)
    
    These warrants were issued in conjunction with the June 2007
    Preferred Stock and Warrant financing and are exercisable for
    five years.  12
    401(k)
    profit sharing plan   F-24




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
  13
    Commitments
    and contingencies  Leases
    For the years endedFebruary 2,


February 3,2008


2007Minimum rentals

$
35,534


$
36,755Contingent rentals


919



1,110Total

$
36,453


$
37,865       Continuing OperationsFiscal years ending:2008

$
22,0092009


20,4902010


17,9242011


14,0702012


9,605Thereafter


26,400Total

$
110,498   License
    agreements
    Litigation
   F-25




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
        Guarantees
    Gain
    contingency
    14
    Sale/leaseback
    of headquarters facility  Accounting for
    Leases.
  15-year
 F-26




---



##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
  15
    Related-party
    transactions    16
    Supplemental
    cash flow information    For the years endedFebruary 2,


February 3,2008


2007Investing activities:Additions to property and equipment

$
571


$
394Financing activities:Preferred stock
    paid-in-kind
    dividends

$
3,415


$
Beneficial conversion feature

$
14,877


$
Deemed dividend to warrant holders

$
967


$
   17
    Subsequent
    events     F-27




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##### Table of Contents



WILSONS
    THE LEATHER EXPERTS INC. AND SUBSIDIARIES
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS(Continued)
    Cash


Non-Cash


TotalNet proceeds on inventory

$
(9,175
)

$
4,784


$
(4,391
)Store asset write-offs






9,287



9,287Lease contract termination costs


8,600







8,600Deferred rent relief






(3,887
)


(3,887
)Store closing, occupancy and selling expenses


10,462







10,462Other administrative costs


1,000







1,000$
10,887


$
10,184


$
21,071          F-28




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##### Table of Contents



Schedule II  Valuation and Qualifying Accounts(In thousands)




AdditionsBalance at


Charged to


Charged





BalanceBeginning


Costs and


to Other





at End ofof Period


Expenses


Accounts


Deductions


PeriodYear ended February 3, 2007:Allowance for doubtful accounts deducted from accounts receivable

$
76


$
277


$



$
(282
)

$
71Year ended February 2, 2008:Allowance for doubtful accounts deducted from accounts receivable

$
71


$
188


$



$
(211
)

$
48  F-29




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##### Table of Contents



EXHIBIT INDEX
  ExhibitNo.

Description

Method of Filing3
.1

Amended and Restated Articles of Incorporation of Wilsons The
    Leather Experts Inc. adopted June 16, 1998, as amended by
    the Articles of Amendment dated February 17, 2000, and the
    Articles of Amendment dated May 23,
    2002.(1)

Incorporated by Reference3
.2

Restated Bylaws of Wilsons The Leather Experts Inc. as amended
    June 16, 1998, January 25, 2000, May 23, 2002,
    and February 5,
    2004.(2)

Incorporated by Reference3
.3

Certificate of Designations for Series A Convertible
    Preferred Stock dated June 15,
    2007.(3)

Incorporated by Reference4
.1

Specimen of common stock
    certificate.(4)

Incorporated by Reference4
.2

Registration Rights Agreement dated as of May 25, 1996, by
    and among CVS New York, Inc. (formerly known as Melville
    Corporation), Wilsons The Leather Experts Inc., the Managers
    listed on the signature pages thereto, Leather Investors Limited
    Partnership I and the Partners listed on the signature pages
    thereto.(5)

Incorporated by Reference4
.3

Amendment to Registration Rights Agreement dated as of
    August 12, 1999, by and among Wilsons The Leather Experts
    Inc. and the Shareholders listed on the attachments
    thereto.(6)

Incorporated by Reference4
.4

Common Stock and Warrant Purchase Agreement, dated as of
    April 25, 2004, by and among Wilsons The Leather Experts
    Inc. and the purchasers identified on the signatory pages
    thereto (the Purchase
    Agreement).(7)

Incorporated by Reference4
.5

Registration Rights Agreement, dated as of April 25, 2004,
    by and among Wilsons The Leather Experts Inc. and the investors
    identified
    therein.(8)

Incorporated by Reference4
.6

Form of Warrant issued to the Purchasers named in the Purchase
    Agreement on April 25,
    2004.(9)

Incorporated by Reference4
.7

Registration Rights Agreement dated as of June 15, 2007 by
    and among Wilsons The Leather Experts Inc., Marathon
    Fund Limited Partnership V, Peninsula Investment
    Partners, L.P., Quaker Capital Partners I, L.P., and Quaker
    Capital Partners II,
    L.P.(10)

Incorporated by Reference4
.8

Form of Warrant issued to Marathon Fund Limited
    Partnership V, Peninsula Investment Partners, L.P., Quaker
    Capital Partners I, L.P., and Quaker Capital Partners II,
    L.P. on June 15,
    2007.(11)

Incorporated by Reference10
.1

Parent Guaranty dated as of May 25, 1996, by Wilsons The
    Leather Experts Inc., Wilsons Center, Inc., Rosedale Wilsons,
    Inc. and River Hills Wilsons, Inc. in favor of General Electric
    Capital
    Corporation.(12)

Incorporated by Reference*10
.2

Corporate Leadership Team Incentive Plan, as
    amended.(13)

Incorporated by Reference10
.3

Fifth Amended and Restated Credit Agreement dated as of
    December 29, 2006, among Wilsons Leather Holdings Inc.,
    General Electric Capital Corporation, as Agent, Lender, Term
    Lender and Swing Line Lender, and the Credit Parties and Lenders
    signatory
    thereto.(14)

Incorporated by Reference10
.4

Store Guarantors Guaranty dated as of May 25, 1996,
    by Bermans The Leather Experts, Inc., Wilsons House of Suede,
    Inc., Wilsons Tannery West, Inc., the Georgetown Subsidiaries
    that are signatories thereto and the Individual Store
    Subsidiaries that are signatories thereto, in favor of General
    Electric Capital Corporation. (15)

Incorporated by Reference10
.5

Joinder Agreement dated as of May 24, 1999, by and between
    the Store Guarantors that are signatories thereto and General
    Electric Capital
    Corporation.(16)

Incorporated by Reference




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##### Table of Contents



ExhibitNo.

Description

Method of Filing10
.6

Pledge Agreement dated as of May 24, 1999, by and between
    Wilsons Leather of Delaware Inc. and General Electric Capital
    Corporation, individually and as agent for the lenders signatory
    to the Credit
    Agreement.(17)

Incorporated by Reference10
.7

Pledge Agreement dated as of May 24, 1999, between Wilsons
    International, Inc. and General Electric Capital Corporation,
    individually and as agent for the lenders signatory to the
    Credit
    Agreement.(18)

Incorporated by Reference10
.8

Pledge Agreement dated as of May 25, 1996, between Wilsons
    The Leather Experts Inc. and General Electric Capital
    Corporation, individually and as agent for the lenders signatory
    to the Credit
    Agreement.(19)

Incorporated by Reference10
.9

Pledge Agreement dated as of May 25, 1996, between Wilsons
    Center, Inc. and General Electric Capital Corporation,
    individually and as agent for the lenders signatory to the
    Credit
    Agreement.(20)

Incorporated by Reference*10
.10

Wilsons The Leather Experts Inc. Amended 1996 Stock Option
    Plan.(4)

Incorporated by Reference10
.11

Pledge Agreement dated as of May 25, 1996, between Rosedale
    Wilsons, Inc. and General Electric Capital Corporation,
    individually and as agent for the lenders signatory to the
    Credit
    Agreement.(21)

Incorporated by Reference10
.12

Pledge Agreement dated as of May 25, 1996, between River
    Hills Wilsons, Inc. and General Electric Capital Corporation,
    individually and as agent for the lenders signatory to the
    Credit
    Agreement.(22)

Incorporated by Reference10
.13

Amendment No. 2 to Pledge Agreement dated as of
    July 31, 1997, between River Hills Wilsons, Inc. and
    General Electric Capital
    Corporation.(23)

Incorporated by Reference10
.14

Joinder Agreement dated as of July 31, 1997, by and between
    Wilsons International Inc. and General Electric Capital
    Corporation.(24)

Incorporated by Reference10
.15

Wilsons The Leather Experts Inc. 1998 Stock Option
    Plan.(25)

Incorporated by Reference10
.16

Amended and Restated Security Agreement dated as of
    June 19, 2001, by and among Wilsons Leather Holdings Inc.
    and the other Grantors listed on the signature pages thereto, in
    favor of General Electric Capital Corporation, in its capacity
    as Agent for
    Lenders.(26)

Incorporated by Reference10
.17

Joinder Agreement dated as of October 31, 2000, by and
    between the Store Guarantors that are signatories thereto and
    General Electric Capital
    Corporation.(27)

Incorporated by Reference10
.18

Pledge Amendment dated as of October 31, 2000, by River
    Hills Wilsons,
    Inc.(28)

Incorporated by Reference10
.19

Pledge Agreement dated as of October 31, 2000, by and
    between WWT, Inc. and General Electric Capital Corporation,
    individually and as agent for the lenders signatory to the
    Credit
    Agreement.(29)

Incorporated by Reference*10
.20

Wilsons The Leather Experts Inc. Amended and Restated 2000 Long
    Term Incentive
    Plan.(30)

Incorporated by Reference10
.21

Joinder Agreement dated as of April 13, 2001, by and
    between the Store Guarantors that are signatory thereto and
    General Electric Capital
    Corporation.(31)

Incorporated by Reference10
.22

Pledge Amendment, dated as of April 13, 2001, by WWT,
    Inc.(32)

Incorporated by Reference10
.23

Pledge Agreement, dated as of April 13, 2001, between
    Bentleys Luggage Corp. and General Electric Capital
    Corporation, individually and as agent for the lenders signatory
    to the Credit
    Agreement.(33)

Incorporated by Reference10
.24

Lease, IRET Properties Landlord to Bermans The Leather Experts,
    Inc. Tenant, dated June 21,
    2002.(34)

Incorporated by Reference10
.25

Joinder Agreement dated as of October 10, 2000, by and
    between Wilsons Leather Direct Inc. and General Electric Capital
    Corporation.(35)

Incorporated by Reference*10
.26

Form of Non-Statutory Stock Option Agreement (Director) pursuant
    to the 1996 Stock Option
    Plan.(36)

Incorporated by Reference




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##### Table of Contents



ExhibitNo.

Description

Method of Filing*10
.27

Form of Non-Statutory Stock Option Agreement (Associate)
    pursuant to the 1996 Stock Option
    Plan.(37)

Incorporated by Reference*10
.28

Form of Non-Statutory Stock Option Agreement (Director) pursuant
    to the 2000 Long Term Incentive
    Plan.(38)

Incorporated by Reference*10
.29

Form of Non-Statutory Stock Option Agreement (Associate)
    pursuant to the 2000 Long Term Incentive
    Plan.(39)

Incorporated by Reference*10
.30

Form of Restricted Stock Agreement (Associate) pursuant to the
    2000 Long Term Incentive
    Plan.(40)

Incorporated by Reference*10
.31

Employment Agreement, dated as of November 22, 2004,
    between the Company and Michael M.
    Searles.(41)

Incorporated by Reference*10
.32

Form of Non-Statutory Stock Option Agreement between the Company
    and Michael M.
    Searles.(42)

Incorporated by Reference*10
.33

Waiver and Modification, dated March 2, 2005, under
    Employment Agreement dated November 22, 2004, between
    Michael Searles and the
    Company.(43)

Incorporated by Reference*10
.34

Amendment to Employment Agreement dated as of September 14,
    2005, by and between Michael M. Searles and the
    Company.(44)

Incorporated by Reference10
.35

Letter Agreement dated December 29, 2006, between Wilsons
    Leather Holdings Inc. and General Electric Capital
    Corporation.(45)

Incorporated by Reference*10
.36

Second Amendment to Employment Agreement dated as of
    December 21, 2006 by and between the Company and Michael M.
    Searles.(46)

Incorporated by Reference10
.37

Reaffirmation of Guaranty dated as of December 29, 2006 by
    Wilsons The Leather Experts Inc., Wilsons Center, Inc., Rosedale
    Wilsons, Inc., River Hills Wilsons, Inc. and the Store
    Guarantors listed on the signature pages thereto in favor of
    General Electric Capital Corporation as Agent for
    Lenders.(47)

Incorporated by Reference10
.38

First Amendment to Fifth Amended and Restated Credit Agreement
    dated as of February 12, 2007, among Wilsons Leather
    Holdings Inc., General Electric Capital Corporation, as Agent,
    Lender, Term Lender and Swing Line Lender, and the Credit
    Parties and Lenders signatory
    thereto.(48)

Incorporated by Reference*10
.40

Form of Stay Bonus
    Agreement.(49)

Incorporated by Reference10
.43

Securities Purchase Agreement dated as of June 1, 2007
    among Wilsons The Leather Experts Inc. and the Purchasers set
    forth on Schedule 1 thereto, including the Exhibits
    thereto.(50)

Incorporated by Reference10
.44

Support Agreement, dated as of June 1, 2007, by and among
    Wilsons The Leather Experts Inc., Marathon Fund Limited
    Partnership V, Peninsula Investment Partners, L.P., Quaker
    Capital Partners I, L.P., and Quaker Capital Partners II,
    L.P.(51)

Incorporated by Reference10
.45

Second Amendment to Fifth Amended and Restated Credit Agreement
    dated as of June 15, 2007, among Wilsons Leather Holdings
    Inc., General Electric Capital Corporation, as Lender, Term
    Lender, Swing Line Lender and Agent, the Credit Parties
    signatory thereto and the Lenders signatory
    thereto.(52)

Incorporated by Reference10
.46

Reaffirmation of Guaranty dated as of June 15, 2007 by
    Wilsons The Leather Experts Inc., Wilsons Center, Inc., Rosedale
    Wilsons, Inc., River Hills Wilsons, Inc. and the Store
    Guarantors listed on the signature pages thereto in favor of
    General Electric Capital Corporation as
    Agent.(53)

Incorporated by Reference14
.1

Code of Business Ethics and
    Conduct.(54)

Incorporated by Reference21
.1

Subsidiaries of Wilsons The Leather Experts Inc.

Electronic Transmission23
.1

Consent of KPMG LLP

Electronic Transmission




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##### Table of Contents



ExhibitNo.

Description

Method of Filing31
.1

Certification of Chairman of the Board of Directors (acting
    principal executive officer) pursuant to Section 302 of the
    Sarbanes-Oxley Act of 2002.

Electronic Transmission31
.2

Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002.

Electronic Transmission32
.1

Certification of Chairman of the Board of Directors (acting
    principal executive officer) pursuant to Section 1350,
    Chapter 63 of Title 18, United States Code, as adopted
    pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Electronic Transmission32
.2

Certification of Chief Financial Officer pursuant to
    Section 1350, Chapter 63 of Title 18, United
    States Code, as adopted pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002.

Electronic Transmission     *
    
    Management contract, compensating plan or arrangement required
    to be filed as an exhibit to this Annual Report on
    Form 10-K.(1)
    
    Incorporated by reference to the same numbered exhibit to the
    Companys Report on
    Form 10-Q
    for the quarter ended May 4, 2002.(2)
    
    Incorporated by reference to the same numbered exhibit to the
    Companys Report on
    Form 10-K
    for the fiscal year ended January 31, 2004.(3)
    
    Incorporated by reference to Exhibit 3.1 to the
    Companys Report on
    Form 8-K
    filed with the Commission on June 21, 2007.(4)
    
    Incorporated by reference to the same numbered exhibit to
    Amendment No. 1 to the Companys Registration
    Statement on
    Form S-1
    (333-13967)
    filed with the Commission on December 24, 1996.(5)
    
    Incorporated by reference to Exhibit 4.8 to the
    Companys Registration Statement on
    Form S-1
    (333-13967)
    filed with the Commission on October 11, 1996.(6)
    
    Incorporated by reference to Exhibit 4.5 to the
    Companys Report on
    Form 10-K
    for the fiscal year ended January 29, 2000, filed with the
    Commission.(7)
    
    Incorporated by reference to Exhibit 4.1 to the
    Companys Current Report on
    Form 8-K
    dated April 26, 2004.(8)
    
    Incorporated by reference to Exhibit 4.2 to the
    Companys Current Report on
    Form 8-K
    dated April 26, 2004.(9)
    
    Incorporated by reference to Exhibit 4.3 to the
    Companys Current Report on
    Form 8-K
    dated April 26, 2004.(10)
    
    Incorporated by reference to Exhibit 4.1 to the
    Companys Report on
    Form 8-K
    filed with the Commission on June 21, 2007.(11)
    
    Incorporated by reference to Exhibit 4.2 to the
    Companys Report on
    Form 8-K
    filed with the Commission on June 21, 2007.(12)
    
    Incorporated by reference to Exhibit 10.8 to the
    Companys Report on
    Form 10-Q
    for the quarter ended August 2, 1997, filed with the
    Commission.(13)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on September 19, 2005.(14)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on January 5, 2007.(15)
    
    Incorporated by reference to Exhibit 10.10 to the
    Companys Report on
    Form 10-Q
    for the quarter ended August 2, 1997, filed with the
    Commission.(16)
    
    Incorporated by reference to Exhibit 10.3 to the
    Companys Report on
    Form 10-Q
    for the quarter ended May 1, 1999, filed with the
    Commission.(17)
    
    Incorporated by reference to Exhibit 10.4 to the
    Companys Report on
    Form 10-Q
    for the quarter ended May 1, 1999, filed with the
    Commission.(18)
    
    Incorporated by reference to Exhibit 10.5 to the
    Companys Report on
    Form 10-Q
    for the quarter ended May 1, 1999, filed with the
    Commission.




---



##### Table of Contents



(19)
    
    Incorporated by reference to Exhibit 10.21 to Amendment
    No. 4 to the Companys Registration Statement on
    Form S-1
    (333-13967)
    filed with the Commission on May 27, 1997.(20)
    
    Incorporated by reference to Exhibit 10.22 to Amendment
    No. 4 to the Companys Registration Statement on
    Form S-1
    (333-13967)
    filed with the Commission on May 27, 1997.(21)
    
    Incorporated by reference to Exhibit 10.23 to Amendment
    No. 4 to the Companys Registration Statement on
    Form S-1
    (333-13967)
    filed with the Commission on May 27, 1997.(22)
    
    Incorporated by reference to Exhibit 10.24 to Amendment
    No. 4 to the Companys Registration Statement on
    Form S-1
    (333-13967)
    filed with the Commission on May 27, 1997.(23)
    
    Incorporated by reference to Exhibit 10.6 to the
    Companys Report on
    Form 10-Q
    for the quarter ended August 2, 1997, filed with the
    Commission.(24)
    
    Incorporated by reference to Exhibit 10.7 to the
    Companys Report on
    Form 10-Q
    for the quarter ended August 2, 1997, filed with the
    Commission.(25)
    
    Incorporated by reference to Exhibit 10.31 to the
    Companys Report on
    Form 10-K
    for the fiscal year ended January 31, 1998, filed with the
    Commission.(26)
    
    Incorporated by reference to Exhibit 10.2 to the
    Companys Report on
    Form 8-K
    filed with the Commission on June 25, 2001.(27)
    
    Incorporated by reference to Exhibit 10.4 to the
    Companys Report on
    Form 10-Q
    for the quarter ended October 28, 2000, filed with the
    Commission.(28)
    
    Incorporated by reference to Exhibit 10.5 to the
    Companys Report on
    Form 10-Q
    for the quarter ended October 28, 2000, filed with the
    Commission.(29)
    
    Incorporated by reference to Exhibit 10.6 to the
    Companys Report on
    Form 10-Q
    for the quarter ended October 28, 2000, filed with the
    Commission.(30)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on June 2, 2005.(31)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Report on
    Form 10-Q
    for the quarter ended May 5, 2001, filed with the
    Commission.(32)
    
    Incorporated by reference to Exhibit 10.2 to the
    Companys Report on
    Form 10-Q
    for the quarter ended May 5, 2001, filed with the
    Commission.(33)
    
    Incorporated by reference to Exhibit 10.3 to the
    Companys Report on
    Form 10-Q
    for the quarter ended May 5, 2001, filed with the
    Commission.(34)
    
    Incorporated by reference to Exhibit 10.2 to the
    Companys Report on
    Form 10-Q
    for the quarter ended August 3, 2002, filed with the
    Commission.(35)
    
    Incorporated by reference to Exhibit 10.33 to the
    Companys Report on
    Form 10-K
    for the year ended February 3, 2001, filed with the
    Commission.(36)
    
    Incorporated by reference to Exhibit 10.4 to the
    Companys Report on
    Form 10-Q
    for the quarter ended July 31, 2004.(37)
    
    Incorporated by reference to Exhibit 10.5 to the
    Companys Report on
    Form 10-Q
    for the quarter ended July 31, 2004.(38)
    
    Incorporated by reference to Exhibit 10.6 to the
    Companys Report on
    Form 10-Q
    for the quarter ended July 31, 2004.(39)
    
    Incorporated by reference to Exhibit 10.7 to the
    Companys Report on
    Form 10-Q
    for the quarter ended July 31, 2004.(40)
    
    Incorporated by reference to Exhibit 10.8 to the
    Companys Report on
    Form 10-Q
    for the quarter ended July 31, 2004.(41)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Report on
    Form 8-K
    filed with the Commission on November 24, 2004.(42)
    
    Incorporated by reference to Exhibit 10.2 to the
    Companys Report on
    Form 8-K
    filed with the Commission on November 24, 2004.




---



##### Table of Contents



(43)
    
    Incorporated by reference to Exhibit 10.73 to the
    Companys Report on
    Form 10-K
    for the year ended January 29, 2005.(44)
    
    Incorporated by reference to Exhibit 10.2 to the
    Companys Report on
    Form 8-K
    filed with the Commission on September 19, 2005.(45)
    
    Incorporated by reference to Exhibit 10.37 to the
    Companys Report on
    Form 10-K
    for the year ended February 3, 2007.(46)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on December 28, 2006.(47)
    
    Incorporated by reference to Exhibit 10.2 to the
    Companys Current Report on
    Form 8-K,
    filed with the Commission on January 5, 2007.(48)
    
    Incorporated by reference to Exhibit 10.40 to the
    Companys Report on
    Form 10-K
    for the year ended February 3, 2007.(49)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Report on
    Form 8-K
    filed with the Commission on February 1, 2007.(50)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Report on
    Form 8-K
    filed with the Commission on June 5, 2007.(51)
    
    Incorporated by reference to Exhibit 10.1 to the
    Companys Report on
    Form 8-K
    filed with the Commission on June 21, 2007.(52)
    
    Incorporated by reference to Exhibit 10.2 to the
    Companys Report on
    Form 8-K
    filed with the Commission on June 21, 2007.(53)
    
    Incorporated by reference to Exhibit 10.3 to the
    Companys Report on
    Form 8-K
    filed with the Commission on June 21, 2007.(54)
    
    Incorporated by reference to Exhibit 14.1 to the
    Companys Report on
    Form 10-K
    for the year ended January 31, 2004.