##### 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 1934    
|          
|           |  | For the fiscal year ended January 29, 2005                                                  
|          
|OR        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from          to                                              



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
    (Address of principal executive offices) |  | 55428
    (Zip Code)                    







Common stock, $.01 par value


(Title of Class)


þ o


o


þ o






DOCUMENTS INCORPORATED BY REFERENCE












---










WILSONS THE LEATHER EXPERTS INC.


FORM 10-K


For the fiscal year ended January 29, 2005


TABLE OF CONTENTS


|                                             |          |             |                                                                                                                      |      |  |    | 
|-------------------------------------------- | -------- | ----------- | -------------------------------------------------------------------------------------------------------------------- | ---- |  | -- | 
|                                             |          | description |                                                                                                                      | page | 
|                                             |          |             |                                                                                                                      |      | 
|PART I                                       |          |             |                                                                                                                      |      |  |   
|                                            
|                                             | Item 1.  |             | Business                                                                                                             |      |  | 1  | 
|                                            
|                                             | Item 2.  |             | Properties                                                                                                           |      |  | 17 | 
|                                            
|                                             | Item 3.  |             | Legal Proceedings                                                                                                    |      |  | 17 | 
|                                            
|                                             | Item 4.  |             | Submission of Matters to a Vote of Security
    Holders                                                              |      |  | 17 | 
|                                            
|                                             | Item 4A. |             | Executive Officers of the Registrant                                                                                 |      |  | 18 | 
|                                            
|PART II                                      |          |             |                                                                                                                      |      |  |   
|                                            
|                                             | Item 5.  |             | Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities |      |  | 19 | 
|                                            
|                                             | Item 6.  |             | Selected Financial Data                                                                                              |      |  | 21 | 
|                                            
|                                             | Item 7.  |             | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |      |  | 23 | 
|                                            
|                                             | Item 7A. |             | Quantitative and Qualitative Disclosure
    About Market Risk                                                        |      |  | 41 | 
|                                            
|                                             | Item 8.  |             | Financial Statements and Supplementary
    Data                                                                      |      |  | 41 | 
|                                            
|                                             | Item 9.  |             | Changes in and Disagreements with
    Accountants on Accounting and Financial Disclosure                             |      |  | 41 | 
|                                            
|                                             | Item 9A. |             | Controls and Procedures                                                                                              |      |  | 41 | 
|                                            
|                                             | Item 9B. |             | Other Information                                                                                                    |      |  | 45 | 
|                                            
|PART III                                     |          |             |                                                                                                                      |      |  |   
|                                            
|                                             | Item 10. |             | Directors and Executive Officers of the
    Registrant                                                               |      |  | 45 | 
|                                            
|                                             | Item 11. |             | Executive Compensation                                                                                               |      |  | 45 | 
|                                            
|                                             | Item 12. |             | Security Ownership of Certain Beneficial
    Owners and Management and Related Stockholder Matters                   |      |  | 45 | 
|                                            
|                                             | Item 13. |             | Certain Relationships and Related
    Transactions                                                                   |      |  | 46 | 
|                                            
|                                             | Item 14. |             | Principal Accountant Fees and Services                                                                               |      |  | 46 | 
|                                            
|PART IV                                      |          |             |                                                                                                                      |      |  |   
|                                            
|                                             | Item 15. |             | Exhibits and Financial Statement
    Schedules                                                                       |      |  | 47 | 
|2nd Amendment, dated February 21, 2005      
|Wavier & Modification                       
|Limited Waiver                              
|Subsidiaries                                
|Consent of KPMG LLP                         
|Certification of CEO Pursuant to Section 302
|Certification of CFO Pursuant to Section 302
|Certification of CEO Pursuant to Section 906
|Certification of CFO Pursuant to Section 906





---



##### 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
January 28, 2006, January 29, 2005, January 31,
2004, February 1, 2003, February 2, 2002, and
February 3, 2001, are referred to herein as 2005, 2004,
2003, 2002, 2001, and 2000, respectively. The year ended
February 3, 2001, consisted of 53 weeks as compared to
52 weeks for all other years presented in this
Form 10-K.







|        |         
|------- | --------
|Item 1. | Business

Disclosure Regarding Forward-Looking Statements




Overview




tm Wilsons Leather


1



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Financial Strategy




Increase Sales and Margins.


Improve Balance Sheet and Enhance Cash Position.


Maintain Rational Store Count.




Discontinued Operations




Reorganization and Partial Store Liquidation




2



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Additional Financing


1 4 1 4 1 4


1 4


Merchandise Strategy




Increase the Merchandising of Accessories.


3



---



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Grow Brand Recognition. Wilsons Leather Wilsons Leather


Optimize Merchandise Assortment.


Target Core Customer Base.


Capitalize on Worldwide Sourcing Network.


Pursue Multiple Store Formats. Wilsons Leather


Product Design and Merchandising




4



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##### Table of Contents











| |   |                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | identifying customer lifestyle segments based on demographic
    factors such as age, fashion awareness, purchasing behavior,
    income, location and ethnicity;
|
| |  | building strong brand recognition and utilizing our proprietary
    labels to target customer lifestyle segments;                                                
|
| |  | driving accessories growth through new styles designed to
    attract customers into our stores; and                                                             
|
| |  | actively managing pricing to maintain value for the largest
    possible customer base.                                                                          

Wilsons
Leather tm




|                     |  |      |       |   |      |  |       |      |  |  |       |  
|-------------------- |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                     |  | 2004 |       |   | 2003 |  |       | 2002 | 
|Merchandise Category |  |      |       |   |      |  |       |      | 
|Accessories          |  |      | 35.6  | % |      |  | 33.6  | %    |  |  | 31.6  | %
|Womens apparel      |  |      | 32.1  | % |      |  | 33.1  | %    |  |  | 35.0  | %
|Mens apparel        |  |      | 32.3  | % |      |  | 33.3  | %    |  |  | 33.4  | %
|                     |  |      |       |   |      |  |       |      | 
|Total                |  |      | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | %
|                     |  |      |       |   |      |  |       |      | 

Sourcing and Quality Assurance






5



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##### Table of Contents







Store Formats and Locations




www.wilsonsleather.com


Store Locations as of January 29, 2005:


|               |  |      |     |  |         |  |     |         |  |  |       |  |  |  |     | 
|-------------- |  | ---- | --- |  | ------- |  | --- | ------- |  |  | ----- |  |  |  | --- | 
|State          |  | Mall |     |  | Outlets |  |     | Airport |  |  | Total | 
|               |  |      |     |  |         |  |     |         |  |  |       | 
|Alabama        |  |      | 2   |  |         |  | 2   |         |  |  |      |  |  |  | 4   | 
|Arkansas       |  |      | 1   |  |         |  |    |         |  |  |      |  |  |  | 1   | 
|Arizona        |  |      | 2   |  |         |  | 1   |         |  |  |      |  |  |  | 3   | 
|California     |  |      | 25  |  |         |  | 13  |         |  |  | 1     |  |  |  | 39  | 
|Colorado       |  |      | 7   |  |         |  | 3   |         |  |  |      |  |  |  | 10  | 
|Connecticut    |  |      | 5   |  |         |  | 1   |         |  |  |      |  |  |  | 6   | 
|Delaware       |  |      | 3   |  |         |  | 1   |         |  |  |      |  |  |  | 4   | 
|Florida        |  |      | 8   |  |         |  | 7   |         |  |  | 1     |  |  |  | 16  | 
|Georgia        |  |      | 11  |  |         |  | 5   |         |  |  | 3     |  |  |  | 19  | 
|Iowa           |  |      | 5   |  |         |  | 1   |         |  |  |      |  |  |  | 6   | 
|Idaho          |  |      | 1   |  |         |  |    |         |  |  |      |  |  |  | 1   | 
|Illinois       |  |      | 24  |  |         |  | 4   |         |  |  | 5     |  |  |  | 33  | 
|Indiana        |  |      | 8   |  |         |  | 2   |         |  |  |      |  |  |  | 10  | 
|Kansas         |  |      | 2   |  |         |  |    |         |  |  |      |  |  |  | 2   | 
|Kentucky       |  |      | 4   |  |         |  |    |         |  |  |      |  |  |  | 4   | 
|Louisiana      |  |      | 2   |  |         |  | 1   |         |  |  |      |  |  |  | 3   | 
|Massachusetts  |  |      | 10  |  |         |  | 2   |         |  |  |      |  |  |  | 12  | 
|Maryland       |  |      | 7   |  |         |  | 4   |         |  |  |      |  |  |  | 11  | 
|Maine          |  |      | 3   |  |         |  | 2   |         |  |  |      |  |  |  | 5   | 
|Michigan       |  |      | 17  |  |         |  | 3   |         |  |  |      |  |  |  | 20  | 
|Minnesota      |  |      | 14  |  |         |  | 3   |         |  |  | 1     |  |  |  | 18  | 
|Missouri       |  |      | 4   |  |         |  | 3   |         |  |  |      |  |  |  | 7   | 
|Mississippi    |  |      |    |  |         |  | 2   |         |  |  |      |  |  |  | 2   | 
|North Carolina |  |      | 7   |  |         |  | 3   |         |  |  |      |  |  |  | 10  | 
|North Dakota   |  |      | 3   |  |         |  |    |         |  |  |      |  |  |  | 3   | 
|Nebraska       |  |      | 2   |  |         |  |    |         |  |  |      |  |  |  | 2   | 
|New Hampshire  |  |      | 4   |  |         |  | 2   |         |  |  |      |  |  |  | 6   | 
|New Jersey     |  |      | 9   |  |         |  | 3   |         |  |  |      |  |  |  | 12  | 
|New Mexico     |  |      | 2   |  |         |  | 1   |         |  |  |      |  |  |  | 3   | 
|Nevada         |  |      | 2   |  |         |  | 3   |         |  |  |      |  |  |  | 5   | 
|New York       |  |      | 20  |  |         |  | 5   |         |  |  |      |  |  |  | 25  | 
|Ohio           |  |      | 15  |  |         |  | 4   |         |  |  |      |  |  |  | 19  | 
|Oklahoma       |  |      | 3   |  |         |  |    |         |  |  |      |  |  |  | 3   | 
|Oregon         |  |      | 5   |  |         |  | 1   |         |  |  |      |  |  |  | 6   | 
|Pennsylvania   |  |      | 17  |  |         |  | 4   |         |  |  | 2     |  |  |  | 23  | 
|Rhode Island   |  |      | 1   |  |         |  | 1   |         |  |  |      |  |  |  | 2   | 
|South Carolina |  |      |    |  |         |  | 4   |         |  |  |      |  |  |  | 4   | 
|South Dakota   |  |      | 2   |  |         |  |    |         |  |  |      |  |  |  | 2   | 
|Tennessee      |  |      | 7   |  |         |  | 4   |         |  |  |      |  |  |  | 11  | 
|Texas          |  |      | 16  |  |         |  | 5   |         |  |  | 1     |  |  |  | 22  | 
|Utah           |  |      | 1   |  |         |  | 1   |         |  |  | 1     |  |  |  | 3   | 
|Virginia       |  |      | 6   |  |         |  | 3   |         |  |  | 1     |  |  |  | 10  | 
|Washington     |  |      | 10  |  |         |  | 2   |         |  |  |      |  |  |  | 12  | 
|Wisconsin      |  |      | 13  |  |         |  | 3   |         |  |  |      |  |  |  | 16  | 
|West Virginia  |  |      | 1   |  |         |  |    |         |  |  |      |  |  |  | 1   | 
|               |  |      |     |  |         |  |     |         |  |  |       | 
|GRAND TOTAL    |  |      | 311 |  |         |  | 109 |         |  |  | 16    |  |  |  | 436 | 
|               |  |      |     |  |         |  |     |         |  |  |       | 

Site Selection for Store Openings and Closings.




| |   |                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------
| |  | customer segment and demographic data derived from our
    point-of-sale network and outside sources;

6



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| |   |                                                                                           
| | - | ------------------------------------------------------------------------------------------
| |  | information relating to population density in concentric circles
    surrounding the mall;
|
| |  | the performance of past seasonal stores within the mall;                                  
|
| |  | the proposed location within the mall; and                                                
|
| |  | projected profitability, cost, return on investment and
    cash-flow objectives.         









|                                   |                       |      |     |      |        |  |    |         |   |  |       |    |   |  |     |      |  
|---------------------------------- | --------------------- | ---- | --- | ---- | ------ |  | -- | ------- | - |  | ----- | -- | - |  | --- | ---- | -
|                                   |                       | Mall |     |      | Outlet |  |    | Airport |   |  | Total |   
|                                   |                       |      |     |      |        |  |    |         |   |  |       |   
|Store count as of February 2, 2002 |                       |      | 492 |      |        |  | 94 |         |   |  | 33    |    |   |  | 619 |     
|                                  
|Fiscal year ended February 1, 2003 |                       |      |     |      |        |  |    |         |   |  |       |    |   |  |     |     
|                                   | Stores opened         |      |     | 12   |        |  |    | 22      |   |  |       |   |   |  |     | 34   |  
|                                   | Stores closed         |      |     | (21  | )      |  |    | (6      | ) |  |       | (8 | ) |  |     | (35  | )
|                                   |                       |      |     |      |        |  |    |         |   |  |       |   
|                                   | End of year count     |      |     | 483  |        |  |    | 110     |   |  |       | 25 |   |  |     | 618  |  
|                                  
|Fiscal year ended January 31, 2004 |                       |      |     |      |        |  |    |         |   |  |       |    |   |  |     |     
|                                   | Stores opened         |      |     | 6    |        |  |    | 11      |   |  |       |   |   |  |     | 17   |  
|                                   | Stores closed         |      |     | (50  | )      |  |    | (8      | ) |  |       | (6 | ) |  |     | (64  | )
|                                   | Stores in liquidation |      |     | (105 | )      |  |    | (6      | ) |  |       |   |   |  |     | (111 | )
|                                   |                       |      |     |      |        |  |    |         |   |  |       |   
|                                   | End of year count     |      |     | 334  |        |  |    | 107     |   |  |       | 19 |   |  |     | 460  |  
|                                  
|Fiscal year ended January 29, 2005 |                       |      |     |      |        |  |    |         |   |  |       |    |   |  |     |     
|                                   | Stores opened         |      |     | 3    |        |  |    | 2       |   |  |       |   |   |  |     | 5    |  
|                                   | Stores closed         |      |     | (26  | )      |  |    |        |   |  |       | (3 | ) |  |     | (29  | )
|                                   |                       |      |     |      |        |  |    |         |   |  |       |   
|                                   | End of year count     |      |     | 311  |        |  |    | 109     |   |  |       | 16 |   |  |     | 436  |  
|                                   |                       |      |     |      |        |  |    |         |   |  |       |   

Mall Stores.


7



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Outlet Stores. tm tm


Airport Stores. Wilsons Leather


e-commerce. www.wilsonsleather.com www.wilsonsleather.com


Store Operations.






8



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Distribution




Marketing and Advertising


Wilsons Leather Wilsons Leather Wilsons Leather




Wilsons Leather


tm




9



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Information Systems






Competition




Trademarks


tm tm tm tm tm tm


Employees




Available Information


www.wilsonsleather.com


10



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Risk Factors






| |                                                                
| | ---------------------------------------------------------------
| | Changes in customer shopping patterns could harm our
    sales.





| |                                                                                        
| | ---------------------------------------------------------------------------------------
| | The high level of competition in our markets may lead to
    reduced sales and profits.





| |                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The uncertainty in general economic conditions has led to
    reduced consumer demand for our leather outerwear, accessories
    and apparel, and could adversely affect our business and
    liquidity.





| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | general business conditions;                                                                             
|
| |  | interest rates;                                                                                          
|
| |  | the availability of consumer credit;                                                                     
|
| |  | weather;                                                                                                 
|
| |  | continued hostilities in the Middle East and other significant
    national and international events; and
|
| |  | taxation and consumer confidence in future economic conditions.                                          





| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | Our inability to effectively respond to changes in fashion
    trends and consumer demands could adversely affect our sales.



11



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| |                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our comparable store sales and results of operations declined
    during the fourth quarter of 2004, and the years 2003 and 2002,
    and did not meet expectations of analysts.





| |   |                                                                                                 
| | - | ------------------------------------------------------------------------------------------------
| |  | consumer shopping preferences;                                                                  
|
| |  | actions by competitors or mall anchor tenants;                                                  
|
| |  | general economic conditions and, in particular, the retail sales
    environment;               
|
| |  | 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;                                                            
|
| |  | weather conditions; and                                                                         
|
| |  | timing of promotional events.                                                                   





| |                                                    
| | ---------------------------------------------------
| | We may not be able to grow our business as planned.





| |   |                                                                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | anticipate fashion trends and design products, merchandise
    stores, manage inventory levels and take timely and necessary
    markdowns in response to such trends;
|
| |  | introduce and expand new selling concepts;                                                                                                                            

12



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| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | identify, negotiate, lease and open stores in suitable locations
    on a profitable and timely basis;             
|
| |  | ensure the availability of and obtain the necessary capital to
    operate our business;                           
|
| |  | consolidate and upgrade our distribution centers and information
    systems in an efficient and timely manner; and
|
| |  | hire, train and retain qualified personnel, including management
    executives and hourly sales associates.       





| |                                                                                                   
| | --------------------------------------------------------------------------------------------------
| | 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.





| |   |                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | economic and political instability;                                                                                                                         
|
| |  | transportation delays and interruptions, including delays
    relating to labor disputes;                                                                   
|
| |  | 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.



13



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| |   |                                                                                                        
| | - | -------------------------------------------------------------------------------------------------------
| |  | 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 net sales contributed by seasonal stores;                                                          
|
| |  | the timing of certain holidays; and                                                                    
|
| |  | the number of shopping days and weekends between Thanksgiving
    and Christmas.                       



| |                                                                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The instruments governing our outstanding debt place certain
    obligations on us and restrictions on our operations, which, if
    not met, could result in our inability to borrow under our
    senior credit facility or other penalties.









| |                                                                                                                                                                                                                           
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.



14



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| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | significantly increase our lower of cost or market allowance for
    obsolete inventory; or
|
| |  | recognize a significant provision for impairment of our fixed
    assets at our stores.    





| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | Changes to financial accounting standards may effect our
    results of operations and cause us to change our business
    practices.

Share-Based Payment.




| |                                                                                           
| | ------------------------------------------------------------------------------------------
| | Loss of key members of our senior management team could
    adversely affect our business.





| |                                                                                                                                                                                                                                                                                                       
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The sale into the market of the shares issued in our equity
    financing or issuable upon exercise of the warrants delivered in
    connection with our equity financing could decrease the price of
    our common stock or make it more difficult to obtain additional
    financing in the future.





| |                                               
| | ----------------------------------------------
| | Ownership of our common stock is concentrated.



15



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| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | 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 month or quarter of our revenues or earnings;                                                  
|
| |  | a decline in any month or quarter of comparable store sales;                                                    
|
| |  | a deviation in our revenues, earnings or comparable store sales
    from levels expected by securities analysts;
|
| |  | changes in financial estimates by securities analysts; or                                                       
|
| |  | changes in market valuations of other companies in the same or
    similar markets.                             





| |                                                                                    
| | -----------------------------------------------------------------------------------
| | 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.





16



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| |                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Any significant interruption in the operation of our
    corporate offices and distribution center could have a material
    adverse effect on our business.





| |                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------
| | The public sale of our common stock by existing shareholders
    could adversely affect the price of our common stock.








|        |           
|------- | ----------
|Item 2. | Properties










|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders



17



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|         |                                     
|-------- | ------------------------------------
|Item 4A. | Executive Officers of the Registrant



|                     |  |     |    |  |          |                                                                                  
|-------------------- |  | --- | -- |  | -------- | ---------------------------------------------------------------------------------
|Name                 |  | Age |    |  | Position
|                     |  |     |    |  |         
|Michael M. Searles   |  |     | 55 |  |          | Chairman and Chief Executive Officer                                             
|Peter G. Michielutti |  |     | 48 |  |          | Executive Vice President, Chief Financial Officer and Chief
    Operating Officer
|Brian R. Bootay      |  |     | 51 |  |          | Vice President                                                                   
|Betty A. Goff        |  |     | 48 |  |          | Vice President                                                                   
|Stacy A. Kruse       |  |     | 45 |  |          | Vice President                                                                   
|Jeffrey W. Orton     |  |     | 49 |  |          | Vice President                                                                   
|Arthur J. Padovese   |  |     | 54 |  |          | Vice President                                                                   
|Steven R. Waller     |  |     | 41 |  |          | Vice President                                                                   
|Teresa L. Wright     |  |     | 44 |  |          | Vice President                                                                   

Michael M. Searles


Peter G. Michielutti


Brian R. Bootay


Betty A. Goff


Stacy A. Kruse


18



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Jeffrey W. Orton


Arthur J. Padovese


Steven R. Waller


Teresa L. Wright





PART II







|        |                                                                                                                 
|------- | ----------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters and Issuer Purchases of Equity Securities

Market Information




|                                    |  |      |       |  |     |   |      | 
|----------------------------------- |  | ---- | ----- |  | --- | - | ---- | 
|Quarterly Common Stock Price Ranges | 
|                                    | 
|Fiscal quarter ended                |  | High |       |  | Low |  
|                                    |  |      |       |  |     |  
|May 3, 2003                         |  | $    | 5.17  |  |     | $ | 3.74 | 
|August 2, 2003                      |  | $    | 8.75  |  |     | $ | 5.55 | 
|November 1, 2003                    |  | $    | 10.00 |  |     | $ | 7.13 | 
|January 31, 2004                    |  | $    | 9.10  |  |     | $ | 3.08 | 
|                                   
|May 1, 2004                         |  | $    | 3.50  |  |     | $ | 2.13 | 
|July 31, 2004                       |  | $    | 4.95  |  |     | $ | 2.23 | 
|October 30, 2004                    |  | $    | 6.66  |  |     | $ | 4.71 | 
|January 29, 2005                    |  | $    | 5.73  |  |     | $ | 3.13 | 



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##### Table of Contents



Dividends




Purchases of Equity Securities




20



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING
DATA


(In thousands except per share amounts and operating data)


|                                                                                                                                                   |  |                     |         |   |             |   |         |             |  |   |               |   |  |               |         |   |  |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------- | - | ----------- | - | ------- | ----------- |  | - | ------------- | - |  | ------------- | ------- | - |  | - | ------- | -
|                                                                                                                                                   |  | For the years ended |        
|                                                                                                                                                   |  |                     |        
|                                                                                                                                                   |  | January 29,         |         |   | January 31, |   |         | February 1, |  |   | February 2,   |   |  | February 3,   |        
|                                                                                                                                                   |  | 2005                |         |   | 2004(7)     |   |         | 2003(1)(7)  |  |   | 2002(1)(2)(7) |   |  | 2001(2)(3)(7) |        
|                                                                                                                                                   |  |                     |         |   |             |   |         |             |  |   |               |   |  |               |        
|Statement of Operations Data:                                                                                                                      |  |                     |         |   |             |   |         |             |  |   |               |   |  |               |         |   |  |   |         |  
|Net sales                                                                                                                                          |  | $                   | 441,071 |   |             | $ | 521,025 |             |  | $ | 571,547       |   |  | $             | 598,299 |   |  | $ | 619,932 |  
|Gross margin                                                                                                                                       |  |                     | 141,358 |   |             |   | 147,111 |             |  |   | 169,753       |   |  |               | 196,808 |   |  |   | 233,587 |  
|Operating income (loss)                                                                                                                            |  |                     | (18,512 | ) |             |   | (25,920 | )           |  |   | (13,603       | ) |  |               | 22,511  |   |  |   | 66,523  |  
|Income (loss) from continuing operations before income taxes,
    extraordinary item and cumulative effect of a change in
    accounting principle |  |                     | (25,939 | ) |             |   | (36,788 | )           |  |   | (23,856       | ) |  |               | 12,927  |   |  |   | 62,318  |  
|Provision (benefit) for income taxes                                                                                                               |  |                     | (2,183  | ) |             |   | (3,205  | )           |  |   | (9,543        | ) |  |               | 5,171   |   |  |   | 21,289  |  
|                                                                                                                                                   |  |                     |         |   |             |   |         |             |  |   |               |   |  |               |        
|Income (loss) from continuing operations before extraordinary
    item and cumulative effect of a change in accounting principle                   |  |                     | (23,756 | ) |             |   | (33,583 | )           |  |   | (14,313       | ) |  |               | 7,756   |   |  |   | 41,029  |  
|Income (loss) from discontinued operations, net of tax                                                                                             |  |                     | 173     |   |             |   |        |             |  |   | (42,014       | ) |  |               | (22,093 | ) |  |   | 29      |  
|Extraordinary loss on early extinguishment of debt, net of tax                                                                                     |  |                     |        |   |             |   |        |             |  |   |              |   |  |               |        |   |  |   | (623    | )
|Cumulative effect of a change in accounting principle, net of
    tax(4)                                                                           |  |                     |        |   |             |   |        |             |  |   | (24,567       | ) |  |               |        |   |  |   |        |  
|                                                                                                                                                   |  |                     |         |   |             |   |         |             |  |   |               |   |  |               |        
|Net income (loss)                                                                                                                                  |  | $                   | (23,583 | ) |             | $ | (33,583 | )           |  | $ | (80,894       | ) |  | $             | (14,337 | ) |  | $ | 40,435  |  
|                                                                                                                                                   |  |                     |         |   |             |   |         |             |  |   |               |   |  |               |        
|Basic earnings (loss) per share:                                                                                                                   |  |                     |         |   |             |   |         |             |  |   |               |   |  |               |         |   |  |   |         |  
|Income (loss) from continuing operations before extraordinary
    item and cumulative effect of a change in accounting principle                   |  | $                   | (0.76   | ) |             | $ | (1.64   | )           |  | $ | (0.71         | ) |  | $             | 0.45    |   |  | $ | 2.45    |  
|Income (loss) from discontinued operations                                                                                                         |  |                     | 0.01    |   |             |   |        |             |  |   | (2.10         | ) |  |               | (1.28   | ) |  |   |        |  
|Extraordinary loss on early extinguishment of debt                                                                                                 |  |                     |        |   |             |   |        |             |  |   |              |   |  |               |        |   |  |   | (0.04   | )
|Cumulative effect of a change in accounting principle                                                                                              |  |                     |        |   |             |   |        |             |  |   | (1.22         | ) |  |               |        |   |  |   |        |  
|                                                                                                                                                   |  |                     |         |   |             |   |         |             |  |   |               |   |  |               |        
|Basic earnings (loss) per share                                                                                                                    |  | $                   | (0.75   | ) |             | $ | (1.64   | )           |  | $ | (4.03         | ) |  | $             | (0.83   | ) |  | $ | 2.41    |  
|                                                                                                                                                   |  |                     |         |   |             |   |         |             |  |   |               |   |  |               |        

21



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SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING
DATA (Continued)


(In thousands except per share amounts and operating data)


|                                                                                                                                 |  |                     |        |   |             |   |        |             |  |   |               |    |  |               |        |    |  |   |        |  
|-------------------------------------------------------------------------------------------------------------------------------- |  | ------------------- | ------ | - | ----------- | - | ------ | ----------- |  | - | ------------- | -- |  | ------------- | ------ | -- |  | - | ------ | -
|                                                                                                                                 |  | For the years ended |       
|                                                                                                                                 |  |                     |       
|                                                                                                                                 |  | January 29,         |        |   | January 31, |   |        | February 1, |  |   | February 2,   |    |  | February 3,   |       
|                                                                                                                                 |  | 2005                |        |   | 2004(7)     |   |        | 2003(1)(7)  |  |   | 2002(1)(2)(7) |    |  | 2001(2)(3)(7) |       
|                                                                                                                                 |  |                     |        |   |             |   |        |             |  |   |               |    |  |               |       
|Diluted earnings (loss) per share:                                                                                               |  |                     |        |   |             |   |        |             |  |   |               |    |  |               |        |    |  |   |        |  
|Income (loss) from continuing operations before extraordinary
    item and cumulative effect of a change in accounting principle |  | $                   | (0.76  | ) |             | $ | (1.64  | )           |  | $ | (0.71         | )  |  | $             | 0.45   |    |  | $ | 2.36   |  
|Income (loss) from discontinued operations                                                                                       |  |                     | 0.01   |   |             |   |       |             |  |   | (2.10         | )  |  |               | (1.28  | )  |  |   |       |  
|Extraordinary loss on early extinguishment of debt                                                                               |  |                     |       |   |             |   |       |             |  |   |              |    |  |               |       |    |  |   | (0.03  | )
|Cumulative effect of a change in accounting principle                                                                            |  |                     |       |   |             |   |       |             |  |   | (1.22         | )  |  |               |       |    |  |   |       |  
|                                                                                                                                 |  |                     |        |   |             |   |        |             |  |   |               |    |  |               |       
|Diluted earnings (loss) per share                                                                                                |  | $                   | (0.75  | ) |             | $ | (1.64  | )           |  | $ | (4.03         | )  |  | $             | (0.83  | )  |  | $ | 2.33   |  
|                                                                                                                                 |  |                     |        |   |             |   |        |             |  |   |               |    |  |               |       
|Weighted average common shares outstanding:                                                                                      |  |                     |        |   |             |   |        |             |  |   |               |    |  |               |        |    |  |   |        |  
|Basic                                                                                                                            |  |                     | 31,275 |   |             |   | 20,528 |             |  |   | 20,053        |    |  |               | 17,172 |    |  |   | 16,732 |  
|Diluted                                                                                                                          |  |                     | 31,275 |   |             |   | 20,528 |             |  |   | 20,053        |    |  |               | 17,172 |    |  |   | 17,342 |  
|Selected Operating Data:                                                                                                         |  |                     |        |   |             |   |        |             |  |   |               |    |  |               |        |    |  |   |        |  
|Number of permanent stores open at end of
    period(5)                                                                          |  |                     | 436    |   |             |   | 460    |             |  |   | 618           |    |  |               | 619    |    |  |   | 573    |  
|Change in comparable store
    sales(5)(6)                                                                                       |  |                     | 0.6    | % |             |   | (6.8   | )%          |  |   | (7.0          | )% |  |               | (12.1  | )% |  |   | 4.1    | %
|Net sales per square foot for stores open entire
    period(5)                                                                   |  | $                   | 395    |   |             | $ | 377    |             |  | $ | 380           |    |  | $             | 415    |    |  | $ | 503    |  
|Total selling square footage at end of period
    (5)(in thousands)                                                              |  |                     | 1,004  |   |             |   | 1,052  |             |  |   | 1,377         |    |  |               | 1,359  |    |  |   | 1,203  |  
|Peak number of seasonal stores during period                                                                                     |  |                     | 102    |   |             |   | 229    |             |  |   | 284           |    |  |               | 281    |    |  |   | 239    |  

|                                 |  |               |         |  |             |   |         |             |  |   |               |  |  |               |         |  |  |   |         | 
|-------------------------------- |  | ------------- | ------- |  | ----------- | - | ------- | ----------- |  | - | ------------- |  |  | ------------- | ------- |  |  | - | ------- | 
|                                 |  | At year ended |        
|                                 |  |               |        
|                                 |  | January 29,   |         |  | January 31, |   |         | February 1, |  |   | February 2,   |  |  | February 3,   |        
|                                 |  | 2005          |         |  | 2004(7)     |   |         | 2003(1)(7)  |  |   | 2002(1)(2)(7) |  |  | 2001(2)(3)(7) |        
|                                 |  |               |         |  |             |   |         |             |  |   |               |  |  |               |        
|Balance Sheet Data:              |  |               |         |  |             |   |         |             |  |   |               |  |  |               |         |  |  |   |         | 
|Working capital                  |  | $             | 86,221  |  |             | $ | 61,847  |             |  | $ | 107,096       |  |  | $             | 101,002 |  |  | $ | 98,379  | 
|Inventories                      |  |               | 86,059  |  |             |   | 89,298  |             |  |   | 118,701       |  |  |               | 92,940  |  |  |   | 106,164 | 
|Total assets                     |  |               | 188,580 |  |             |   | 215,765 |             |  |   | 259,303       |  |  |               | 346,908 |  |  |   | 316,348 | 
|Total debt (short and long-term) |  |               | 25,000  |  |             |   | 56,189  |             |  |   | 55,740        |  |  |               | 55,590  |  |  |   | 30,590  | 
|Shareholders equity             |  |               | 95,107  |  |             |   | 85,354  |             |  |   | 117,228       |  |  |               | 184,495 |  |  |   | 174,710 | 




|    |                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes a charge to operations, before tax, of $1.0 and
    $5.4 million in 2002 and 2001, respectively, resulting from
    the impairment of property and equipment.                                                                                                                                                                                                                           
|   
|(2) | Reclassified for the presentation of discontinued operations for
    the Travel Subsidiaries.                                                                                                                                                                                                                                                                                                    
|   
|(3) | Our results of operations for the year ended February 3,
    2001, consisted of 53 weeks as compared to 52 weeks
    for all other years presented in this Form 10-K.                                                                                                                                                                                                                            
|   
|(4) | Includes a charge to operations, net of tax, of
    $24.6 million for the year ended February 1, 2003,
    resulting from the cumulative effect of adopting
    SFAS No. 142, Goodwill and Other Intangible Assets.                                                                                                                                                                              
|   
|(5) | The figures for January 31, 2004, exclude the 111
    liquidation stores.                                                                                                                                                                                                                                                                                                                        
|   
|(6) | A store is included in the comparable store sales calculation
    after it has been opened and operated by us for more than
    52 weeks. The percentage change is computed by comparing
    total net sales for comparable stores as thus defined at the end
    of the applicable reporting period with total net sales from
    comparable stores for the comparable period in the prior year.
|   
|(7) | Reclassified for the presentation of certain lease accounting
    issues clarified by the Office of the Chief Accountant of the
    Securities and Exchange Commission in a letter to the American
    Institute of Certified Public Accountants on February 7,
    2005.                                                                                                                        

22



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations



Overview
















23



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|               |  |               |       |  |                  |              |             |              |  |  |                |  |  |   |         | 
|-------------- |  | ------------- | ----- |  | ---------------- | ------------ | ----------- | ------------ |  |  | -------------- |  |  | - | ------- | 
|               |  |               |       |  |                  |              |             | Sales per    | 
|               |  | Sales         |       |  | Comparable Sales |              |             | Average Size |  |  | Square Foot(1) | 
|               |  |               |       |  |                  |              |             |              |  |  |                | 
|               |  | (in millions) |       |  |                  |              | (in selling |              |  | 
|               |  |               |       |  |                  | square feet) |             |              | 
|Mall stores    |  | $             | 246.3 |  |                  |              | (0.3        | )%           |  |  | 2,000          |  |  | $ | 387.5   | 
|Outlet stores  |  |               | 139.0 |  |                  |              | 2.0         | %            |  |  | 3,300          |  |  |   | 378.4   | 
|Airport stores |  |               | 13.6  |  |                  |              | 4.6         | %            |  |  | 700            |  |  |   | 1,649.5 | 
|E-commerce     |  |               | 4.2   |  |                  |              |            |              |  |  |               |  |  |   |        | 
|Seasonal       |  |               | 17.2  |  |                  |              |            |              |  |  |               |  |  |   |        | 
|Liquidation    |  |               | 20.8  |  |                  |              |            |              |  |  |               |  |  |   |        | 
|               |  |               |       |  |                  |              |             |              |  |  |                | 
|Total          |  | $             | 441.1 |  |                  |              |             |              |  |  |                |  |  |   |         | 
|               |  |               |       |  |                  |              |             |              |  |  |                | 



|               |  |               |       |  |                  |              |             |              |  |  |                |  |  |   |         | 
|-------------- |  | ------------- | ----- |  | ---------------- | ------------ | ----------- | ------------ |  |  | -------------- |  |  | - | ------- | 
|               |  |               |       |  |                  |              |             | Sales per    | 
|               |  | Sales         |       |  | Comparable Sales |              |             | Average Size |  |  | Square Foot(1) | 
|               |  |               |       |  |                  |              |             |              |  |  |                | 
|               |  | (in millions) |       |  |                  |              | (in selling |              |  | 
|               |  |               |       |  |                  | square feet) |             |              | 
|Mall stores    |  | $             | 327.0 |  |                  |              | (10.1       | )%           |  |  | 2,100          |  |  | $ | 364.7   | 
|Outlet stores  |  |               | 137.0 |  |                  |              | 3.7         | %            |  |  | 3,300          |  |  |   | 372.6   | 
|Airport stores |  |               | 16.1  |  |                  |              | (7.1        | )%           |  |  | 700            |  |  |   | 1,114.8 | 
|E-commerce     |  |               | 4.5   |  |                  |              |            |              |  |  |               |  |  |   |        | 
|Seasonal       |  |               | 33.1  |  |                  |              |            |              |  |  |               |  |  |   |        | 
|Liquidation    |  |               | 3.3   |  |                  |              |            |              |  |  |               |  |  |   |        | 
|               |  |               |       |  |                  |              |             |              |  |  |                | 
|Total          |  | $             | 521.0 |  |                  |              |             |              |  |  |                |  |  |   |         | 
|               |  |               |       |  |                  |              |             |              |  |  |                | 






|    |                                                                                                                                                              
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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.



Reclassification of Financial Statements






24



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Critical Accounting Policies






| |            
| | -----------
| | Inventories





| |                                  
| | ---------------------------------
| | Property and Equipment Impairment



25



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##### Table of Contents





Results of Operations


OVERVIEW




26



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WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


Reconciliation of GAAP Consolidated Statement of Operations
to


Adjusted Statement of Operations for the year ended
January 29, 2005


(In thousands, except per share amounts)


(Unaudited)


|                                                |                                                              |                                             |         |         |               |   |         |               |       |   |         |         |        | 
|----------------------------------------------- | ------------------------------------------------------------ | ------------------------------------------- | ------- | ------- | ------------- | - | ------- | ------------- | ----- | - | ------- | ------- | ------ | 
|                                                |                                                              | For the year                                |         |         | Liquidation,  |   |         | For the year  |      
|                                                |                                                              | ended                                       |         |         | Restructuring |   |         | ended         |      
|                                                |                                                              | January 29,                                 |         |         | and Other     |   |         | January 29,   |      
|                                                |                                                              | 2005as reported                            |         |         | Charges(1)    |   |         | 2005adjusted |      
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|Net sales                                       |                                                              | $                                           | 441,071 |         |               | $ | 20,778  |               |       | $ | 420,293 |        
|Cost of goods sold, buying and occupancy costs  |                                                              |                                             | 299,713 |         |               |   | 16,944  |               |       |   | 282,769 |        
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                | Gross margin                                                 |                                             |         | 141,358 |               |   |         | 3,834         |       |   |         | 137,524 |       
|Selling, general and administrative expenses    |                                                              |                                             | 129,240 |         |               |   | 17,442  |               |       |   | 111,798 |        
|Depreciation and amortization                   |                                                              |                                             | 30,630  |         |               |   | 13,780  |               |       |   | 16,850  |        
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                | Operating income (loss)                                      |                                             |         | (18,512 | )             |   |         | (27,388       | )     |   |         | 8,876   |       
|Interest expense, net                           |                                                              |                                             | 7,427   |         |               |   |        |               |       |   | 7,427   |        
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                | Income (loss) from continuing operations before income taxes |                                             |         | (25,939 | )             |   |         | (27,388       | )     |   |         | 1,449   |       
|Income tax benefit                              |                                                              |                                             | (2,183  | )       |               |   |        |               |       |   | (2,183  | )      
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|Income (loss) from continuing operations        |                                                              |                                             | (23,756 | )       |               |   | (27,388 | )             |       |   | 3,632   |        
|Income from discontinued operations, net of tax |                                                              |                                             | 173     |         |               |   |        |               |       |   | 173     |        
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                | Net income (loss)                                            |                                             | $       | (23,583 | )             |   | $       | (27,388       | )     |   | $       | 3,805   |       
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|Basic earnings per share:                       |                                                              |                                             |         |         |               |   |         |               |       |   |         |        
|                                                | Income (loss) from continuing operations                     |                                             | $       | (0.76   | )             |   | $       | (0.87         | )     |   | $       | 0.11    |       
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                | Income (loss) from discontinued operations                   |                                             | $       | 0.01    |               |   | $       |              |       |   | $       | 0.01    |       
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                |                                                              | Basic earnings (loss) per share             |         | $       | (0.75         | ) |         | $             | (0.87 | ) |         | $       | 0.12   | 
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                |                                                              | Basic weighted average shares outstanding   |         |         | 31,275        |   |         |               |      |   |         |         | 31,275 | 
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|Diluted earnings per share:                     |                                                              |                                             |         |         |               |   |         |               |       |   |         |        
|                                                | Income (loss) from continuing operations                     |                                             | $       | (0.76   | )             |   | $       | (0.85         | )     |   | $       | 0.11    |       
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                | Income (loss) from discontinued operations                   |                                             | $       | 0.01    |               |   | $       |              |       |   | $       | 0.01    |       
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                |                                                              | Diluted earnings (loss) per share           |         | $       | (0.75         | ) |         | $             | (0.85 | ) |         | $       | 0.12   | 
|                                                |                                                              |                                             |         |         |               |   |         |               |      
|                                                |                                                              | Weighted average shares outstandingdiluted |         |         | 31,275        |   |         |               |      |   |         |         | 32,057 | 
|                                                |                                                              |                                             |         |         |               |   |         |               |      






|    |                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes $27.4 million related to the transfer of inventory
    to an independent liquidator in conjunction with the closing of
    approximately 111 stores, accelerated depreciation, fixed asset
    write-offs, lease termination costs related to store closings,
    severance, and other restructuring charges.

27



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WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


Reconciliation of GAAP Consolidated Statement of Operations
to


Adjusted Statement of Operations for the year ended
January 31, 2004


(In thousands, except per share amounts)


(Unaudited)


|                                               |                                                       |                     |         |         |               |   |        |                  |        |   |         |         |         |  
|---------------------------------------------- | ----------------------------------------------------- | ------------------- | ------- | ------- | ------------- | - | ------ | ---------------- | ------ | - | ------- | ------- | ------- | -
|                                               |                                                       | For the year        |         |         | Liquidation,  |   |        | For the year     |       
|                                               |                                                       | ended               |         |         | Restructuring |   |        | ended            |       
|                                               |                                                       | January 31,         |         |         | and Other     |   |        | January 31,      |       
|                                               |                                                       | 2004as reported(2) |         |         | Charges(1)(2) |   |        | 2004adjusted(2) |       
|                                               |                                                       |                     |         |         |               |   |        |                  |       
|Net sales                                      |                                                       | $                   | 521,025 |         |               | $ | 3,290  |                  |        | $ | 517,735 |        
|Cost of goods sold, buying and occupancy costs |                                                       |                     | 373,914 |         |               |   | 6,806  |                  |        |   | 367,108 |        
|                                               |                                                       |                     |         |         |               |   |        |                  |       
|                                               | Gross margin                                          |                     |         | 147,111 |               |   |        | (3,516           | )      |   |         | 150,627 |        
|Selling, general and administrative expenses   |                                                       |                     | 150,678 |         |               |   | 2,805  |                  |        |   | 147,873 |        
|Depreciation and amortization                  |                                                       |                     | 22,353  |         |               |   | 2,278  |                  |        |   | 20,075  |        
|                                               |                                                       |                     |         |         |               |   |        |                  |       
|                                               | Operating loss                                        |                     |         | (25,920 | )             |   |        | (8,599           | )      |   |         | (17,321 | )      
|Interest expense, net                          |                                                       |                     | 10,868  |         |               |   |       |                  |        |   | 10,868  |        
|                                               |                                                       |                     |         |         |               |   |        |                  |       
|                                               | Loss from continuing operations before income taxes   |                     |         | (36,788 | )             |   |        | (8,599           | )      |   |         | (28,189 | )      
|Income tax benefit                             |                                                       |                     | (3,205  | )       |               |   |       |                  |        |   | (3,205  | )      
|                                               |                                                       |                     |         |         |               |   |        |                  |       
|Loss from continuing operations                |                                                       |                     | (33,583 | )       |               |   | (8,599 | )                |        |   | (24,984 | )      
|                                               |                                                       | Net loss            |         | $       | (33,583       | ) |        | $                | (8,599 | ) |         | $       | (24,984 | )
|                                               |                                                       |                     |         |         |               |   |        |                  |       
|Basic and diluted loss per share:              |                                                       |                     |         |         |               |   |        |                  |        |   |         |        
|                                               | Basic and diluted loss per share                      |                     | $       | (1.64   | )             |   | $      | (0.42            | )      |   | $       | (1.22   | )      
|                                               |                                                       |                     |         |         |               |   |        |                  |       
|                                               | Weighted average shares outstandingbasic and diluted |                     |         | 20,528  |               |   |        |                 |        |   |         | 20,528  |        
|                                               |                                                       |                     |         |         |               |   |        |                  |       






|    |                                                                                                                                                                                                                                                                                                                                                                                                            
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes $8.6 million related to the transfer of inventory
    to an independent liquidator in conjunction with the closing of
    approximately 111 stores, severance related to staff reductions,
    accelerated depreciation related to store closings, a loss on
    disposal of assets associated with the closing of the Las Vegas,
    Nevada distribution center, and other miscellaneous charges.
|   
|(2) | Reclassified for the presentation of certain lease accounting
    issues clarified by the Office of the Chief Accountant of the
    Securities and Exchange Commission in a letter to the American
    Institute of Certified Public Accountants on February 7,
    2005.                                                                                                                                  

28



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|                                                                  |                                                                                                  |                                            |       |      |             |  |       |             |   |  |       |       |  
|----------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | ------------------------------------------ | ----- | ---- | ----------- |  | ----- | ----------- | - |  | ----- | ----- | -
|                                                                  |                                                                                                  | Selected Data as a Percentage of Net Sales |      
|                                                                  |                                                                                                  | As reported                                |      
|                                                                  |                                                                                                  | For the years ended                        |      
|                                                                  |                                                                                                  |                                            |      
|                                                                  |                                                                                                  | January 29,                                |       |      | January 31, |  |       | February 1, |  
|                                                                  |                                                                                                  | 2005                                       |       |      | 2004(1)     |  |       | 2003(1)     |  
|                                                                  |                                                                                                  |                                            |       |      |             |  |       |             |  
|Net sales                                                         |                                                                                                  |                                            | 100.0 | %    |             |  | 100.0 | %           |   |  | 100.0 | %    
|Cost of goods sold, buying and occupancy costs                    |                                                                                                  |                                            | 68.0  |      |             |  | 71.8  |             |   |  | 70.3  |      
|                                                                  |                                                                                                  |                                            |       |      |             |  |       |             |  
|                                                                  | Gross margin                                                                                     |                                            |       | 32.0 |             |  |       | 28.2        |   |  |       | 29.7  |  
|Selling, general and administrative expenses                      |                                                                                                  |                                            | 29.3  |      |             |  | 28.9  |             |   |  | 28.8  |      
|Depreciation and amortization                                     |                                                                                                  |                                            | 6.9   |      |             |  | 4.3   |             |   |  | 3.3   |      
|                                                                  |                                                                                                  |                                            |       |      |             |  |       |             |  
|                                                                  | Operating loss                                                                                   |                                            |       | (4.2 | )           |  |       | (5.0        | ) |  |       | (2.4  | )
|Interest expense, net                                             |                                                                                                  |                                            | 1.7   |      |             |  | 2.1   |             |   |  | 1.8   |      
|Income tax benefit                                                |                                                                                                  |                                            | (0.5  | )    |             |  | (0.6  | )           |   |  | (1.7  | )    
|                                                                  |                                                                                                  |                                            |       |      |             |  |       |             |  
|                                                                  | Loss from continuing operations before cumulative effect of a
    change in accounting principle |                                            |       | (5.4 | )           |  |       | (6.4        | ) |  |       | (2.5  | )
|Loss from discontinued operations, net of tax                     |                                                                                                  |                                            |      |      |             |  |      |             |   |  | (7.4  | )    
|Cumulative effect of a change in accounting principle, net of tax |                                                                                                  |                                            |      |      |             |  |      |             |   |  | (4.3  | )    
|                                                                  |                                                                                                  |                                            |       |      |             |  |       |             |  
|                                                                  | Net loss                                                                                         |                                            |       | (5.3 | )           |  |       | (6.4        | ) |  |       | (14.2 | )
|                                                                  |                                                                                                  |                                            |       |      |             |  |       |             |  

|                                                                  |                                                                                                           |                                            |       |      |             |  |       |             |   |  |       |       |  
|----------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ----- | ---- | ----------- |  | ----- | ----------- | - |  | ----- | ----- | -
|                                                                  |                                                                                                           | Selected Data as a Percentage of Net Sales |      
|                                                                  |                                                                                                           | As adjusted                                |      
|                                                                  |                                                                                                           | for the years ended                        |      
|                                                                  |                                                                                                           |                                            |      
|                                                                  |                                                                                                           | January 29,                                |       |      | January 31, |  |       | February 1, |  
|                                                                  |                                                                                                           | 2005                                       |       |      | 2004(1)     |  |       | 2003(1)     |  
|                                                                  |                                                                                                           |                                            |       |      |             |  |       |             |  
|Net sales                                                         |                                                                                                           |                                            | 100.0 | %    |             |  | 100.0 | %           |   |  | 100.0 | %    
|Cost of goods sold, buying and occupancy costs                    |                                                                                                           |                                            | 67.3  |      |             |  | 70.9  |             |   |  | 70.3  |      
|                                                                  |                                                                                                           |                                            |       |      |             |  |       |             |  
|                                                                  | Gross margin                                                                                              |                                            |       | 32.7 |             |  |       | 29.1        |   |  |       | 29.7  |  
|Selling, general and administrative expenses                      |                                                                                                           |                                            | 26.6  |      |             |  | 28.6  |             |   |  | 28.8  |      
|Depreciation and amortization                                     |                                                                                                           |                                            | 4.0   |      |             |  | 3.9   |             |   |  | 3.3   |      
|                                                                  |                                                                                                           |                                            |       |      |             |  |       |             |  
|                                                                  | Operating income (loss)                                                                                   |                                            |       | 2.1  |             |  |       | (3.3        | ) |  |       | (2.4  | )
|Interest expense, net                                             |                                                                                                           |                                            | 1.8   |      |             |  | 2.1   |             |   |  | 1.8   |      
|Income tax benefit                                                |                                                                                                           |                                            | (0.5  | )    |             |  | (0.6  | )           |   |  | (1.7  | )    
|                                                                  |                                                                                                           |                                            |       |      |             |  |       |             |  
|                                                                  | Income (loss) from continuing operations before cumulative
    effect of a change in accounting principle |                                            |       | 0.9  |             |  |       | (4.8        | ) |  |       | (2.5  | )
|Income (loss) from discontinued operations, net of tax            |                                                                                                           |                                            |      |      |             |  |      |             |   |  | (7.4  | )    
|Cumulative effect of a change in accounting principle, net of tax |                                                                                                           |                                            |      |      |             |  |      |             |   |  | (4.3  | )    
|                                                                  |                                                                                                           |                                            |       |      |             |  |       |             |  
|                                                                  | Net income (loss)                                                                                         |                                            |       | 0.9  |             |  |       | (4.8        | ) |  |       | (14.2 | )
|                                                                  |                                                                                                           |                                            |       |      |             |  |       |             |  






|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Reclassified for the presentation of certain lease accounting
    issues clarified by the Office of the Chief Accountant of the
    Securities and Exchange Commission in a letter to the American
    Institute of Certified Public Accountants on February 7,
    2005.

29



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| |                      
| | ---------------------
| | 2004 Compared to 2003

Net Sales.






Cost of Goods Sold, Buying and Occupancy Costs.






Selling, General and Administrative Expenses.




30



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Depreciation and Amortization.




Operating Loss.




Interest Expense. 1 4 1 4


Income Tax Benefit.


Income from Discontinued Operations.


Net Loss.


31



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| |                      
| | ---------------------
| | 2003 Compared to 2002

Net Sales.








Cost of Goods Sold, Buying and Occupancy Costs.




Selling, General and Administrative Expenses.


32



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Depreciation and Amortization.




Operating Loss.


Interest Expense.


Income Tax Benefit.


Net Loss from Continuing Operations.


Loss from Discontinued Operations and Cumulative Effect of
a Change in Accounting Principle.


33



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Goodwill and Other Intangible Assets.


Net Loss.


Liquidity and Capital Resources








| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 85% of net inventories, provided that such percentage at no time
    may exceed 85% of the then applicable discount rate applied in
    appraising such inventories to reflect their value as if sold in
    an orderly liquidation, except that the discount rate is
    gradually increased from August 17 to October 1 of
    each year and gradually decreased from December 17 to
    February 1 of each year, and except that such amount is
    reduced by the amount of certain in-transit inventory to the
    extent such in-transit inventory reflects a disproportionate
    amount of our total inventory;
|
| |  | plus 85% of outstanding and undrawn trade letters of credit,
    provided that such percentage at no time may exceed 85% of the
    discount rate applied in appraising the future inventories
    related to such letters of credit to reflect their value as if
    sold in an orderly liquidation;                                                                                                                                                                                                                                                                                                                  
|
| |  | plus 85% of credit card receivables; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | minus a $10.0 million reserve.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         





| |   |                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the revolving credit portion of such borrowings cannot exceed
    the sum of 85% of credit card receivables, plus 85% of the
    appraised value of inventory (including inventory subject to
    trade letters of credit) as if sold on a going-out-of business
    basis;                                                                                      
|
| |  | the total borrowings (i.e. the revolving credit portion of the
    facility and the Term B promissory note) cannot exceed the sum
    of 85.0% of the book value of credit card receivables, plus
    92.5% of the appraised value of inventory (including inventory
    subject to trade letters of credit) as if sold on a going-out-of
    business basis; and
|
| |  | from December 31 of each year, through March 31 of the
    following year, we must have no borrowings under the revolving
    credit portion of the facility and outstanding letters of credit
    must be no greater than $20.0 million.                                                                                                                        





34



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1 4












35



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1 4


Cash Flow Analysis




|                                                                                 |  |                     |        |   |             |   |         |             |  |   |         |  
|-------------------------------------------------------------------------------- |  | ------------------- | ------ | - | ----------- | - | ------- | ----------- |  | - | ------- | -
|                                                                                 |  | For the years ended |       
|                                                                                 |  |                     |       
|                                                                                 |  | January 29,         |        |   | January 31, |   |         | February 1, | 
|                                                                                 |  | 2005                |        |   | 2004(1)     |   |         | 2003(1)     | 
|                                                                                 |  |                     |        |   |             |   |         |             | 
|                                                                                 |  | (in thousands)      |       
|Net cash provided by (used in) operating activities of
    continuing operations |  | $                   | 11,014 |   |             | $ | 31,468  |             |  | $ | (36,225 | )
|Net cash provided by (used in) investing activities of
    continuing operations |  |                     | (4,520 | ) |             |   | (8,907  | )           |  |   | 2,608   |  
|Net cash provided by financing activities of continuing
    operations           |  |                     | 157    |   |             |   | 510     |             |  |   | 11,249  |  
|Net cash provided by (used in) discontinued operations                           |  |                     | (233   | ) |             |   | (11,110 | )           |  |   | 13,857  |  
|                                                                                 |  |                     |        |   |             |   |         |             | 
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                             |  | $                   | 6,418  |   |             | $ | 11,961  |             |  | $ | (8,511  | )
|                                                                                 |  |                     |        |   |             |   |         |             | 




|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Reclassified for the presentation of certain lease accounting
    issues clarified by the Office of the Chief Accountant of the
    Securities and Exchange Commission in a letter to the American
    Institute of Certified Public Accountants on February 7,
    2005.

Operating Activities.








36



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Investing Activities.






Financing Activities. 1 4






37



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Contractual Obligations and Commercial
Commitments.


Contractual Obligations


Payments Due by Period (in thousands)


|                                   |  |             |         |  |      |   |        |           |  |   |            |  |  |       |        |  |  |   |        | 
|---------------------------------- |  | ----------- | ------- |  | ---- | - | ------ | --------- |  | - | ---------- |  |  | ----- | ------ |  |  | - | ------ | 
|                                   |  | Total       |         |  |      |   |        |           |  |   | After five | 
|                                   |  | Obligations |         |  | 2005 |   |        | 2006-2007 |  |   | 2008-2009  |  |  | years |       
|                                   |  |             |         |  |      |   |        |           |  |   |            |  |  |       |       
|Operating
    leases(1)            |  | $           | 182,616 |  |      | $ | 32,423 |           |  | $ | 54,696     |  |  | $     | 44,857 |  |  | $ | 50,640 | 
|Debt obligations                   |  |             | 25,000  |  |      |   | 5,000  |           |  |   | 5,000      |  |  |       | 15,000 |  |  |   |       | 
|                                   |  |             |         |  |      |   |        |           |  |   |            |  |  |       |       
|Total contractual cash obligations |  | $           | 207,616 |  |      | $ | 37,423 |           |  | $ | 59,696     |  |  | $     | 59,857 |  |  | $ | 50,640 | 
|                                   |  |             |         |  |      |   |        |           |  |   |            |  |  |       |       




|    |                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes store and distribution center operating leases, which
    generally provide for payment of direct operating costs in
    addition to rent. These obligation amounts include future
    minimum lease payments and exclude related direct operating
    costs.

Commercial Commitments


Amount of Commitment by Period (in thousands)


|                              |  |           |       |  |      |   |       |           |  |           |            |       |  |   |   |  |  |   |   | 
|----------------------------- |  | --------- | ----- |  | ---- | - | ----- | --------- |  | --------- | ---------- | ----- |  | - | - |  |  | - | - | 
|                              |  | Total     |       |  |      |   |       |           |  |           |           
|                              |  | Amounts   |       |  |      |   |       |           |  |           | After five
|                              |  | Committed |       |  | 2005 |   |       | 2006-2007 |  | 2008-2009 |            | years
|                              |  |           |       |  |      |   |       |           |  |           |            |      
|Documentary letters of credit |  | $         | 3,461 |  |      | $ | 3,461 |           |  | $         |           |       |  | $ |  |  |  | $ |  | 
|Standby letters of credit     |  |           | 4,586 |  |      |   | 4,586 |           |  |           |           |       |  |   |  |  |  |   |  | 
|                              |  |           |       |  |      |   |       |           |  |           |            |       |  |   |  
|Total commercial commitments  |  | $         | 8,047 |  |      | $ | 8,047 |           |  | $         |           |       |  | $ |  |  |  | $ |  | 
|                              |  |           |       |  |      |   |       |           |  |           |            |       |  |   |  

Off-Balance Sheet Arrangements




Seasonality and Inflation






Discontinued Operations




38



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Reorganization and Partial Store Liquidation






Additional Financing




39



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1 4 1 4


Quarterly Results




|                                         |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |   |  |   |         |   |  |   |         |  
|---------------------------------------- |  | ---------------- | ------- |  | ----------- | - | ------ | -------- |  | - | ------- | - |  | -------- | ------- | - | ------- | - | ------- | ------- |  | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                         |  | Quarter ended(1) |        
|                                         |  |                  |        
|                                         |  | Fiscal 2004      |         |  | Fiscal 2003 |  
|                                         |  |                  |         |  |             |  
|                                         |  | Jan. 29,         |         |  | Oct. 30,    |   |        | Jul. 31, |  |   | May 1,  |   |  | Jan. 31, |         |   | Nov. 1, |   |         | Aug. 2, |  |   | May 3,  |  
|                                         |  | 2005             |         |  | 2004(2)     |   |        | 2004(2)  |  |   | 2004(2) |   |  | 2004(2)  |         |   | 2003(2) |   |         | 2003(2) |  |   | 2003(2) |  
|                                         |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |  
|Net sales                                |  | $                | 200,067 |  |             | $ | 87,923 |          |  | $ | 55,330  |   |  | $        | 97,751  |   |         | $ | 268,094 |         |  | $ | 97,880  |   |  | $ | 59,750  |   |  | $ | 95,301  |  
|Gross margin                             |  |                  | 84,164  |  |             |   | 25,567 |          |  |   | 9,694   |   |  |          | 21,933  |   |         |   | 101,341 |         |  |   | 23,512  |   |  |   | 3,540   |   |  |   | 18,718  |  
|Operating income (loss)                  |  |                  | 41,135  |  |             |   | (7,108 | )        |  |   | (28,491 | ) |  |          | (24,048 | ) |         |   | 43,040  |         |  |   | (16,473 | ) |  |   | (33,527 | ) |  |   | (18,960 | )
|Income (loss) from continuing operations |  |                  | 41,973  |  |             |   | (8,493 | )        |  |   | (30,444 | ) |  |          | (26,792 | ) |         |   | 12,372  |         |  |   | (11,618 | ) |  |   | (21,600 | ) |  |   | (12,737 | )
|Income from discontinued operations      |  |                  | 173     |  |             |   |       |          |  |   |        |   |  |          |        |   |         |   |        |         |  |   |        |   |  |   |        |   |  |   |        |  
|                                         |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |  
|Net income (loss)                        |  | $                | 42,146  |  |             | $ | (8,493 | )        |  | $ | (30,444 | ) |  | $        | (26,792 | ) |         | $ | 12,372  |         |  | $ | (11,618 | ) |  | $ | (21,600 | ) |  | $ | (12,737 | )
|                                         |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |  
|Basic earnings (loss) per share:         |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |   |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations |  | $                | 1.08    |  |             | $ | (0.22  | )        |  | $ | (1.14   | ) |  | $        | (1.30   | ) |         | $ | 0.60    |         |  | $ | (0.57   | ) |  | $ | (1.05   | ) |  | $ | (0.62   | )
|Income from discontinued operations      |  | $                |        |  |             | $ |       |          |  | $ |        |   |  | $        |        |   |         | $ |        |         |  | $ |        |   |  | $ |        |   |  | $ |        |  
|                                         |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |  
|Net income (loss)                        |  | $                | 1.08    |  |             | $ | (0.22  | )        |  | $ | (1.14   | ) |  | $        | (1.30   | ) |         | $ | 0.60    |         |  | $ | (0.57   | ) |  | $ | (1.05   | ) |  | $ | (0.62   | )
|                                         |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |  
|Diluted earnings per share:              |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |   |  |   |         |   |  |   |         |  
|Income (loss) from continuing operations |  | $                | 1.05    |  |             | $ | (0.22  | )        |  | $ | (1.14   | ) |  | $        | (1.30   | ) |         | $ | 0.60    |         |  | $ | (0.57   | ) |  | $ | (1.05   | ) |  | $ | (0.62   | )
|Income from discontinued operations      |  | $                |        |  |             | $ |       |          |  | $ |        |   |  | $        |        |   |         | $ |        |         |  | $ |        |   |  | $ |        |   |  | $ |        |  
|                                         |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |  
|Net income (loss)                        |  | $                | 1.05    |  |             | $ | (0.22  | )        |  | $ | (1.14   | ) |  | $        | (1.30   | ) |         | $ | 0.60    |         |  | $ | (0.57   | ) |  | $ | (1.05   | ) |  | $ | (0.62   | )
|                                         |  |                  |         |  |             |   |        |          |  |   |         |   |  |          |         |   |         |   |         |         |  |   |         |  




|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The sum of the per share amounts for the quarters does not equal
    the totals for the year due to the application of the treasury
    stock method.                                                                                                                    
|   
|(2) | Reclassified for the presentation of certain lease accounting
    issues clarified by the Office of the Chief Accountant of the
    Securities and Exchange Commission in a letter to the American
    Institute of Certified Public Accountants on February 7,
    2005.

Recently Issued Accounting Pronouncements




40



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##### Table of Contents








|         |                                                          
|-------- | ---------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure About Market Risk










|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








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








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures




Managements Report on Internal Controls and
Procedures






| |       |                                                                                                                                                                                                                                                                                                                                                   
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (i)   | pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of our assets;                                                                                                                                                                                            
|
| | (ii)  | provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with U.S. generally accepted accounting
    principles, and that our receipts and expenditures are being
    made only in accordance with the authorizations of our
    management and directors; and
|
| | (iii) | provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on our financial
    statements.                                                                                                                                    

41



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42



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Report of Independent Registered Public Accounting Firm
















43



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| |             
| | ------------
| | /s/ KPMG LLP





44



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Change in Internal Control Over Financial Reporting









|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III











|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



www.wilsonsleather.com







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Stockholder Matters



45



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|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accountant Fees and Services



46



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PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

(a)     Documents filed as part of
this report:


|   |  |                                                        
|-- |  | -------------------------------------------------------
|1. |  | Financial Statements:                                  
|  
|   |  | Report of Independent Registered Public Accounting Firm
|  
|   |  | Consolidated Balance Sheets                            
|  
|   |  | Consolidated Statements of Operations                  
|  
|   |  | Consolidated Statements of Shareholders Equity        
|  
|   |  | Consolidated Statements of Cash Flows                  
|  
|   |  | Notes to Consolidated Financial Statements             
|  
|   |  | Financial Statement Schedule                           



| |     |          
| | --- | ---------
| | (b) | Exhibits:



|        |     |  |             |                                                                                                                                                                                                                                                                                                                                                    |                  |  |                           | 
|------- | --- |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------- |  | ------------------------- | 
|Exhibit |     |  |             |                                                                                                                                                                                                                                                                                                                                                    |                 
|No.     |     |  | Description |                                                                                                                                                                                                                                                                                                                                                    | Method of Filing | 
|        |     |  |             |                                                                                                                                                                                                                                                                                                                                                    |                  | 
|        | 2.1 |  |             | Sale Agreement dated as of May 24, 1996 by and among CVS
    New York, Inc. (formerly known as Melville Corporation), Wilsons
    Center Inc. and Wilsons The Leather Experts Inc.
    (1)                                                                                                                                                         |                  |  | Incorporated by Reference | 
|        | 3.1 |  |             | 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.(2)                                                                                                    |                  |  | Incorporated by Reference | 
|        | 3.2 |  |             | Restated Bylaws of Wilsons The Leather Experts Inc. as amended
    June 16, 1998, January 25, 2000, May 23, 2002,
    and February 5,
    2004.(3)                                                                                                                                                                                                 |                  |  | Incorporated by Reference | 
|        | 4.1 |  |             | Specimen of common stock
    certificate.(4)                                                                                                                                                                                                                                                                                                       |                  |  | Incorporated by Reference | 
|        | 4.2 |  |             | 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 Reference | 
|        | 4.3 |  |             | 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 Reference | 
|        | 4.4 |  |             | 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 Reference | 
|        | 4.5 |  |             | 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 Reference | 
|        | 4.6 |  |             | Form of Warrant issued to the Purchasers named in the Purchase
    Agreement on April 25,
    2004.(9)                                                                                                                                                                                                                                             |                  |  | Incorporated by Reference | 

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|        |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                  |  |                           | 
|------- | ----- |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------- |  | ------------------------- | 
|Exhibit |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                 
|No.     |       |  | Description |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           | Method of Filing | 
|        |       |  |             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |                  | 
|        | 10.1  |  |             | 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.(10)                                                                                                                                                                                                                                                                                           |                  |  | Incorporated by Reference | 
|        | *10.2 |  |             | Wilsons The Leather Experts Inc. Amended Executive and Key
    Management Incentive
    Plan.(11)                                                                                                                                                                                                                                                                                                                                                                                                                         |                  |  | Incorporated by Reference | 
|        | *10.3 |  |             | Wilsons The Leather Experts Inc. 401(k)
    Plan.(12)                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                  |  | Incorporated by Reference | 
|        | *10.4 |  |             | Employment Agreement dated as of May 25, 1996, between
    Wilsons The Leather Experts Inc. and Joel
    Waller.(1)                                                                                                                                                                                                                                                                                                                                                                                                       |                  |  | Incorporated by Reference | 
|        | *10.5 |  |             | Employment Agreement dated as of May 25, 1996, between
    Wilsons The Leather Experts Inc. and David
    Rogers.(1)                                                                                                                                                                                                                                                                                                                                                                                                      |                  |  | Incorporated by Reference | 
|        | 10.6  |  |             | Fourth Amended and Restated Credit Agreement dated as of
    April 23, 2002, among Wilsons Leather Holdings Inc., as
    Borrower, the Lenders signatory thereto from time to time, as
    Lenders, and General Electric Capital Corporation, as Agent,
    Lender, Term Lender and Swing Line Lender, GECC Capital Markets
    Corp., Inc. as Lead Arranger, the CIT Group/Business
    Credit, Inc., as Lender and Documentation Agent and Wells Fargo
    Retail Finance LLC, as Lender and Syndication
    Agent.(13) |                  |  | Incorporated by Reference | 
|        | 10.7  |  |             | 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.(14)                                                                                                                                                           |                  |  | Incorporated by Reference | 
|        | *10.8 |  |             | Wilsons The Leather Experts Inc. Amended 1996 Stock Option
    Plan.(3)                                                                                                                                                                                                                                                                                                                                                                                                                                                   |                  |  | Incorporated by Reference | 
|        | 10.9  |  |             | Joinder Agreement dated as of May 24, 1999, by and between
    the Store Guarantors that are signatories thereto and General
    Electric Capital
    Corporation.(15)                                                                                                                                                                                                                                                                                                                                                    |                  |  | Incorporated by Reference | 
|        | 10.10 |  |             | 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.(16)                                                                                                                                                                                                                                                                                     |                  |  | Incorporated by Reference | 
|        | 10.11 |  |             | 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.(17)                                                                                                                                                                                                                                                                                                 |                  |  | Incorporated by Reference | 
|        | 10.12 |  |             | 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.(18)                                                                                                                                                                                                                                                                                            |                  |  | Incorporated by Reference | 
|        | 10.13 |  |             | 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.(19)                                                                                                                                                                                                                                                                                                        |                  |  | Incorporated by Reference | 
|        | 10.14 |  |             | 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.(20)                                                                                                                                                                                                                                                                                                      |                  |  | Incorporated by Reference | 
|        | 10.15 |  |             | 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.(21)                                                                                                                                                                                                                                                                                                   |                  |  | Incorporated by Reference | 

48



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|        |        |  |             |                                                                                                                                                                                                                                                                                                               |                  |  |                           | 
|------- | ------ |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------- |  | ------------------------- | 
|Exhibit |        |  |             |                                                                                                                                                                                                                                                                                                               |                 
|No.     |        |  | Description |                                                                                                                                                                                                                                                                                                               | Method of Filing | 
|        |        |  |             |                                                                                                                                                                                                                                                                                                               |                  | 
|        | 10.16  |  |             | Reaffirmation of Guaranty dated as of May 24, 1999, 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.(22)     |                  |  | Incorporated by Reference | 
|        | 10.17  |  |             | 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 Reference | 
|        | 10.18  |  |             | Joinder Agreement dated as of July 31, 1997, by and between
    Wilsons International Inc. and General Electric Capital
    Corporation.(24)                                                                                                                                                                  |                  |  | Incorporated by Reference | 
|        | 10.19  |  |             | Reaffirmation of Guaranty dated as of July 31, 1997, by
    Wilsons The Leather Experts Inc., Wilsons Center, Inc., Rosedale
    Wilsons, Inc. and River Hills Wilsons, Inc., in favor of General
    Electric Capital
    Corporation.(25)                                                                   |                  |  | Incorporated by Reference | 
|        | 10.20  |  |             | Wilsons The Leather Experts Inc. 1998 Stock Option Plan.
    (26)                                                                                                                                                                                                                                             |                  |  | Incorporated by Reference | 
|        | 10.21  |  |             | Reaffirmation of Guaranty dated September 24, 1999, by
    Wilsons The Leather Experts Inc., Wilsons Center, Inc., Rosedale
    Wilsons, Inc. and River Hills Wilsons,
    Inc.(27)                                                                                                                           |                  |  | Incorporated by Reference | 
|        | *10.22 |  |             | First Amendment to Employment Agreement dated as of
    April 3, 2000, between Wilsons The Leather Experts Inc. and
    Joel N.
    Waller.(28)                                                                                                                                                               |                  |  | Incorporated by Reference | 
|        | *10.23 |  |             | First Amendment to Employment Agreement as of March 23,
    2000, between Wilsons The Leather Experts Inc. and David L.
    Rogers.(29)                                                                                                                                                                       |                  |  | Incorporated by Reference | 
|        | 10.24  |  |             | 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.(30)                   |                  |  | Incorporated by Reference | 
|        | 10.25  |  |             | Joinder Agreement dated as of October 31, 2000, by and
    between the Store Guarantors that are signatories thereto and
    General Electric Capital
    Corporation.(31)                                                                                                                                    |                  |  | Incorporated by Reference | 
|        | 10.26  |  |             | Pledge Amendment dated as of October 31, 2000, by River
    Hills Wilsons,
    Inc.(32)                                                                                                                                                                                                                       |                  |  | Incorporated by Reference | 
|        | 10.27  |  |             | 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.(33)                                                                                            |                  |  | Incorporated by Reference | 
|        | 10.28  |  |             | Reaffirmation of Guaranty dated as of October 31, 2000, 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.(34) |                  |  | Incorporated by Reference | 
|        | 10.29  |  |             | Wilsons The Leather Experts Inc. 2000 Long Term Incentive Plan,
    as amended on August 24, 2000, March 21, 2002,
    June 11, 2003 and September 18,
    2003.(35)                                                                                                                                          |                  |  | Incorporated by Reference | 
|        | 10.30  |  |             | Joinder Agreement dated as of April 13, 2001, by and
    between the Store Guarantors that are signatory thereto and
    General Electric Capital
    Corporation.(36)                                                                                                                                        |                  |  | Incorporated by Reference | 
|        | 10.31  |  |             | Pledge Amendment, dated as of April 13, 2001, by WWT, Inc.
    (37)                                                                                                                                                                                                                                           |                  |  | Incorporated by Reference | 

49



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|        |        |  |             |                                                                                                                                                                                                                                                                                                                                                          |                  |  |                           | 
|------- | ------ |  | ----------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------- |  | ------------------------- | 
|Exhibit |        |  |             |                                                                                                                                                                                                                                                                                                                                                          |                 
|No.     |        |  | Description |                                                                                                                                                                                                                                                                                                                                                          | Method of Filing | 
|        |        |  |             |                                                                                                                                                                                                                                                                                                                                                          |                  | 
|        | 10.32  |  |             | 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.(38)                                                                                                                                 |                  |  | Incorporated by Reference | 
|        | 10.33  |  |             | Reaffirmation Of Guaranty dated as of April 13, 2001, by
    Wilsons The Leather Experts Inc., Wilsons Center, Inc., Rosedale
    Wilsons, Inc. and River Hills Wilsons, Inc., in favor of General
    Electric Capital
    Corporation.(39)                                                                                                             |                  |  | Incorporated by Reference | 
|        | 10.34  |  |             | Reaffirmation Of Guaranty dated as of June 19, 2001, by
    Wilsons The Leather Experts Inc., Wilsons Center, Inc., Rosedale
    Wilsons, Inc. and River Hills Wilsons, Inc., in favor of General
    Electric Capital
    Corporation.(40)                                                                                                              |                  |  | Incorporated by Reference | 
|        | 10.35  |  |             | Reaffirmation of Guaranty dated as of April 23, 2002, 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.(41)                         |                  |  | Incorporated by Reference | 
|        | 10.36  |  |             | Agreement to Purchase Office/Warehouse Building by and between
    Bermans The Leather Experts, Inc., a Delaware Corporation, as
    Seller and IRET Properties, a North Dakota limited partnership,
    as Purchaser, Dated as of June 19,
    2002.(42)                                                                                                |                  |  | Incorporated by Reference | 
|        | 10.37  |  |             | Lease, IRET Properties Landlord to Bermans The Leather Experts,
    Inc. Tenant, dated June 21,
    2002.(43)                                                                                                                                                                                                                                            |                  |  | Incorporated by Reference | 
|        | 10.38  |  |             | First Amendment to Fourth Amended and Restated Credit Agreement
    dated as of November 1, 2002, by and among Wilsons Leather
    Holdings Inc., General Electric Capital Corporation, the credit
    parties signatory thereto and the lenders signatory
    thereto.(44)                                                                              |                  |  | Incorporated by Reference | 
|        | *10.39 |  |             | Unqualified Release Agreement dated August 22, 2002, by and
    between John A. Fowler and Wilsons Leather Holdings Inc.
    (45)                                                                                                                                                                                                                        |                  |  | Incorporated by Reference | 
|        | *10.40 |  |             | Consulting Agreement dated August 11, 2002, by and between
    John A. Fowler and Wilsons Leather Holdings
    Inc.(46)                                                                                                                                                                                                                                  |                  |  | Incorporated by Reference | 
|        | 10.41  |  |             | Limited Waiver and Second Amendment to Fourth Amended and
    Restated Credit Agreement dated as of January 21, 2003,
    among Wilsons Leather Holdings Inc., General Electric Capital
    Corporation, as Lender, Term Lender, Swing Line Lender and as
    Agent, the Credit Parties signatory thereto and the Lenders
    signatory
    thereto.(47) |                  |  | Incorporated by Reference | 
|        | *10.42 |  |             | Unqualified Release Agreement dated December 9, 2002, by
    and between John Serino and River Hills Wilsons,
    Inc.(48)                                                                                                                                                                                                                               |                  |  | Incorporated by Reference | 
|        | 10.43  |  |             | Limited Waiver and Third Amendment to Fourth Amended and
    Restated Credit Agreement dated as of April 11, 2003, among
    Wilsons Leather Holdings Inc., General Electric Capital
    Corporation, as Lender, Term Lender, Swing Line Lender and as
    Agent, the Credit Parties signatory thereto and the Lenders
    signatory
    thereto.(49)    |                  |  | Incorporated by Reference | 
|        | 10.44  |  |             | Reaffirmation of Guaranty dated as of April 11, 2003, 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.(50)                         |                  |  | Incorporated by Reference | 
|        | *10.45 |  |             | Wilsons The Leather Experts Inc. Employee Stock Purchase Plan,
    as
    amended.(51)                                                                                                                                                                                                                                                                   |                  |  | Incorporated by Reference | 

50



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|        |        |  |             |                                                                                                                                                                                                                                                                                                                                    |                  |  |                           | 
|------- | ------ |  | ----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------- |  | ------------------------- | 
|Exhibit |        |  |             |                                                                                                                                                                                                                                                                                                                                    |                 
|No.     |        |  | Description |                                                                                                                                                                                                                                                                                                                                    | Method of Filing | 
|        |        |  |             |                                                                                                                                                                                                                                                                                                                                    |                  | 
|        | 10.46  |  |             | Fourth Amendment to Fourth Amended and Restated Credit Agreement
    dated as of January 21, 2004, among Wilsons Leather
    Holdings Inc., General Electric Capital Corporation, as Lender,
    Term Lender, Swing Line Lender and as Agent, the Credit Parties
    signatory thereto and the Lenders signatory
    thereto.(52)  |                  |  | Incorporated by Reference | 
|        | 10.47  |  |             | Reaffirmation of Guaranty dated as of January 21, 2004, 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.(53) |                  |  | Incorporated by Reference | 
|        | 10.48  |  |             | Limited Waiver and Fifth Amendment to Fourth Amended and
    Restated Credit Agreement dated as of April 15, 2004 among
    Wilsons Leather Holdings Inc., General Electric Capital
    Corporation, as Lender, Term Lender, Swing Line Lender and as
    Agent, the Credit Parties signatory
    thereto.(54)                     |                  |  | Incorporated by Reference | 
|        | 10.49  |  |             | Reaffirmation of Guaranty dated as of April 15, 2004 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.(55)    |                  |  | Incorporated by Reference | 
|        | 10.50  |  |             | Reaffirmation of Guaranty dated as of November 1, 2002 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.(56)  |                  |  | Incorporated by Reference | 
|        | 10.51  |  |             | Joinder Agreement dated as of October 10, 2000, by and
    between Wilsons Leather Direct Inc. and General Electric Capital
    Corporation.(57)                                                                                                                                                                                   |                  |  | Incorporated by Reference | 
|        | 10.52  |  |             | Sixth Amendment to Fourth Amended and Restated Credit Agreement
    dated as of April 27, 2004 among Wilsons Leather Holdings
    Inc., General Electric Capital Corporation, as Lender, Term
    Lender, Swing Line Lender and as Agent, the Credit Parties
    signatory thereto and the Lenders signatory
    thereto.(58)      |                  |  | Incorporated by Reference | 
|        | 10.53  |  |             | Reaffirmation of Guaranty dated as of April 27, 2004 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.(59)    |                  |  | Incorporated by Reference | 
|        | *10.54 |  |             | Second Amendment to Employment Agreement dated April 19,
    2004, between Joel N. Waller and the
    Company.(60)                                                                                                                                                                                                                 |                  |  | Incorporated by Reference | 
|        | *10.55 |  |             | Second Amendment to Employment Agreement dated April 5,
    2004, between David L. Rogers and the
    Company.(61)                                                                                                                                                                                                                 |                  |  | Incorporated by Reference | 
|        | *10.56 |  |             | Stay Bonus Agreement dated April 5, 2004, between
    Peter G. Michielutti and the
    Company.(62)                                                                                                                                                                                                                                |                  |  | Incorporated by Reference | 
|        | *10.57 |  |             | Stay Bonus Agreement dated April 5, 2004, between
    Arthur J. Padovese and the
    Company.(63)                                                                                                                                                                                                                                  |                  |  | Incorporated by Reference | 
|        | *10.58 |  |             | First Amendment to Stay Bonus Agreement dated as of
    June 21, 2004, by Peter G. Michielutti and the
    Company.(64)                                                                                                                                                                                                            |                  |  | Incorporated by Reference | 
|        | 10.59  |  |             | Unqualified Release Agreement dated as of July 13, 2004, by
    Jenele C. Grassle and the
    Company.(65)                                                                                                                                                                                                                         |                  |  | Incorporated by Reference | 
|        | *10.60 |  |             | Agreement dated as of July 29, 2004, by David L.
    Rogers and the
    Company.(66)                                                                                                                                                                                                                                               |                  |  | Incorporated by Reference | 

51



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##### Table of Contents



|        |        |  |             |                                                                                                                                                                                                                                                                                                                                                                                       |                  |  |                           | 
|------- | ------ |  | ----------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------- |  | ------------------------- | 
|Exhibit |        |  |             |                                                                                                                                                                                                                                                                                                                                                                                       |                 
|No.     |        |  | Description |                                                                                                                                                                                                                                                                                                                                                                                       | Method of Filing | 
|        |        |  |             |                                                                                                                                                                                                                                                                                                                                                                                       |                  | 
|        | *10.61 |  |             | Form of Non-Statutory Stock Option Agreement (Director) pursuant
    to the 1996 Stock Option
    Plan.(67)                                                                                                                                                                                                                                                                           |                  |  | Incorporated by Reference | 
|        | *10.62 |  |             | Form of Non-Statutory Stock Option Agreement (Associate)
    pursuant to the 1996 Stock Option
    Plan.(68)                                                                                                                                                                                                                                                                          |                  |  | Incorporated by Reference | 
|        | *10.63 |  |             | Form of Non-Statutory Stock Option Agreement (Director) pursuant
    to the 2000 Long Term Incentive
    Plan.(69)                                                                                                                                                                                                                                                                    |                  |  | Incorporated by Reference | 
|        | *10.64 |  |             | Form of Non-Statutory Stock Option Agreement (Associate)
    pursuant to the 2000 Long Term Incentive
    Plan.(70)                                                                                                                                                                                                                                                                   |                  |  | Incorporated by Reference | 
|        | *10.65 |  |             | Form of Restricted Stock Agreement (Associate) pursuant to the
    2000 Long Term Incentive
    Plan.(71)                                                                                                                                                                                                                                                                             |                  |  | Incorporated by Reference | 
|        | *10.66 |  |             | Agreement, dated October 28, 2004, between Joel N.
    Waller and the
    Company.(72)                                                                                                                                                                                                                                                                                                |                  |  | Incorporated by Reference | 
|        | *10.67 |  |             | Employment Agreement, dated as of November 22, 2004,
    between the Company and Michael M.
    Searles.(73)                                                                                                                                                                                                                                                                          |                  |  | Incorporated by Reference | 
|        | *10.68 |  |             | Form of Non-Statutory Stock Option Agreement between the Company
    and Michael M.
    Searles.(74)                                                                                                                                                                                                                                                                                  |                  |  | Incorporated by Reference | 
|        | *10.69 |  |             | Amendment dated as of December 22, 2004, to the Agreement
    dated October 28, 2004, between the Company and
    Joel N.
    Waller.(75)                                                                                                                                                                                                                                             |                  |  | Incorporated by Reference | 
|        | 10.70  |  |             | Seventh Amendment to Fourth Amended and Restated Credit
    Agreement, dated as of March 2, 2005, among Wilsons Leather
    Holdings Inc., a Minnesota corporation, General Electric Capital
    Corporation, a Delaware corporation, as Lender, Term Lender,
    Swing Line Lender and as Agent, the Credit Parties signatory
    thereto and the Lenders signatory
    thereto.(76) |                  |  | Incorporated by Reference | 
|        | *10.71 |  |             | Corporate Leadership Team Incentive
    Plan.(77)                                                                                                                                                                                                                                                                                                                                     |                  |  | Incorporated by Reference | 
|        | *10.72 |  |             | Second Amendment, dated as of February 21, 2005, to the
    Agreement dated October 28, 2004, between the Company and
    Joel N. Waller                                                                                                                                                                                                                                              |                  |  | Electronic Transmission   | 
|        | *10.73 |  |             | Waiver and Modification, dated March 2, 2005, under
    Employment Agreement dated November 22, 2004, between
    Michael Searles and the Company                                                                                                                                                                                                                                     |                  |  | Electronic Transmission   | 
|        | 10.74  |  |             | Limited Waiver and Eight Amendment to Fourth Amended and
    Restated Credit Agreement, dated as of April 4, 2005, among
    Wilsons Leather Holdings Inc., a Minnesota corporation, as
    Lender, Term Lender, Swing Line Lender and as Agent, the Credit
    Parties signatory thereto and the Lenders signatory thereto                                                           |                  |  | Electronic Transmission   | 
|        | 14.1   |  |             | Code of Business Ethics and
    Conduct(78)                                                                                                                                                                                                                                                                                                                                           |                  |  | Incorporated by Reference | 
|        | 21.1   |  |             | Subsidiaries of Wilsons The Leather Experts Inc                                                                                                                                                                                                                                                                                                                                       |                  |  | Electronic Transmission   | 
|        | 23.1   |  |             | Consent of KPMG LLP                                                                                                                                                                                                                                                                                                                                                                   |                  |  | Electronic Transmission   | 
|        | 31.1   |  |             | Certification of Chief Executive Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                |                  |  | Electronic Transmission   | 
|        | 31.2   |  |             | Certification of Chief Financial Officer pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                |                  |  | Electronic Transmission   | 
|        | 32.1   |  |             | Certification of Chief 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 Transmission   | 
|        | 32.2   |  |             | 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   | 

52



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| |   |                                                                                                                                     
| | - | ------------------------------------------------------------------------------------------------------------------------------------
| | * | 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 Registration Statement on Form S-1
    (333-13967) filed with the Commission on October 11, 1996.                        
|
| | (2) | Incorporated by reference to the same numbered exhibit to the
    Companys Report on Form 10-Q for the quarter ended
    May 4, 2002 (File No. 0-21543).                                            
|
| | (3) | Incorporated by reference to the same numbered exhibit to the
    Companys Report on Form 10-K for the fiscal year
    ended January 29, 2005.                                                      
|
| | (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 the same numbered exhibit to the
    Companys Report on Form 10-K for the fiscal year
    ended January 29, 2000, filed with the Commission (File
    No. 0-21543).    
|
| | (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 10.8 to the
    Companys Report on Form 10-Q for the quarter ended
    August 2, 1997, filed with the Commission.                             
|    
|(11) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report on Form 10-Q for the quarter ended
    May 4, 2002, filed with the Commission.                                
|    
|(12) | Incorporated by Reference to Exhibit 10.3 to the
    Companys Report on Form 10-K for the fiscal year
    ended February 2, 2002, filed with the Commission.                       
|    
|(13) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 10-Q for the quarter ended
    May 4, 2002 filed, with the Commission.                                
|    
|(14) | 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.                            
|    
|(15) | 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.                                
|    
|(16) | 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.                                
|    
|(17) | 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.                                
|    
|(18) | 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.
|    
|(19) | 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.
|    
|(20) | 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.
|    
|(21) | 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.
|    
|(22) | Incorporated by reference to Exhibit 10.6 to the
    Companys Report on Form 10-Q for the quarter ended
    May 1, 1999, filed with the Commission.                                

53



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|     |                                                                                                                                                                  
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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 10.9 to the
    Companys Report on Form 10-Q for the quarter ended
    August 2, 1997, filed with the Commission.          
|    
|(26) | 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.   
|    
|(27) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report on Form 10-Q for the quarter ended
    October 30, 1999, filed with the Commission.        
|    
|(28) | Incorporated by reference to Exhibit 10.27 to the
    Companys Report on Form 10-K for the fiscal year
    ended January 29, 2000, filed with the Commission.   
|    
|(29) | Incorporated by reference to Exhibit 10.28 to the
    Companys Report on Form 10-K for the fiscal year
    ended January 29, 2000, filed with the Commission.   
|    
|(30) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report on Form 8-K filed with the Commission
    on June 25, 2001.                                
|    
|(31) | 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.        
|    
|(32) | 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.        
|    
|(33) | 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.        
|    
|(34) | Incorporated by reference to Exhibit 10.3 to the
    Companys Report on Form 10-Q for the quarter ended
    October 28, 2000, filed with the Commission.        
|    
|(35) | Incorporated by reference to Exhibit 99.1 to the
    Companys Registration Statement on Form S-8
    (333-109977) filed with the Commission on October 24, 2003.
|    
|(36) | 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.             
|    
|(37) | 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.             
|    
|(38) | 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.             
|    
|(39) | Incorporated by reference to Exhibit 10.4 to the
    Companys Report on Form 10-Q for the quarter ended
    May 5, 2001, filed with the Commission.             
|    
|(40) | Incorporated by reference to Exhibit 10.3 to the
    Companys Report on Form 8-K filed with the Commission
    on June 25, 2001.                                
|    
|(41) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report of Form 10-Q for the quarter ended
    May 4, 2002, filed with the Commission.             
|    
|(42) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 10-Q for the quarter ended
    August 3, 2002, filed with the Commission.          
|    
|(43) | 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.          
|    
|(44) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 10-Q for the quarter ended
    November 2, 2002, filed with the Commission.        
|    
|(45) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report on Form 10-Q for the quarter ended
    November 2, 2002, filed with the Commission.        

54



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|     |                                                                                                                                                          
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|(46) | Incorporated by reference to Exhibit 10.3 to the
    Companys Report on Form 10-Q for the quarter ended
    November 2, 2002, filed with the Commission.
|    
|(47) | Incorporated by reference to Exhibit 10.41 to the
    Companys Report on Form 10-K for the year ended
    February 1, 2003, filed with the Commission.  
|    
|(48) | Incorporated by reference to Exhibit 10.42 to the
    Companys Report on Form 10-K for the year ended
    February 1, 2003, filed with the Commission.  
|    
|(49) | Incorporated by reference to Exhibit 10.43 to the
    Companys Report on Form 10-K for the year ended
    February 1, 2003, filed with the Commission.  
|    
|(50) | Incorporated by reference to Exhibit 10.44 to the
    Companys Report on Form 10-K for the year ended
    February 1, 2003, filed with the Commission.  
|    
|(51) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report on Form 10-Q for the quarter ended
    May 3, 2003, filed with the Commission.     
|    
|(52) | Incorporated by reference to Exhibit 10.46 to the
    Companys Report on Form 10-K for the year ended
    January 31, 2004.                             
|    
|(53) | Incorporated by reference to Exhibit 10.47 to the
    Companys Report on Form 10-K for the year ended
    January 31, 2004.                             
|    
|(54) | Incorporated by reference to Exhibit 10.48 to the
    Companys Report on Form 10-K for the year ended
    January 31, 2004.                             
|    
|(55) | Incorporated by reference to Exhibit 10.49 to the
    Companys Report on Form 10-K for the year ended
    January 31, 2004.                             
|    
|(56) | Incorporated by reference to Exhibit 10.50 to the
    Companys Report on Form 10-K for the year ended
    January 31, 2004.                             
|    
|(57) | 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.  
|    
|(58) | Incorporated by reference to Exhibit 10.52 to the
    Companys Report on Form 10-K for the year ended
    January 31, 2004.                             
|    
|(59) | Incorporated by reference to Exhibit 10.53 to the
    Companys Report on Form 10-K for the year ended
    January 31, 2004.                             
|    
|(60) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 10-Q for the quarter ended
    May 31, 2004.                               
|    
|(61) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report on Form 10-Q for the quarter ended
    May 31, 2004.                               
|    
|(62) | Incorporated by reference to Exhibit 10.3 to the
    Companys Report on Form 10-Q for the quarter ended
    May 31, 2004.                               
|    
|(63) | Incorporated by reference to Exhibit 10.4 to the
    Companys Report on Form 10-Q for the quarter ended
    May 31, 2004.                               
|    
|(64) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 8-Q for the quarter ended
    July 31, 2004.                               
|    
|(65) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report on Form 8-Q for the quarter ended
    July 31, 2004.                               
|    
|(66) | Incorporated by reference to Exhibit 10.3 to the
    Companys Report on Form 8-Q for the quarter ended
    July 31, 2004.                               
|    
|(67) | Incorporated by reference to Exhibit 10.4 to the
    Companys Report on Form 8-Q for the quarter ended
    July 31, 2004.                               
|    
|(68) | Incorporated by reference to Exhibit 10.5 to the
    Companys Report on Form 8-Q for the quarter ended
    July 31, 2004.                               

55



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##### Table of Contents





|     |                                                                                                                                      
|---- | -------------------------------------------------------------------------------------------------------------------------------------
|(69) | Incorporated by reference to Exhibit 10.6 to the
    Companys Report on Form 8-Q for the quarter ended
    July 31, 2004.           
|    
|(70) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 10-Q for the quarter ended
    October 30, 2004.       
|    
|(71) | Incorporated by reference to Exhibit 10.8 to the
    Companys Report on Form 8-Q for the quarter ended
    July 31, 2004.           
|    
|(72) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 8-K filed with the Commission
    on November 3, 2004. 
|    
|(73) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 8-K filed with the Commission
    on November 24, 2004.
|    
|(74) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report on Form 8-K filed with the Commission
    on November 24, 2004.
|    
|(75) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 8-K filed with the Commission
    on December 23, 2004.
|    
|(76) | Incorporated by reference to Exhibit 10.1 to the
    Companys Report on Form 8-K filed with the Commission
    on March 8, 2005.    
|    
|(77) | Incorporated by reference to Exhibit 10.2 to the
    Companys Report on Form 8-K filed with the Commission
    on March 8, 2004.    
|    
|(78) | Incorporated by reference to Exhibit 14.1 to the
    Companys Report on Form 10-K for the year ended
    January 31, 2004.          

56



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


Index to Consolidated Financial Statements and Financial
Statement Schedule


|                                                                                                                                     |  |      |      | 
|------------------------------------------------------------------------------------------------------------------------------------ |  | ---- | ---- | 
|                                                                                                                                     |  | Page |     
|                                                                                                                                     |  |      |     
|Report of Independent Registered Public
    Accounting Firm                                                                          |  |      | F-2  | 
|Consolidated Balance Sheets as of
    January 29, 2005, and January 31, 2004                                                         |  |      | F-3  | 
|Consolidated Statements of Operations for
    the years ended January 29, 2005, January 31, 2004,
    and February 1, 2003           |  |      | F-4  | 
|Consolidated Statements of
    Shareholders Equity for the years ended January 29,
    2005, January 31, 2004, and February 1, 2003 |  |      | F-5  | 
|Consolidated Statements of Cash Flows for
    the years ended January 29, 2005, January 31, 2004,
    and February 1, 2003           |  |      | F-6  | 
|Notes to Consolidated Financial
    Statements                                                                                       |  |      | F-7  | 
|Financial Statement Schedule:                                                                                                        |  |      |      | 
|Schedule IIValuation and
    Qualifying Accounts                                                                                    |  |      | F-29 | 

F-1



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
















| |             
| | ------------
| | /s/ KPMG LLP





F-2



---



##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES





CONSOLIDATED BALANCE SHEETS


(In thousands, except share and per share amounts)


|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             |  |         |        |         | 
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | ------------------------------------------ | ------- | ------ | ----------- |  | ------- | ------ | ------- | 
|                                                                                                                                                                                        |                                                                                         | January 29,                                |         |        | January 31, | 
|                                                                                                                                                                                        |                                                                                         | 2005                                       |         |        | 2004        | 
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 
|ASSETS                                                                                                                                                                                 
|                                                                                                                                                                                       
|CURRENT ASSETS:                                                                                                                                                                         |                                                                                         |                                            |         |        |             |  |         |       
|                                                                                                                                                                                        | Cash and cash equivalents                                                               |                                            | $       | 48,821 |             |  | $       | 42,403 |        
|                                                                                                                                                                                        | Accounts receivable, net of allowance of $76 and $88 in 2004 and
    2003, respectively |                                            |         | 3,643  |             |  |         | 6,122  |        
|                                                                                                                                                                                        | Inventories                                                                             |                                            |         | 86,059 |             |  |         | 89,298 |        
|                                                                                                                                                                                        | Prepaid expenses                                                                        |                                            |         | 3,246  |             |  |         | 3,719  |        
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 
|                                                                                                                                                                                        |                                                                                         | TOTAL CURRENT ASSETS                       |         |        | 141,769     |  |         |        | 141,542 | 
|Property and equipment, net                                                                                                                                                             |                                                                                         |                                            | 44,606  |        |             |  | 71,685  |       
|Other assets, net                                                                                                                                                                       |                                                                                         |                                            | 2,205   |        |             |  | 2,538   |       
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 
|                                                                                                                                                                                        |                                                                                         | TOTAL ASSETS                               |         | $      | 188,580     |  |         | $      | 215,765 | 
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 
|                                                                                                                                                                                       
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                   
|CURRENT LIABILITIES:                                                                                                                                                                    |                                                                                         |                                            |         |        |             |  |         |       
|                                                                                                                                                                                        | Accounts payable                                                                        |                                            | $       | 17,697 |             |  | $       | 10,198 |        
|                                                                                                                                                                                        | Notes payable                                                                           |                                            |         |       |             |  |         | 490    |        
|                                                                                                                                                                                        | Current portion of long-term debt                                                       |                                            |         | 5,000  |             |  |         | 30,635 |        
|                                                                                                                                                                                        | Accrued expenses                                                                        |                                            |         | 22,959 |             |  |         | 28,275 |        
|                                                                                                                                                                                        | Liabilities of discontinued operations                                                  |                                            |         |       |             |  |         | 406    |        
|                                                                                                                                                                                        | Income taxes payable                                                                    |                                            |         | 4,307  |             |  |         | 3,214  |        
|                                                                                                                                                                                        | Deferred income taxes                                                                   |                                            |         | 5,585  |             |  |         | 6,477  |        
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 
|                                                                                                                                                                                        |                                                                                         | TOTAL CURRENT LIABILITIES                  |         |        | 55,548      |  |         |        | 79,695  | 
|Long-term debt                                                                                                                                                                          |                                                                                         |                                            | 20,000  |        |             |  | 25,064  |       
|Other long-term liabilities                                                                                                                                                             |                                                                                         |                                            | 17,925  |        |             |  | 23,926  |       
|Deferred income taxes                                                                                                                                                                   |                                                                                         |                                            |        |        |             |  | 1,726   |       
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 
|                                                                                                                                                                                        |                                                                                         | TOTAL LIABILITIES                          |         |        | 93,473      |  |         |        | 130,411 | 
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 
|COMMITMENTS AND CONTINGENCIES                                                                                                                                                           |                                                                                         |                                            |         |        |             |  |         |       
|                                                                                                                                                                                       
|SHAREHOLDERS EQUITY:                                                                                                                                                                   |                                                                                         |                                            |         |        |             |  |         |       
|Common stock, $.01 par value; 150,000,000 shares
    authorized; 38,884,072 and 20,807,706 shares issued and
    outstanding on January 29, 2005 and January 31, 2004,
    respectively |                                                                                         |                                            | 389     |        |             |  | 208     |       
|Additional paid-in capital                                                                                                                                                              |                                                                                         |                                            | 133,103 |        |             |  | 100,633 |       
|Accumulated deficit                                                                                                                                                                     |                                                                                         |                                            | (38,389 | )      |             |  | (14,788 | )     
|Unearned compensation                                                                                                                                                                   |                                                                                         |                                            |        |        |             |  | (701    | )     
|Accumulated other comprehensive income                                                                                                                                                  |                                                                                         |                                            | 4       |        |             |  | 2       |       
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 
|                                                                                                                                                                                        |                                                                                         | TOTAL SHAREHOLDERS EQUITY                 |         |        | 95,107      |  |         |        | 85,354  | 
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 
|                                                                                                                                                                                        |                                                                                         | TOTAL LIABILITIES AND SHAREHOLDERS EQUITY |         | $      | 188,580     |  |         | $      | 215,765 | 
|                                                                                                                                                                                        |                                                                                         |                                            |         |        |             | 



F-3



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share amounts)


|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |         |   |         |         |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | ------- | ------- | ----------- | - | ------- | ----------- | ------- | - | ------- | ------- | ------- | -
|                                                                                                                                                        |                                                                                                                            | For the years ended                                   |        
|                                                                                                                                                        |                                                                                                                            |                                                       |        
|                                                                                                                                                        |                                                                                                                            | January 29,                                           |         |         | January 31, |   |         | February 1, |        
|                                                                                                                                                        |                                                                                                                            | 2005                                                  |         |         | 2004        |   |         | 2003        |        
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        
|NET SALES                                                                                                                                               |                                                                                                                            | $                                                     | 441,071 |         |             | $ | 521,025 |             |         | $ | 571,547 |        
|COST OF GOODS SOLD, BUYING AND OCCUPANCY COSTS                                                                                                          |                                                                                                                            |                                                       | 299,713 |         |             |   | 373,914 |             |         |   | 401,794 |        
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        
|                                                                                                                                                        | Gross margin                                                                                                               |                                                       |         | 141,358 |             |   |         | 147,111     |         |   |         | 169,753 |        
|SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                                                                                                            |                                                                                                                            |                                                       | 129,240 |         |             |   | 150,678 |             |         |   | 164,513 |        
|DEPRECIATION AND AMORTIZATION                                                                                                                           |                                                                                                                            |                                                       | 30,630  |         |             |   | 22,353  |             |         |   | 18,843  |        
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        
|                                                                                                                                                        | Operating loss                                                                                                             |                                                       |         | (18,512 | )           |   |         | (25,920     | )       |   |         | (13,603 | )      
|INTEREST EXPENSE, net                                                                                                                                   |                                                                                                                            |                                                       | 7,427   |         |             |   | 10,868  |             |         |   | 10,253  |        
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        
|                                                                                                                                                        | Income (loss) from continuing operations before income taxes and
    cumulative effect of a change in accounting principle |                                                       |         | (25,939 | )           |   |         | (36,788     | )       |   |         | (23,856 | )      
|INCOME TAX BENEFIT                                                                                                                                      |                                                                                                                            |                                                       | (2,183  | )       |             |   | (3,205  | )           |         |   | (9,543  | )      
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        
|                                                                                                                                                        | Income (loss) from continuing operations before cumulative
    effect of a change in accounting principle                  |                                                       |         | (23,756 | )           |   |         | (33,583     | )       |   |         | (14,313 | )      
|INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax
    (including loss on disposal of $0, $0, and $27,247 in 2004, 2003
    and 2002, respectively) |                                                                                                                            |                                                       | 173     |         |             |   |        |             |         |   | (42,014 | )      
|CUMULATIVE EFFECT OF A CHANGE IN ACCOUNTING PRINCIPLE, net of
    tax of $1,727 in 2002                                                                 |                                                                                                                            |                                                       |        |         |             |   |        |             |         |   | (24,567 | )      
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        
|                                                                                                                                                        |                                                                                                                            | Net loss                                              |         | $       | (23,583     | ) |         | $           | (33,583 | ) |         | $       | (80,894 | )
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        
|BASIC AND DILUTED LOSS PER SHARE:                                                                                                                       |                                                                                                                            |                                                       |         |         |             |   |         |             |         |   |         |        
|                                                                                                                                                        | Loss from continuing operations before cumulative effect of a
    change in accounting principle                           |                                                       | $       | (0.76   | )           |   | $       | (1.64       | )       |   | $       | (0.71   | )      
|                                                                                                                                                        | Income (loss) from discontinued operations                                                                                 |                                                       |         | 0.01    |             |   |         |            |         |   |         | (2.10   | )      
|                                                                                                                                                        | Cumulative effect of a change in accounting principle                                                                      |                                                       |         |        |             |   |         |            |         |   |         | (1.22   | )      
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        
|                                                                                                                                                        |                                                                                                                            | Basic and diluted loss per share                      |         | $       | (0.75       | ) |         | $           | (1.64   | ) |         | $       | (4.03   | )
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        
|                                                                                                                                                        |                                                                                                                            | Weighted average shares outstandingbasic and diluted |         |         | 31,275      |   |         |             | 20,528  |   |         |         | 20,053  |  
|                                                                                                                                                        |                                                                                                                            |                                                       |         |         |             |   |         |             |        



F-4



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


(In thousands, except share amounts)


|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |   |   |     |   |    |   |         |         |    | 
|------------------------- | ------------------------------------------------------------------ | --------------------------------------- | ---------- | ---------- | ---------- | - | --- | -------- | - | -------- | ------------ | ------ | ----- | ------------- | ------ | ----- | ------------- | - | ------- | ------- | - | - | --- | - | -- | - | ------- | ------- | -- | 
|                          |                                                                    |                                         |            |            |            |   |     | Retained |   |          | Accumulated  |        |       |              
|                          |                                                                    | Common stock                            |            |            | Additional |   |     |          |   | earnings |              |        | other |               |        | Total |              
|                          |                                                                    |                                         |            |            | paid-in    |   |     | Deferred |   |          | (accumulated |        |       | comprehensive |        |       | shareholders |  
|                          |                                                                    | Shares                                  |            |            | Amount     |   |     | capital  |   |          | compensation |        |       | deficit)      |        |       | income (loss) |   |         | equity  |  
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|BALANCE, February 2, 2002 |                                                                    |                                         | 19,204,545 |            |            | $ | 192 |          |   | $        | 85,896       |        |       | $             | (1,243 | )     |               | $ | 99,680  |         |   | $ | (30 | ) |    | $ | 184,495 |        
|                          | Net loss                                                           |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        |      |               |   |         | (80,894 | ) |   |     |  |    |   |         | (80,894 | ) 
|                          | Other comprehensive loss                                          |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |   |   |     |   |    |   |         |         |   
|                          |                                                                    | Foreign currency translation adjustment |            |            |           |   |     |          |  |          |              |        |      |               |        |       |              |   |         |         |  |   |     |   | 27 |   |         |         | 27 | 
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|                          | Comprehensive loss                                                 |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | (80,867 | ) 
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|                          | Stock options exercised                                            |                                         |            | 108,664    |            |   |     | 1        |   |          |              | 720    |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 721     |   
|                          | Tax benefit on employee stock options                              |                                         |            |           |            |   |     |         |   |          |              | 168    |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 168     |   
|                          | Shares issued under the Companys employee stock purchase
    plan |                                         |            | 71,449     |            |   |     | 1        |   |          |              | 498    |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 499     |   
|                          | Restricted stock cancellation                                      |                                         |            | (11,625    | )          |   |     |         |   |          |              | (221   | )     |               |        | 221   |               |   |         |        |   |   |     |  |    |   |         |        |   
|                          | Compensation expense for restricted stock issued to employees      |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        | 331   |               |   |         |        |   |   |     |  |    |   |         | 331     |   
|                          | Private placement of common stock, net of issuance costs           |                                         |            | 1,100,000  |            |   |     | 11       |   |          |              | 11,949 |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 11,960  |   
|                          | Joint venture distribution                                         |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        |      |               |   |         | (79     | ) |   |     |  |    |   |         | (79     | ) 
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|BALANCE, February 1, 2003 |                                                                    |                                         | 20,473,033 |            |            |   | 205 |          |   |          | 99,010       |        |       |               | (691   | )     |               |   | 18,707  |         |   |   | (3  | ) |    |   | 117,228 |        
|                          | Net loss                                                           |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        |      |               |   |         | (33,583 | ) |   |     |  |    |   |         | (33,583 | ) 
|                          | Other comprehensive loss                                          |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |   |   |     |   |    |   |         |         |   
|                          |                                                                    | Foreign currency translation adjustment |            |            |           |   |     |          |  |          |              |        |      |               |        |       |              |   |         |         |  |   |     |   | 5  |   |         |         | 5  | 
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|                          | Comprehensive loss                                                 |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | (33,578 | ) 
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|                          | Stock options exercised                                            |                                         |            | 144,648    |            |   |     | 1        |   |          |              | 794    |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 795     |   
|                          | Tax benefit on employee stock options                              |                                         |            |           |            |   |     |         |   |          |              | 185    |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 185     |   
|                          | Shares issued under the Companys employee stock purchase
    plan |                                         |            | 76,742     |            |   |     | 1        |   |          |              | 288    |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 289     |   
|                          | Net restricted stock issued to employees                           |                                         |            | 113,283    |            |   |     | 1        |   |          |              | 356    |       |               |        | (360  | )             |   |         |        |   |   |     |  |    |   |         | (3      | ) 
|                          | Compensation expense for restricted stock issued to employees      |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        | 350   |               |   |         |        |   |   |     |  |    |   |         | 350     |   
|                          | Joint venture contribution                                         |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        |      |               |   |         | 88      |   |   |     |  |    |   |         | 88      |   
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|BALANCE, January 31, 2004 |                                                                    |                                         | 20,807,706 |            |            |   | 208 |          |   |          | 100,633      |        |       |               | (701   | )     |               |   | (14,788 | )       |   |   | 2   |   |    |   | 85,354  |        
|                          | Net loss                                                           |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        |      |               |   |         | (23,583 | ) |   |     |  |    |   |         | (23,583 | ) 
|                          | Other comprehensive loss                                          |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |   |   |     |   |    |   |         |         |   
|                          |                                                                    | Foreign currency translation adjustment |            |            |           |   |     |          |  |          |              |        |      |               |        |       |              |   |         |         |  |   |     |   | 2  |   |         |         | 2  | 
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|                          | Comprehensive loss                                                 |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | (23,581 | ) 
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|                          | Stock options exercised                                            |                                         |            | 15,600     |            |   |     |         |   |          |              | 62     |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 62      |   
|                          | Shares issued under the Companys employee stock purchase
    plan |                                         |            | 73,961     |            |   |     | 1        |   |          |              | 205    |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 206     |   
|                          | Net restricted stock issued to employees                           |                                         |            | 38,087     |            |   |     |         |   |          |              | 103    |       |               |        | (127  | )             |   |         |        |   |   |     |  |    |   |         | (24     | ) 
|                          | Compensation expense for restricted stock issued to employees      |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        | 828   |               |   |         |        |   |   |     |  |    |   |         | 828     |   
|                          | Private placement of common stock, net of issuance costs           |                                         |            | 17,948,718 |            |   |     | 180      |   |          |              | 32,100 |       |               |        |      |               |   |         |        |   |   |     |  |    |   |         | 32,280  |   
|                          | Joint venture distribution                                         |                                         |            |           |            |   |     |         |   |          |              |       |       |               |        |      |               |   |         | (18     | ) |   |     |  |    |   |         | (18     | ) 
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  
|BALANCE, January 29, 2005 |                                                                    |                                         | 38,884,072 |            |            | $ | 389 |          |   | $        | 133,103      |        |       | $             |       |       |               | $ | (38,389 | )       |   | $ | 4   |   |    | $ | 95,107  |        
|                          |                                                                    |                                         |            |            |            |   |     |          |   |          |              |        |       |               |        |       |               |   |         |         |  



F-5



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES





CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)


|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |        |        |        |         |         |         |  
|------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------- | -------------------------------------------------------------------------------- | ------- | ----------- | ------ | ------- | ----------- | ------ | ------ | ------ | ------- | ------- | ------- | -
|                                                       |                                                                                                                      | For the years ended                                               |                                                                                 
|                                                       |                                                                                                                      |                                                                   |                                                                                 
|                                                       |                                                                                                                      | January 29,                                                       |                                                                                  |         | January 31, |        |         | February 1, |       
|                                                       |                                                                                                                      | 2005                                                              |                                                                                  |         | 2004        |        |         | 2003        |       
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|OPERATING ACTIVITIES:                                  |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |        |        |        |        
|                                                       | Net loss                                                                                                             |                                                                   | $                                                                                | (23,583 | )           |        | $       | (33,583     | )      |        | $      | (80,894 | )      
|                                                       |                                                                                                                      | (Income) loss from discontinued operations, net of tax            |                                                                                  |         | (173        | )      |         |             |       |        |        |         | 42,014  |        
|                                                       |                                                                                                                      | Cumulative effect of a change in accounting principle, net of tax |                                                                                  |         |            |        |         |             |       |        |        |         | 24,567  |        
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|                                                       | Loss from continuing operations                                                                                      |                                                                   |                                                                                  | (23,756 | )           |        |         | (33,583     | )      |        |        | (14,313 | )      
|                                                       | Adjustments to reconcile loss from continuing operations to net
    cash provided by (used in) operating activities: |                                                                   |                                                                                  |         |             |        |         |             |        |        |        |         |        
|                                                       |                                                                                                                      | Depreciation                                                      |                                                                                  |         | 30,546      |        |         |             | 22,280 |        |        |         | 18,801  |        
|                                                       |                                                                                                                      | Amortization                                                      |                                                                                  |         | 84          |        |         |             | 73     |        |        |         | 42      |        
|                                                       |                                                                                                                      | Amortization of deferred financing costs                          |                                                                                  |         | 1,429       |        |         |             | 1,728  |        |        |         | 1,104   |        
|                                                       |                                                                                                                      | Loss on disposal of assets                                        |                                                                                  |         | 1,119       |        |         |             | 1,903  |        |        |         | 1,586   |        
|                                                       |                                                                                                                      | Restricted stock compensation expense                             |                                                                                  |         | 828         |        |         |             | 350    |        |        |         | 331     |        
|                                                       |                                                                                                                      | Deferred income taxes                                             |                                                                                  |         | (2,618      | )      |         |             | 12,845 |        |        |         | (10,790 | )      
|                                                       | Changes in operating assets and liabilities:                                                                         |                                                                   |                                                                                  |        |             |        |         |            |        |        |        |        |        
|                                                       |                                                                                                                      | Accounts receivable, net                                          |                                                                                  |         | 2,479       |        |         |             | (960   | )      |        |         | 3,715   |        
|                                                       |                                                                                                                      | Inventories                                                       |                                                                                  |         | 3,239       |        |         |             | 29,403 |        |        |         | (25,761 | )      
|                                                       |                                                                                                                      | Prepaid expenses                                                  |                                                                                  |         | 473         |        |         |             | 93     |        |        |         | (874    | )      
|                                                       |                                                                                                                      | Refundable income taxes                                           |                                                                                  |         |            |        |         |             | 3,064  |        |        |         | (3,064  | )      
|                                                       |                                                                                                                      | Accounts payable and accrued expenses                             |                                                                                  |         | 2,183       |        |         |             | (7,648 | )      |        |         | 3,560   |        
|                                                       |                                                                                                                      | Income taxes payable and other liabilities                        |                                                                                  |         | (4,992      | )      |         |             | 1,920  |        |        |         | (10,562 | )      
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|                                                       |                                                                                                                      |                                                                   | Net cash provided by (used in) operating activities of
    continuing operations |         |             | 11,014 |         |             |        | 31,468 |        |         |         | (36,225 | )
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|INVESTING ACTIVITIES:                                  |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |        |        |        |        
|                                                       | Additions to property, equipment and other assets                                                                    |                                                                   |                                                                                  | (4,753  | )           |        |         | (9,406      | )      |        |        | (9,859  | )      
|                                                       | Proceeds from sale of property and equipment                                                                         |                                                                   |                                                                                  | 233     |             |        |         | 499         |        |        |        |        |        
|                                                       | Net proceeds from sale/leaseback                                                                                     |                                                                   |                                                                                  |        |             |        |         |            |        |        |        | 12,546  |        
|                                                       | Changes in other assets                                                                                              |                                                                   |                                                                                  |        |             |        |         |            |        |        |        | (79     | )      
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|                                                       |                                                                                                                      |                                                                   | Net cash provided by (used in) investing activities of
    continuing operations |         |             | (4,520 | )       |             |        | (8,907 | )      |         |         | 2,608   |  
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|FINANCING ACTIVITIES:                                  |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |        |        |        |        
|                                                       | Proceeds from issuance of common stock, net                                                                          |                                                                   |                                                                                  | 32,524  |             |        |         | 1,081       |        |        |        | 13,180  |        
|                                                       | Proceeds from issuance of notes payable                                                                              |                                                                   |                                                                                  |        |             |        |         | 490         |        |        |        |        |        
|                                                       | Debt acquisition costs                                                                                               |                                                                   |                                                                                  | (1,180  | )           |        |         | (1,025      | )      |        |        | (2,108  | )      
|                                                       | Proceeds from issuance of long-term debt                                                                             |                                                                   |                                                                                  |        |             |        |         |            |        |        |        | 4,950   |        
|                                                       | Repayments of long-term debt                                                                                         |                                                                   |                                                                                  | (64     | )           |        |         | (41         | )      |        |        | (4,800  | )      
|                                                       | Repurchase of debt                                                                                                   |                                                                   |                                                                                  | (31,125 | )           |        |         |            |        |        |        |        |        
|                                                       | Other                                                                                                                |                                                                   |                                                                                  | 2       |             |        |         | 5           |        |        |        | 27      |        
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|                                                       |                                                                                                                      |                                                                   | Net cash provided by financing activities of continuing
    operations           |         |             | 157    |         |             |        | 510    |        |         |         | 11,249  |  
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|NET CASH PROVIDED BY (USED IN) DISCONTINUED OPERATIONS |                                                                                                                      |                                                                   | (233                                                                             | )       |             |        | (11,110 | )           |        |        | 13,857 |        
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS   |                                                                                                                      |                                                                   | 6,418                                                                            |         |             |        | 11,961  |             |        |        | (8,511 | )      
|CASH AND CASH EQUIVALENTS, beginning of period         |                                                                                                                      |                                                                   | 42,403                                                                           |         |             |        | 30,442  |             |        |        | 38,953 |        
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|CASH AND CASH EQUIVALENTS, end of period               |                                                                                                                      | $                                                                 | 48,821                                                                           |         |             | $      | 42,403  |             |        | $      | 30,442 |        
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|SUPPLEMENTAL CASH FLOW INFORMATION:                    |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |        |        |        |        
|                                                       | Cash paid during the year for                                                                                       |                                                                   |                                                                                  |         |             |        |         |             |        |        |        |         |        
|                                                       |                                                                                                                      | Interest                                                          |                                                                                  | $       | 7,889       |        |         | $           | 9,265  |        |        | $       | 9,199   |        
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       
|                                                       |                                                                                                                      | Income taxes                                                      |                                                                                  | $       | 607         |        |         | $           | 898    |        |        | $       | 1,651   |        
|                                                       |                                                                                                                      |                                                                   |                                                                                  |         |             |        |         |             |       



F-6



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


January 29, 2005, and January 31, 2004




|  |                                           
|- | ------------------------------------------
|1 | Summary of significant accounting policies



| |                       
| | ----------------------
| | Nature of organization





| |                      
| | ---------------------
| | Basis of presentation









| |            
| | -----------
| | Fiscal year





| |                 
| | ----------------
| | Use of estimates





| |                                     
| | ------------------------------------
| | Fair values of financial instruments

1 4


F-7



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


1 4




| |                          
| | -------------------------
| | Cash and cash equivalents





| |            
| | -----------
| | Inventories





|               |  |             |        |  |             |   |        | 
|-------------- |  | ----------- | ------ |  | ----------- | - | ------ | 
|               |  | January 29, |        |  | January 31, |  
|               |  | 2005        |        |  | 2004        |  
|               |  |             |        |  |             |  
|Raw materials  |  | $           | 2,155  |  |             | $ | 3,189  | 
|Finished goods |  |             | 83,904 |  |             |   | 86,109 | 
|               |  |             |        |  |             |  
|               |  | $           | 86,059 |  |             | $ | 89,298 | 
|               |  |             |        |  |             |  



| |                       
| | ----------------------
| | Property and equipment



F-8



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




| |                                                  
| | -------------------------------------------------
| | Store closing and impairment of long-lived assets

Accounting
for the Impairment or Disposal of Long-Lived Assets






| |         
| | --------
| | Goodwill

Goodwill and Other
Intangible Assets






| |                    
| | -------------------
| | Debt issuance costs



F-9



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




| |                 
| | ----------------
| | Operating leases





| |                    
| | -------------------
| | Revenue recognition

Revenue
Recognition in Financial Statements




| |                    
| | -------------------
| | Store opening costs





| |                  
| | -----------------
| | Advertising costs





| |             
| | ------------
| | Income taxes



F-10



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






| |                             
| | ----------------------------
| | Foreign currency translation





| |               
| | --------------
| | Loss per share



|                                                   |  |                     |        |  |             |  |        |             |  |  |        | 
|-------------------------------------------------- |  | ------------------- | ------ |  | ----------- |  | ------ | ----------- |  |  | ------ | 
|                                                   |  | For the years ended |       
|                                                   |  |                     |       
|                                                   |  | January 29,         |        |  | January 31, |  |        | February 1, | 
|                                                   |  | 2005                |        |  | 2004        |  |        | 2003        | 
|                                                   |  |                     |        |  |             |  |        |             | 
|Weighted average common shares outstandingbasic   |  |                     | 31,275 |  |             |  | 20,528 |             |  |  | 20,053 | 
|Effect of dilutive securities: stock options       |  |                     |       |  |             |  |       |             |  |  |       | 
|Effect of dilutive securities: warrants            |  |                     |       |  |             |  |       |             |  |  |       | 
|                                                   |  |                     |        |  |             |  |        |             | 
|Weighted average common shares outstandingdiluted |  |                     | 31,275 |  |             |  | 20,528 |             |  |  | 20,053 | 
|                                                   |  |                     |        |  |             |  |        |             | 





| |                         
| | ------------------------
| | Stock-based compensation

Accounting for
Stock-Based Compensation Accounting for Stock Issued to Employees


F-11



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                  |                                                                                                      |                     |   |         |             |  |   |             |   |  |   |         |  
|--------------------------------- | ---------------------------------------------------------------------------------------------------- | ------------------- | - | ------- | ----------- |  | - | ----------- | - |  | - | ------- | -
|                                  |                                                                                                      | For the years ended |  
|                                  |                                                                                                      |                     |  
|                                  |                                                                                                      | January 29,         |   |         | January 31, |  |   | February 1, |  
|                                  |                                                                                                      | 2005                |   |         | 2004        |  |   | 2003        |  
|                                  |                                                                                                      |                     |   |         |             |  |   |             |  
|Net loss:                         |                                                                                                      |                     |   |         |             |  |   |             |   |  |   |        
|                                  | As reported                                                                                          |                     | $ | (23,583 | )           |  | $ | (33,583     | ) |  | $ | (80,894 | )
|                                  | Stock based employee compensation expense included in net loss                                       |                     |   | 828     |             |  |   | 210         |   |  |   | 199     |  
|                                  | Stock based employee compensation determined under fair value
    based method for all
    awards(1) |                     |   | (2,987  | )           |  |   | (1,729      | ) |  |   | (1,899  | )
|                                  |                                                                                                      |                     |   |         |             |  |   |             |  
|                                  | Pro forma loss                                                                                       |                     | $ | (25,742 | )           |  | $ | (35,102     | ) |  | $ | (82,594 | )
|                                  |                                                                                                      |                     |   |         |             |  |   |             |  
|Basic and diluted loss per share: |                                                                                                      |                     |   |         |             |  |   |             |   |  |   |        
|                                  | As reported                                                                                          |                     | $ | (0.75   | )           |  | $ | (1.64       | ) |  |   | (4.03   | )
|                                  | Stock based employee compensation expense included in net loss                                       |                     |   | 0.03    |             |  |   | 0.01        |   |  |   | 0.01    |  
|                                  | Stock based employee compensation determined under fair value
    based method for all
    awards(1) |                     |   | (0.10   | )           |  |   | (0.08       | ) |  |   | (0.10   | )
|                                  |                                                                                                      |                     |   |         |             |  |   |             |  
|                                  | Pro forma loss                                                                                       |                     | $ | (0.82   | )           |  | $ | (1.71       | ) |  | $ | (4.12   | )
|                                  |                                                                                                      |                     |   |         |             |  |   |             |  
|                                  | Weighted average fair value of options granted                                                       |                     | $ | 2.74    |             |  | $ | 2.04        |   |  | $ | 6.60    |  






|    |                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | For 2004, $1,105 of pro forma expense is due to stock option
    acceleration from the private placement equity transaction that
    occurred in July of 2004. See Note 11, Capital
    stock.



|     |  |                  |      |  |          |  |      |          |  |  |            |  |  |  |       | 
|---- |  | ---------------- | ---- |  | -------- |  | ---- | -------- |  |  | ---------- |  |  |  | ----- | 
|     |  | Weighted Average |      |  | Dividend |  |      | Expected |  |  | Expected   | 
|     |  | Risk Free Rate   |      |  | Yield    |  |      | Lives    |  |  | Volatility | 
|     |  |                  |      |  |          |  |      |          |  |  |            | 
|2004 |  |                  | 3.5% |  |          |  | 0.0% |          |  |  | 4.7        |  |  |  | 67.3% | 
|2003 |  |                  | 3.0% |  |          |  | 0.0% |          |  |  | 5.0        |  |  |  | 55.3% | 
|2002 |  |                  | 2.0% |  |          |  | 0.0% |          |  |  | 6.5        |  |  |  | 52.6% | 



| |                              
| | -----------------------------
| | New accounting pronouncements

Share-Based Payment. Accounting for Stock-Based Compensation Accounting for Stock Issued to Employees


F-12



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




Inventory Costs.




|  |                                         
|- | ----------------------------------------
|2 | Reclassification of financial statements







F-13



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|                                          |  |                            |         |  |             |   |        |              |  |   |         | 
|----------------------------------------- |  | -------------------------- | ------- |  | ----------- | - | ------ | ------------ |  | - | ------- | 
|                                          |  | Consolidated Balance Sheet |        
|                                          |  |                            |        
|                                          |  | As Previously              |         |  |            
|                                          |  | Reported                   |         |  | Adjustments |   |        | Reclassified | 
|                                          |  |                            |         |  |             |   |        |              | 
|January 31, 2004:                         |  |                            |         |  |             |   |        |              |  |   |         | 
|Property and equipment, net               |  | $                          | 60,047  |  |             | $ | 11,638 |              |  | $ | 71,685  | 
|Total assets                              |  |                            | 204,127 |  |             |   | 11,638 |              |  |   | 215,765 | 
|Accrued expenses                          |  |                            | 26,670  |  |             |   | 1,605  |              |  |   | 28,275  | 
|Total current liabilities                 |  |                            | 78,090  |  |             |   | 1,605  |              |  |   | 79,695  | 
|Other long-term liabilities               |  |                            | 13,893  |  |             |   | 10,033 |              |  |   | 23,926  | 
|Total liabilities                         |  |                            | 118,773 |  |             |   | 11,638 |              |  |   | 130,411 | 
|Total liabilities and shareholders equity |  |                            | 204,127 |  |             |   | 11,638 |              |  |   | 215,765 | 

|                                               |  |                                       |         |  |             |   |        |              |  |   |         | 
|---------------------------------------------- |  | ------------------------------------- | ------- |  | ----------- | - | ------ | ------------ |  | - | ------- | 
|                                               |  | Consolidated Statements of Operations |        
|                                               |  |                                       |        
|                                               |  | As Previously                         |         |  |            
|                                               |  | Reported                              |         |  | Adjustments |   |        | Reclassified | 
|                                               |  |                                       |         |  |             |   |        |              | 
|Fiscal Year Ended January 31, 2004:            |  |                                       |         |  |             |   |        |              |  |   |         | 
|Cost of goods sold, buying and occupancy costs |  | $                                     | 377,060 |  |             | $ | (3,146 | )            |  | $ | 373,914 | 
|Gross margin                                   |  |                                       | 143,965 |  |             |   | 3,146  |              |  |   | 147,111 | 
|Depreciation and amortization                  |  |                                       | 19,207  |  |             |   | 3,146  |              |  |   | 22,353  | 
|Fiscal Year Ended February 1, 2003:            |  |                                       |         |  |             |   |        |              |  |   |         | 
|Cost of goods sold, buying and occupancy costs |  | $                                     | 404,304 |  |             | $ | (2,510 | )            |  | $ | 401,794 | 
|Gross margin                                   |  |                                       | 167,243 |  |             |   | 2,510  |              |  |   | 169,753 | 
|Depreciation and amortization                  |  |                                       | 16,333  |  |             |   | 2,510  |              |  |   | 18,843  | 

F-14



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


|                                                                                 |  |                                       |         |   |             |   |        |              |  |   |         |  
|-------------------------------------------------------------------------------- |  | ------------------------------------- | ------- | - | ----------- | - | ------ | ------------ |  | - | ------- | -
|                                                                                 |  | Consolidated Statements of Cash Flows |        
|                                                                                 |  |                                       |        
|                                                                                 |  | As Previously                         |         |   |            
|                                                                                 |  | Reported                              |         |   | Adjustments |   |        | Reclassified | 
|                                                                                 |  |                                       |         |   |             |   |        |              | 
|Fiscal Year Ended January 31, 2004:                                              |  |                                       |         |   |             |   |        |              |  |   |         |  
|Depreciation                                                                     |  | $                                     | 19,134  |   |             | $ | 3,146  |              |  | $ | 22,280  |  
|Accounts payable and accrued expenses                                            |  |                                       | (7,798  | ) |             |   | 150    |              |  |   | (7,648  | )
|Income taxes payable and other liabilities                                       |  |                                       | 3,598   |   |             |   | (1,678 | )            |  |   | 1,920   |  
|Net cash provided by operating activities of continuing
    operations           |  |                                       | 29,850  |   |             |   | 1,618  |              |  |   | 31,468  |  
|Additions to property, equipment and other assets                                |  |                                       | (7,788  | ) |             |   | (1,618 | )            |  |   | (9,406  | )
|Net cash used in investing activities of continuing operations                   |  |                                       | (7,289  | ) |             |   | (1,618 | )            |  |   | (8,907  | )
|Fiscal Year Ended February 1, 2003:                                              |  |                                       |         |   |             |   |        |              |  |   |         |  
|Depreciation                                                                     |  | $                                     | 16,291  |   |             | $ | 2,510  |              |  | $ | 18,801  |  
|Accounts payable and accrued expenses                                            |  |                                       | 3,365   |   |             |   | 195    |              |  |   | 3,560   |  
|Income taxes payable and other liabilities                                       |  |                                       | (8,962  | ) |             |   | (1,600 | )            |  |   | (10,562 | )
|Net cash provided by (used in) operating activities of
    continuing operations |  |                                       | (37,330 | ) |             |   | 1,105  |              |  |   | (36,225 | )
|Additions to property, equipment and other assets                                |  |                                       | (8,754  | ) |             |   | (1,105 | )            |  |   | (9,859  | )
|Net cash provided by (used in) investing activities of
    continuing operations |  |                                       | 3,713   |   |             |   | (1,105 | )            |  |   | 2,608   |  



|  |                        
|- | -----------------------
|3 | Discontinued operations





F-15



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                           |  |                  |     |  |                  |   |       |  
|------------------------------------------ |  | ---------------- | --- |  | ---------------- | - | ----- | -
|                                           |  | Charges for the  |     |  | Charges for the  |  
|                                           |  | year ended       |     |  | year ended       |  
|                                           |  | January 29, 2005 |     |  | February 1, 2003 |  
|                                           |  |                  |     |  |                  |  
|Inventory markdowns                        |  | $                |    |  |                  | $ | (5.9  | )
|Fixed asset write-downs                    |  |                  |    |  |                  |   | (18.2 | )
|Other selling and administrative expenses  |  |                  |    |  |                  |   | (4.6  | )
|Lease terminations and store closing costs |  |                  | 0.3 |  |                  |   | (10.7 | )
|                                           |  |                  |     |  |                  |  
|                                           |  | $                | 0.3 |  |                  | $ | (39.4 | )
|                                           |  |                  |     |  |                  |  
|Income (loss) on disposition, net of tax   |  | $                | 0.2 |  |                  | $ | (27.2 | )
|                                           |  |                  |     |  |                  |  





| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | markdowns on inventories;                                                                                          
|
| |  | write-off of substantially all store fixed assets for the 135
    store chain;                                     
|
| |  | miscellaneous employee related termination costs and other
    administrative costs related to the liquidation; and
|
| |  | lease termination fees to exit all store leases.                                                                   





|                                                      |  |                     |      |  |             |   |             |  |  |   |         |  
|----------------------------------------------------- |  | ------------------- | ---- |  | ----------- | - | ----------- |  |  | - | ------- | -
|                                                      |  | For the years ended |     
|                                                      |  |                     |     
|                                                      |  | January 29,         |      |  | January 31, |   | February 1, | 
|                                                      |  | 2005                |      |  | 2004        |   | 2003        | 
|                                                      |  |                     |      |  |             |   |             | 
|Net sales                                             |  | $                   |     |  |             | $ |            |  |  | $ | 77,570  |  
|                                                      |  |                     |      |  |             |   |             |  | 
|Loss before income taxes                              |  | $                   |     |  |             | $ |            |  |  | $ | (24,613 | )
|                                                      |  |                     |      |  |             |   |             |  | 
|Net loss, net of income tax                           |  | $                   |     |  |             | $ |            |  |  | $ | (14,767 | )
|Income (loss) on disposition, net of income tax       |  |                     | 173  |  |             |   |            |  |  |   | (27,247 | )
|                                                      |  |                     |      |  |             |   |             |  | 
|Income (loss) from discontinued operations            |  | $                   | 173  |  |             | $ |            |  |  | $ | (42,014 | )
|                                                      |  |                     |      |  |             |   |             |  | 
|Net loss per share, net of income tax                 |  | $                   |     |  |             | $ |            |  |  | $ | (0.74   | )
|Income (loss) on disposition, per share               |  |                     | 0.01 |  |             |   |            |  |  |   | (1.36   | )
|                                                      |  |                     |      |  |             |   |             |  | 
|Income (loss) from discontinued operations, per share |  | $                   | 0.01 |  |             | $ |            |  |  | $ | (2.10   | )
|                                                      |  |                     |      |  |             |   |             |  | 



F-16



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                               |  |             |   |             |  |   |      |  
|---------------------------------------------- |  | ----------- | - | ----------- |  | - | ---- | -
|                                               |  | January 29, |   | January 31, | 
|                                               |  | 2005        |   | 2004        | 
|                                               |  |             |   |             | 
|Total assets of discontinued operations        |  | $           |  |             |  | $ |     |  
|                                               |  |             |   |             |  |  
|Accounts payable                               |  | $           |  |             |  | $ |     |  
|Other current liabilities                      |  |             |  |             |  |   | 406  |  
|                                               |  |             |   |             |  |  
|Current liabilities of discontinued operations |  |             |  |             |  |   | 406  |  
|                                               |  |             |   |             |  |  
|Total liabilities of discontinued operations   |  |             |  |             |  |   | 406  |  
|                                               |  |             |   |             |  |  
|Net liabilities of discontinued operations     |  | $           |  |             |  | $ | (406 | )
|                                               |  |             |   |             |  |  





|                                             |  |             |     |  |       |   |      |           |             |   |      |   |  |   |   | 
|-------------------------------------------- |  | ----------- | --- |  | ----- | - | ---- | --------- | ----------- | - | ---- | - |  | - | - | 
|                                             |  | January 31, |     |  |       |   |      |           | January 29,
|                                             |  | 2004        |     |  | Usage |   |      | Transfers |             |   | 2005
|                                             |  |             |     |  |       |   |      |           |             |   |     
|Store
    closing(1)                         |  | $           | 388 |  |       | $ | (402 | )         |             | $ | 14   |   |  | $ |  | 
|Taxes                                        |  |             | 18  |  |       |   | (4   | )         |             |   | (14  | ) |  |   |  | 
|Severance                                    |  |             |    |  |       |   |     |           |             |   |     |   |  |   |  | 
|Miscellaneous                                |  |             |    |  |       |   |     |           |             |   |     |   |  |   |  | 
|Accounts payable                             |  |             |    |  |       |   |     |           |             |   |     |   |  |   |  | 
|                                             |  |             |     |  |       |   |      |           |             |   |      |  
|Total liabilities of discontinued operations |  | $           | 406 |  |       | $ | (406 | )         |             | $ |     |   |  | $ |  | 
|                                             |  |             |     |  |       |   |      |           |             |   |      |  






|    |                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|(1) | Primarily includes lease termination costs and vendor
    chargebacks associated with the liquidation of the Travel
    Subsidiaries.



|  |                                             
|- | --------------------------------------------
|4 | Reorganization and partial store liquidation



F-17



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|  |             
|- | ------------
|5 | Other assets



|                             |  |             |       |  |             |   |       | 
|---------------------------- |  | ----------- | ----- |  | ----------- | - | ----- | 
|                             |  | January 29, |       |  | January 31, |  
|                             |  | 2005        |       |  | 2004        |  
|                             |  |             |       |  |             |  
|Debt issuance costs, net     |  | $           | 2,145 |  |             | $ | 2,395 | 
|Other intangible assets, net |  |             | 60    |  |             |   | 143   | 
|                             |  |             |       |  |             |  
|                             |  | $           | 2,205 |  |             | $ | 2,538 | 
|                             |  |             |       |  |             |  







|  |                    
|- | -------------------
|6 | Accounts receivable



|                                     |       |             |       |       |             |   |       |       | 
|------------------------------------ | ----- | ----------- | ----- | ----- | ----------- | - | ----- | ----- | 
|                                     |       | January 29, |       |       | January 31, |  
|                                     |       | 2005        |       |       | 2004        |  
|                                     |       |             |       |       |             |  
|Trade receivables                    |       | $           | 3,454 |       |             | $ | 5,290 |      
|Other receivables                    |       |             | 305   |       |             |   | 964   |      
|                                     |       |             |       |       |             |  
|                                     | Total |             |       | 3,759 |             |   |       | 6,254 | 
|LessAllowance for doubtful accounts |       |             | (76   | )     |             |   | (88   | )    
|LessDeferred
    sales(1)           |       |             | (40   | )     |             |   | (44   | )    
|                                     |       |             |       |       |             |  
|                                     | Total |             | $     | 3,643 |             |   | $     | 6,122 | 
|                                     |       |             |       |       |             |  






|    |                                      
|--- | -------------------------------------
|(1) | Deferred in-transit e-commerce sales.

F-18



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|  |                       
|- | ----------------------
|7 | Property and equipment



|                                                |                            |             |         |         |             |   |         |         | 
|----------------------------------------------- | -------------------------- | ----------- | ------- | ------- | ----------- | - | ------- | ------- | 
|                                                |                            | January 29, |         |         | January 31, |  
|                                                |                            | 2005        |         |         | 2004        |  
|                                                |                            |             |         |         |             |  
|Equipment and furniture                         |                            | $           | 75,130  |         |             | $ | 91,555  |        
|Leasehold improvements                          |                            |             | 37,621  |         |             |   | 50,985  |        
|                                                |                            |             |         |         |             |  
|                                                | Total                      |             |         | 112,751 |             |   |         | 142,540 | 
|Less Accumulated depreciation and amortization |                            | $           | (68,145 | )       |             | $ | (70,855 | )      
|                                                |                            |             |         |         |             |  
|                                                | Net property and equipment |             |         | 44,606  |             |   |         | 71,685  | 
|                                                |                            |             |         |         |             |  





|  |                 
|- | ----------------
|8 | Accrued expenses



|                              |       |             |        |        |             |   |       |        | 
|----------------------------- | ----- | ----------- | ------ | ------ | ----------- | - | ----- | ------ | 
|                              |       | January 29, |        |        | January 31, |  
|                              |       | 2005        |        |        | 2004        |  
|                              |       |             |        |        |             |  
|Compensation and benefits     |       | $           | 10,357 |        |             | $ | 7,761 |       
|Taxes other than income taxes |       |             | 4,292  |        |             |   | 4,761 |       
|Legal                         |       |             | 306    |        |             |   | 2,741 |       
|Rent                          |       |             | 3,252  |        |             |   | 3,962 |       
|Interest                      |       |             | 369    |        |             |   | 1,946 |       
|Other                         |       |             | 4,383  |        |             |   | 7,104 |       
|                              |       |             |        |        |             |  
|                              | Total |             | $      | 22,959 |             |   | $     | 28,275 | 
|                              |       |             |        |        |             |  

F-19



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|  |               
|- | --------------
|9 | Long-term debt



|                       |  |             |        |   |             |   |         |  
|---------------------- |  | ----------- | ------ | - | ----------- | - | ------- | -
|                       |  | January 29, |        |   | January 31, |  
|                       |  | 2005        |        |   | 2004        |  
|                       |  |             |        |   |             |  
|Senior notes           |  | $           |       |   |             | $ | 30,590  |  
|Term B promissory note |  |             | 25,000 |   |             |   | 25,000  |  
|Note payable           |  |             |       |   |             |   | 490     |  
|Other loans            |  |             |       |   |             |   | 109     |  
|                       |  |             |        |   |             |  
|Total debt             |  | $           | 25,000 |   |             | $ | 56,189  |  
|Less: current portion  |  |             | (5,000 | ) |             |   | (31,125 | )
|                       |  |             |        |   |             |  
|Total long-term debt   |  | $           | 20,000 |   |             | $ | 25,064  |  
|                       |  |             |        |   |             |  



| |             
| | ------------
| | Senior notes

1 4 1 4




| |                                                  
| | -------------------------------------------------
| | Term B promissory note and senior credit facility

1 4








F-20



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|           |  |   |        | 
|---------- |  | - | ------ | 
|2005       |  | $ | 5,000  | 
|2006       |  |   | 5,000  | 
|2007       |  |   |       | 
|2008       |  |   | 15,000 | 
|Thereafter |  |   |       | 
|           |  |   |       
|           |  | $ | 25,000 | 
|           |  |   |       



|   |             
|-- | ------------
|10 | Income taxes



|        |          |                     |   |        |             |   |   |             |        |   |   |        |        |  
|------- | -------- | ------------------- | - | ------ | ----------- | - | - | ----------- | ------ | - | - | ------ | ------ | -
|        |          | For the years ended |  
|        |          |                     |  
|        |          | January 29,         |   |        | January 31, |   |   | February 1, |       
|        |          | 2005                |   |        | 2004        |   |   | 2003        |       
|        |          |                     |   |        |             |   |   |             |       
|Current |          |                     |   |        |             |   |   |             |        |   |   |       
|        | Federal  |                     | $ | (94    | )           |   | $ | (15,514     | )      |   | $ | (6,322 | )     
|        | State    |                     |   | 537    |             |   |   | (536        | )      |   |   | 874    |       
|        | Deferred |                     |   | (2,626 | )           |   |   | 12,845      |        |   |   | (4,095 | )     
|        |          |                     |   |        |             |   |   |             |       
|        |          | Total               |   | $      | (2,183      | ) |   | $           | (3,205 | ) |   | $      | (9,543 | )
|        |          |                     |   |        |             |   |   |             |       



|                                           |  |                     |        |   |             |   |         |             |  |   |        |  
|------------------------------------------ |  | ------------------- | ------ | - | ----------- | - | ------- | ----------- |  | - | ------ | -
|                                           |  | For the years ended |       
|                                           |  |                     |       
|                                           |  | January 29,         |        |   | January 31, |   |         | February 1, | 
|                                           |  | 2005                |        |   | 2004        |   |         | 2003        | 
|                                           |  |                     |        |   |             |   |         |             | 
|Tax at statutory rate (35%)                |  | $                   | (9,078 | ) |             | $ | (12,876 | )           |  | $ | (8,350 | )
|State income taxes, net of federal benefit |  |                     | (1,249 | ) |             |   | (1,830  | )           |  |   | (943   | )
|Change in valuation allowance              |  |                     | 6,415  |   |             |   | 13,222  |             |  |   |       |  
|Adjustment of deferred tax balances        |  |                     | 855    |   |             |   |        |             |  |   |       |  
|Other                                      |  |                     | 874    |   |             |   | (1,721  | )           |  |   | (250   | )
|                                           |  |                     |        |   |             |   |         |             | 
|                                           |  | $                   | (2,183 | ) |             | $ | (3,205  | )           |  | $ | (9,543 | )
|                                           |  |                     |        |   |             |   |         |             | 

F-21



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                                    |  |                     |       |    |             |  |       |             |  |  |      |  
|----------------------------------- |  | ------------------- | ----- | -- | ----------- |  | ----- | ----------- |  |  | ---- | -
|                                    |  | For the years ended |      
|                                    |  |                     |      
|                                    |  | January 29,         |       |    | January 31, |  |       | February 1, | 
|                                    |  | 2005                |       |    | 2004        |  |       | 2003        | 
|                                    |  |                     |       |    |             |  |       |             | 
|Statutory rate                      |  |                     | 35.0  | %  |             |  | 35.0  | %           |  |  | 35.0 | %
|State income taxes                  |  |                     | 4.8   | %  |             |  | 5.0   | %           |  |  | 4.0  | %
|Change in valuation allowance       |  |                     | (24.7 | )% |             |  | (35.9 | )%          |  |  |     |  
|Adjustment of deferred tax balances |  |                     | (3.3  | )% |             |  |      |             |  |  |     |  
|Other                               |  |                     | (3.4  | )% |             |  | 4.6   | %           |  |  | 1.0  | %
|                                    |  |                     |       |    |             |  |       |             | 
|                                    |  |                     | 8.4   | %  |             |  | 8.7   | %           |  |  | 40.0 | %
|                                    |  |                     |       |    |             |  |       |             | 



|                                              |                                        |                                                 |        |         |             |   |        |         |        |  
|--------------------------------------------- | -------------------------------------- | ----------------------------------------------- | ------ | ------- | ----------- | - | ------ | ------- | ------ | -
|                                              |                                        | For the years ended                             |       
|                                              |                                        |                                                 |       
|                                              |                                        | January 29,                                     |        |         | January 31, |  
|                                              |                                        | 2005                                            |        |         | 2004        |  
|                                              |                                        |                                                 |        |         |             |  
|Net deferred tax asset (liability) current   |                                        |                                                 |        |         |             |   |        |        
|                                              | Accrued liabilities                    |                                                 | $      | 4,711   |             |   | $      | 4,754   |       
|                                              | Inventories                            |                                                 |        | (4,815  | )           |   |        | (5,832  | )     
|                                              | Other                                  |                                                 |        | (178    | )           |   |        | (99     | )     
|                                              | Less: valuation allowance              |                                                 |        | (5,303  | )           |   |        | (5,300  | )     
|                                              |                                        |                                                 |        |         |             |  
|                                              |                                        | Total deferred tax asset (liability) current   |        | $       | (5,585      | ) |        | $       | (6,477 | )
|                                              |                                        |                                                 |        |         |             |  
|Net deferred tax asset (liability) long-term |                                        |                                                 |        |         |             |   |        |        
|                                              | Accrued liabilities                    |                                                 | $      | 8,729   |             |   | $      | 11,147  |       
|                                              | State net operating loss carryforwards |                                                 |        | 4,791   |             |   |        | 4,085   |       
|                                              | Property and equipment                 |                                                 |        | (6,593  | )           |   |        | (9,768  | )     
|                                              | Capital loss carryforwards             |                                                 |        |        |             |   |        | 6,424   |       
|                                              | Federal net operating loss             |                                                 |        | 6,452   |             |   |        | 125     |       
|                                              | Other                                  |                                                 |        | 80      |             |   |        | 78      |       
|                                              | Less: valuation allowance              |                                                 |        | (13,459 | )           |   |        | (13,817 | )     
|                                              |                                        |                                                 |        |         |             |  
|                                              |                                        | Total deferred tax asset (liability) long-term |        | $       |            |   |        | $       | (1,726 | )
|                                              |                                        |                                                 |        |         |             |  
|Net deferred tax liability                    |                                        | $                                               | (5,585 | )       |             | $ | (8,203 | )      
|                                              |                                        |                                                 |        |         |             |  





F-22



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)












|                         |                                                             |                                                          |   |      |             |  |             |   |   |  |   |         |         |  
|------------------------ | ----------------------------------------------------------- | -------------------------------------------------------- | - | ---- | ----------- |  | ----------- | - | - |  | - | ------- | ------- | -
|                         |                                                             | For the years ended                                      |  
|                         |                                                             |                                                          |  
|                         |                                                             | January 29,                                              |   |      | January 31, |  | February 1, |  
|                         |                                                             | 2005                                                     |   |      | 2004        |  | 2003        |  
|                         |                                                             |                                                          |   |      |             |  |             |  
|Discontinued Operations: |                                                             |                                                          |   |      |             |  |             |   |   |  |   |        
|                         | Income (loss) from discontinued operations                  |                                                          | $ | 288  |             |  | $           |  |   |  | $ | (24,613 | )      
|                         | Income tax benefit (provision) from discontinued operations |                                                          |   | (115 | )           |  |             |  |   |  |   | 9,846   |        
|                         | Loss on disposition                                         |                                                          |   |     |             |  |             |  |   |  |   | (39,429 | )      
|                         | Income tax benefit of loss on disposition                   |                                                          |   |     |             |  |             |  |   |  |   | 12,182  |        
|                         |                                                             |                                                          |   |      |             |  |             |   |  
|                         |                                                             | Net loss from discontinued operations, net of income tax |   | $    | 173         |  |             | $ |  |  |   | $       | (42,014 | )
|                         |                                                             |                                                          |   |      |             |  |             |   |  



|   |              
|-- | -------------
|11 | Capital stock



| |                            
| | ---------------------------
| | Private placement offerings





F-23



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)


1 4 1 4






|   |              
|-- | -------------
|12 | Stock options







|                                 |           |                               |           |          |                  |   |       |                  |          |  |           |          |   |          |       |       |       |  |           |          |   |   |       |       | 
|-------------------------------- | --------- | ----------------------------- | --------- | -------- | ---------------- | - | ----- | ---------------- | -------- |  | --------- | -------- | - | -------- | ----- | ----- | ----- |  | --------- | -------- | - | - | ----- | ----- | 
|                                 |           | As of and for the years ended |          
|                                 |           |                               |          
|                                 |           | January 29, 2005              |           |          | January 31, 2004 |   |       | February 1, 2003 |         
|                                 |           |                               |           |          |                  |   |       |                  |         
|                                 |           |                               |           | Weighted |                  |   |       |                  | Weighted |  |           |          |   | Weighted |      
|                                 |           |                               |           | Average  |                  |   |       |                  | Average  |  |           |          |   | Average  |      
|                                 |           |                               |           | Exercise |                  |   |       |                  | Exercise |  |           |          |   | Exercise |      
|                                 |           | Shares                        |           |          | Price            |   |       | Shares           |          |  | Price     |          |   | Shares   |       |       | Price | 
|                                 |           |                               |           |          |                  |   |       |                  |          |  |           |          |   |          |       |       |       | 
|Outstanding, beginning of year   |           |                               | 1,953,924 |          |                  | $ | 10.16 |                  |          |  | 2,000,562 |          |   | $        | 10.71 |       |       |  | 1,982,982 |          |   | $ | 10.11 |      
|                                 | Granted   |                               |           | 745,850  |                  |   |       | 4.52             |          |  |           | 272,500  |   |          |       | 4.04  |       |  |           | 260,000  |   |   |       | 12.93 | 
|                                 | Exercised |                               |           | (15,600  | )                |   |       | 3.96             |          |  |           | (144,648 | ) |          |       | 5.50  |       |  |           | (108,664 | ) |   |       | 6.64  | 
|                                 | Forfeited |                               |           | (256,952 | )                |   |       | 12.56            |          |  |           | (174,490 | ) |          |       | 10.78 |       |  |           | (133,756 | ) |   |       | 9.37  | 
|                                 |           |                               |           |          |                  |   |       |                  |          |  |           |          |   |          |       |       |       | 
|Outstanding, end of year         |           |                               | 2,427,222 |          |                  | $ | 8.22  |                  |          |  | 1,953,924 |          |   | $        | 10.16 |       |       |  | 2,000,562 |          |   | $ | 10.71 |      
|                                 |           |                               |           |          |                  |   |       |                  |          |  |           |          |   |          |       |       |       | 
|Exercisable, end of year         |           |                               | 1,852,222 |          |                  | $ | 9.21  |                  |          |  | 1,364,729 |          |   | $        | 10.68 |       |       |  | 1,343,307 |          |   | $ | 9.23  |      
|                                 |           |                               |           |          |                  |   |       |                  |          |  |           |          |   |          |       |       |       | 
|Available for grant, end of year |           |                               | 576,069   |          |                  |   |       |                  |          |  | 1,103,054 |          |   |          |       |       |       |  | 564,347   |          |   |   |       |      
|                                 |           |                               |           |          |                  |   |       |                  |          |  |           |          |   |          |       |       |       | 

F-24



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




|                |                  |                                                                           |           |          |                     |           |  |  |          |  |  |           |       |  |          |  |           |  |  |   |       | 
|--------------- | ---------------- | ------------------------------------------------------------------------- | --------- | -------- | ------------------- | --------- |  |  | -------- |  |  | --------- | ----- |  | -------- |  | --------- |  |  | - | ----- | 
|                |                  | Options Outstanding and Exercisable by Price Range as of January 29, 2005 |          
|                |                  |                                                                           |          
|                |                  | Options Outstanding                                                       |           |          | Options Exercisable |          
|                |                  |                                                                           |           |          |                     |          
|                |                  |                                                                           |           | Weighted |                     |           |  |  | Weighted | 
|                |                  |                                                                           |           | Average  |                     |           |  |  | Average  | 
|Range of        |                  |                                                                           | Number of |          |                     | Remaining |  |  | Exercise |  |  | Number of |       |  | Exercise | 
|Exercise Prices |                  |                                                                           | Options   |          |                     | Life      |  |  | Price    |  |  | Options   |       |  | Price    | 
|                |                  |                                                                           |           |          |                     |           |  |  |          |  |  |           |       |  |          | 
|                | $ 2.07  - $ 4.14 |                                                                           |           |          | 436,530             |           |  |  | 8.3      |  |  | $         | 3.54  |  |          |  | 431,530   |  |  | $ | 3.53  | 
|                | $ 4.14  - $ 6.21 |                                                                           |           |          | 1,069,219           |           |  |  | 6.5      |  |  | $         | 5.39  |  |          |  | 499,219   |  |  | $ | 5.83  | 
|                | $ 6.21  - $ 8.28 |                                                                           |           |          | 43,327              |           |  |  | 4.1      |  |  | $         | 6.89  |  |          |  | 43,327    |  |  | $ | 6.89  | 
|                | $ 8.28  - $10.34 |                                                                           |           |          | 11,028              |           |  |  | 3.9      |  |  | $         | 9.28  |  |          |  | 11,028    |  |  | $ | 9.28  | 
|                | $10.34 - $12.41  |                                                                           |           |          | 323,034             |           |  |  | 6.5      |  |  | $         | 11.21 |  |          |  | 323,034   |  |  | $ | 11.21 | 
|                | $12.41 - $14.48  |                                                                           |           |          | 258,163             |           |  |  | 7.2      |  |  | $         | 13.72 |  |          |  | 258,163   |  |  | $ | 13.72 | 
|                | $14.48 - $16.55  |                                                                           |           |          | 141,971             |           |  |  | 5.8      |  |  | $         | 15.70 |  |          |  | 141,971   |  |  | $ | 15.70 | 
|                | $16.55 - $18.62  |                                                                           |           |          | 6,975               |           |  |  | 5.6      |  |  | $         | 17.40 |  |          |  | 6,975     |  |  | $ | 17.40 | 
|                | $18.62 - $20.69  |                                                                           |           |          | 136,975             |           |  |  | 5.3      |  |  | $         | 19.80 |  |          |  | 136,975   |  |  | $ | 19.80 | 
|                |                  |                                                                           |           |          |                     |           |  |  |          |  |  |           |       |  |          | 
|                |                  |                                                                           |           |          | 2,427,222           |           |  |  | 6.7      |  |  | $         | 8.22  |  |          |  | 1,852,222 |  |  | $ | 9.21  | 
|                |                  |                                                                           |           |          |                     |           |  |  |          |  |  |           |       |  |          | 







|   |                       
|-- | ----------------------
|13 | Employee benefit plans



| |                              
| | -----------------------------
| | 2000 Long Term Incentive Plan





F-25



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)




| |                           
| | --------------------------
| | 401(k) profit sharing plan





| |                             
| | ----------------------------
| | Employee stock purchase plan





|   |                              
|-- | -----------------------------
|14 | Commitments and contingencies



| |       
| | ------
| | Leases



|                   |  |                     |        |  |             |   |        |             |  |   |        | 
|------------------ |  | ------------------- | ------ |  | ----------- | - | ------ | ----------- |  | - | ------ | 
|                   |  | For the years ended |       
|                   |  |                     |       
|                   |  | January 29,         |        |  | January 31, |   |        | February 1, | 
|                   |  | 2005                |        |  | 2004        |   |        | 2003        | 
|                   |  |                     |        |  |             |   |        |             | 
|Minimum rentals    |  | $                   | 38,667 |  |             | $ | 56,236 |             |  | $ | 57,492 | 
|Contingent rentals |  |                     | 1,680  |  |             |   | 1,921  |             |  |   | 2,918  | 
|                   |  |                     |        |  |             |   |        |             | 
|Total              |  | $                   | 40,347 |  |             | $ | 58,157 |             |  | $ | 60,410 | 
|                   |  |                     |        |  |             |   |        |             | 



|                     |            |       |   |        |         | 
|-------------------- | ---------- | ----- | - | ------ | ------- | 
|Fiscal years ending: |            |       |   |       
|                     | 2005       |       | $ | 32,423 |        
|                     | 2006       |       |   | 28,674 |        
|                     | 2007       |       |   | 26,022 |        
|                     | 2008       |       |   | 23,600 |        
|                     | 2009       |       |   | 21,257 |        
|                     | Thereafter |       |   | 50,640 |        
|                     |            |       |  
|                     |            | Total |   | $      | 182,616 | 
|                     |            |       |  

F-26



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






| |           
| | ----------
| | Litigation







| |           
| | ----------
| | Guarantees





|   |                                        
|-- | ---------------------------------------
|15 | Sale/leaseback of headquarters facility

Accounting for
Leases.






|   |                           
|-- | --------------------------
|16 | Related-party transactions





F-27



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##### Table of Contents



WILSONS THE LEATHER EXPERTS INC. AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS(Continued)






|   |                  
|-- | -----------------
|17 | Subsequent events







F-28



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##### Table of Contents






Schedule II


|                                                                  |  |            |     |           |            |   |       |          |  |            |   |           |        |   |        |   |  |   |     | 
|----------------------------------------------------------------- |  | ---------- | --- | --------- | ---------- | - | ----- | -------- |  | ---------- | - | --------- | ------ | - | ------ | - |  | - | --- | 
|Valuation and Qualifying Accounts                                 |  |            |     | Additions |            |   |       |         
|(In thousands)                                                    |  |            |     |           |            |   |       |         
|                                                                  |  | Balance at |     |           | Charged to |   |       | Charged  |  |            |   | Balance   |       
|                                                                  |  | Beginning  |     |           | Costs and  |   |       | to Other |  |            |   | at End of |       
|                                                                  |  | of Period  |     |           | Expenses   |   |       | Accounts |  | Deductions |   |           | Period |  
|                                                                  |  |            |     |           |            |   |       |          |  |            |   |           |        |  
|Year ended February 1, 2003:                                      |  |            |     |           |            |   |       |          |  |            |   |           |        |   |        |   |  |   |     | 
|Allowance for doubtful accounts deducted from accounts receivable |  | $          | 351 |           |            | $ | 1,327 |          |  | $          |  |           |        | $ | (1,533 | ) |  | $ | 145 | 
|Year ended January 31, 2004:                                      |  |            |     |           |            |   |       |          |  |            |   |           |        |   |        |   |  |   |     | 
|Allowance for doubtful accounts deducted from accounts receivable |  | $          | 145 |           |            | $ | 874   |          |  | $          |  |           |        | $ | (931   | ) |  | $ | 88  | 
|Year ended January 29, 2005:                                      |  |            |     |           |            |   |       |          |  |            |   |           |        |   |        |   |  |   |     | 
|Allowance for doubtful accounts deducted from accounts receivable |  | $          | 88  |           |            | $ | 506   |          |  | $          |  |           |        | $ | (518   | ) |  | $ | 76  | 

F-29



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##### 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 14,
2005:




| |                                     
| | ------------------------------------
| | Wilsons The Leather
    Experts Inc.
| | (registrant)                        



| |     |                       
| | --- | ----------------------
| | By: | /s/ Michael M. Searles

| |                                     
| | ------------------------------------
| |                                     
| | Michael M. Searles                  
| | Chairman and Chief Executive Officer
| | (principal executive officer)       



| |     |                         
| | --- | ------------------------
| | By: | /s/ Peter G. Michielutti

| |                                                  
| | -------------------------------------------------
| |                                                  
| | Peter G. Michielutti                             
| | Executive Vice President, Chief Financial Officer
| | and Chief Operating Officer                      
| | (principal financial and accounting officer)     

Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below on April 14,
2005, by the following persons on behalf of the registrant and
in the capacities indicated:


|                                              |  |          |  | 
|--------------------------------------------- |  | -------- |  | 
|                                             
|/s/ Michael M. Searles
    Michael M. Searles |  | Director |  | 
|                                             
|/s/ Lyle Berman
    Lyle Berman               |  | Director |  | 
|                                             
|/s/ Michael T. Cowhig
    Michael T. Cowhig   |  | Director |  | 
|                                             
|/s/ Bradley K. Johnson
    Bradley K. Johnson |  | Director |  | 
|                                             
|/s/ William F. Farley
    William F. Farley   |  | Director |  | 
|                                             
|/s/ Michael J. Mccoy
    Michael J. Mccoy     |  | Director |  | 
|                                             
|/s/ R. Ted Weschler
    R. Ted Weschler       |  | Director |  | 
|                                             
|/s/ David L. Rogers
    David L. Rogers       |  | Director |  | 
|                                             
|/s/ Joel N. Waller
    Joel N. Waller         |  | Director |  | 

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