SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC. 20549

                                    FORM 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                                                                Commission File
For the Quarterly Period Ended September 29, 2001               Number  1-14967
                               ------------------                      --------


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


               Delaware                                             36-3554758
---------------------------------------                            ------------
(State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization)                               Identification No.)


706 North Deerpath Drive, Vernon Hills, Illinois                        60061
------------------------------------------------                      ---------
(Address of principal executive offices)                              (Zip Code)



                                  847-367-3400
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during  the  preceding  12  months,  and (2) has  been  subject  to such  filing
requirements for the past 90 days.

                                      Yes   X                   No
                                          -----                     -----

As of October 31, 2001, the Registrant had 8,281,585 shares of Common Stock, par
value $.01 per share outstanding.

<PAGE>1





                          WICKES INC. AND SUBSIDIARIES

                                      INDEX
                                      -----
<TABLE>


                                                                                                          Page
                                                                                                         Number
                                                                                                         ------
<S>                                                                                                     <C>
PART I.         FINANCIAL INFORMATION

       Item 1.  Financial Statements

           Condensed Consolidated Balance Sheets
           September 29, 2001 (Unaudited), December 30, 2000 and
           September 23, 2000 (Unaudited)                                                                    3

           Condensed Consolidated Statements of Operations (Unaudited)-
           For the three months and nine months ended
           September 29, 2001 and September 23, 2000                                                         4

           Condensed Consolidated Statements of Cash Flows (Unaudited)-
           For the nine months ended September 29, 2001 and
           September 23, 2000                                                                                5

           Notes to Condensed Consolidated
           Financial Statements (Unaudited)                                                                  6

       Item 2.  Management's Discussion and Analysis of Financial
                     Condition and Results of Operations                                                    14

       Item 3.  Quantitative and Qualitative Disclosures about
                     Market Risk                                                                            26


PART II.        OTHER INFORMATION

       Item 1.  Legal Proceedings                                                                           28

       Item 6.  Exhibits and Reports on Form 8-K                                                            28
</TABLE>
<PAGE>2


<TABLE>



                                              WICKES INC. AND SUBSIDIARIES
                                          CONDENSED CONSOLIDATED BALANCE SHEETS
                                            (in thousands except share data)

                                                              September 29,     December 30,    September 23,
                                                                  2001              2000            2000
                                                              --------------    --------------  -------------
                    ASSETS                                    (UNAUDITED)                       (UNAUDITED)
<S>                                                           <C>              <C>             <C>
Current assets:
   Cash                                                         $     203        $     243       $     153
   Accounts receivable, less allowance for doubtful
    accounts of $1,975 in 2001, $2,791 in December 2000,
     and $3,741 in September 2000                                 107,633           76,659         106,220
   Notes receivable from affiliate                                    356              201             134
   Inventory                                                      127,832          117,910         123,016
   Deferred tax asset                                               9,254            6,692           7,184
   Prepaid expenses and other assets                                3,859            3,405           4,285
                                                                 --------          -------        --------
     Total current assets                                         249,137          205,110         240,992

   Notes receivable from affiliate                                     67              282             349
   Property, plant and equipment, net                              56,053           54,384          53,080
   Trademark (net of accumulated amortization of
     $11,108 in 2001, $10,941 in December 2000,
     and $10,885 in September 2000)                                 5,912            6,079           6,134
   Deferred tax asset                                              12,990           12,990          14,695
   Rental equipment (net of accumulated depreciation
     of $2,076 in 2001, $1,582 in December 2000,
     and $1,441 in September 2000)                                  2,480            2,296           2,210
   Other assets (net of accumulated amortization of
     $14,072 in 2001, $12,440 in December 2000,
     and $12,918 in September 2000)                                21,196           19,795          17,605
                                                                 --------         --------        --------

     Total assets                                                $347,835         $300,936        $335,065
                                                                  =======          =======         =======

       LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
   Current maturities of long-term debt                        $    8,922        $   6,339      $        -
   Accounts payable                                                61,449           35,294          62,705
   Accrued liabilities                                             19,901           21,576          23,596
                                                                ---------         --------       ---------
     Total current liabilities                                     90,272           63,209          86,301
                                                                ---------         --------       ---------

Long-term debt, less current maturities                           224,721          200,403         213,797
Other long-term liabilities                                         3,904            3,428           3,552

Commitments and contingencies (Note 6)

Stockholders' equity:
   Preferred stock (no shares issued)
   Common stock, $0.01 par (8,278,400, 8,271,313,
     and 8,249,597 shares issued and
     outstanding, respectively)                                        83               83              82
   Other comprehensive loss                                          (177)               -               -
   Additional paid-in capital                                      87,124           87,092          86,997
   Accumulated deficit                                            (58,092)         (53,279)        (55,664)
                                                                 --------           ------         --------
     Total stockholders' equity                                    28,938           33,896          31,415
                                                                 --------          -------        --------
     Total liabilities & stockholders' equity                    $347,835         $300,936        $355,065
                                                                  =======          =======         =======

</TABLE>

The accompanying notes are an integral part of the condensed consolidated
financial statements.
<PAGE>3
<TABLE>


                                                    WICKES INC. AND SUBSIDIARIES
                                           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                                             (UNAUDITED)
                                           (in thousands except share and per share data)


                                                          Three Months Ended             Nine Months Ended
                                                          ------------------             -----------------
                                                  September 29,    September 23,    September 29,  September 23,
                                                      2001              2000            2001            2000
                                                  --------------   ---------------  -------------- ---------------
<S>                                              <C>              <C>              <C>            <C>
Net sales                                            $   295,307     $   282,743      $   754,226    $   779,566
Cost of sales                                            234,055         220,170          592,406        610,883
                                                      ----------      ----------       ----------     ----------

     Gross profit                                         61,252          62,573          161,820        168,683
                                                      ----------      ----------       ----------     ----------

Selling, general and administrative expenses              53,331          51,015          148,200        145,237
Depreciation, goodwill and trademark amortization          1,570           1,454            4,675          4,329
Provision for doubtful accounts                              159             860              802          1,363
Other operating income                                     (710)           (784)          (1,823)        (2,152)
                                                      ----------      ----------       -----------    ----------
                                                          54,350          52,545          151,854        148,777
                                                      ----------      ----------       ----------     ----------

     Income from operations                                6,902          10,028            9,966         19,906

Interest expense                                           5,417           6,163           16,811         18,176
                                                      ----------      ----------       ----------     ----------
     Income (loss) before income taxes                     1,485           3,865          (6,845)          1,730

Income tax expense (benefit)                                 796           1,729          (2,032)          1,261
                                                      ----------      ----------       ----------     ----------

     Net income (loss)                               $       689     $     2,136      $   (4,813)    $       469
                                                      ==========      ==========       ==========     ==========

Basic net income (loss) per common share             $      0.08     $      0.26      $    (0.58)    $      0.06
                                                      ==========      ==========       ==========     ==========

Diluted net income (loss) per common share           $      0.08     $      0.25      $    (0.58)    $      0.06
                                                      ==========      ==========       ==========     ==========

Weighted average common shares - for basic             8,278,347       8,248,643        8,275,737      8,242,949
                                                      ==========      ==========       ==========     ==========

Weighted average common shares - for diluted           8,448,300       8,476,023        8,275,737      8,501,410
                                                      ==========      ==========       ==========     ==========
</TABLE>








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


<PAGE>4

<TABLE>


                                                    WICKES INC. AND SUBSIDIARIES
                                           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                             (UNAUDITED)
                                                           (in thousands)
                                                                                           Nine Months Ended
                                                                                           -----------------
                                                                                  September 29,      September 23,
                                                                                      2001                  2000
                                                                                  ---------------    ---------------
<S>                                                                              <C>                <C>
Cash flows from operating activities:
   Net (loss) income                                                               $       (4,813)       $      469
   Adjustments to reconcile net (loss) income to
     net cash from operating activities:
   Depreciation expense                                                                     5,443             4,799
   Amortization of trademark                                                                  167               167
   Amortization of goodwill                                                                   516               446
   Amortization of deferred financing costs                                                 1,078               970
   Provision for doubtful accounts                                                            802             1,363
(Gain) loss on sale of assets and other items                                                 (13)              187
   Deferred tax benefit                                                                    (2,452)                -
Changes in assets and liabilities, net of the effects of acquisitions:
     (Increase) decrease in accounts receivable                                           (31,749)            2,769
     Increase in inventory                                                                 (9,747)           (2,311)
     Increase in accounts payable and accrued liabilities                                  23,639             6,778
     Increase in prepaids and other assets                                                 (3,181)           (2,408)
                                                                                       -----------        ----------

NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                                       (20,310)           13,229
                                                                                       -----------        ----------

Cash flows from investing activities:
   Purchases of property, plant and equipment                                              (6,320)           (6,666)
   Payments for acquisitions                                                                 (759)             (800)
   Decrease (increase) in notes receivable                                                     60                (2)
   Proceeds from sales of property, plant and equipment                                       907               887
                                                                                       -----------        ----------

NET CASH USED IN INVESTING ACTIVITIES                                                      (6,112)           (6,581)
                                                                                       -----------        ----------

Cash flows from financing activities:
   Debt issuance costs                                                                       (519)                -
   Repayments of term note                                                                 (4,226)                -
   Net borrowing (repayments) under revolving line of credit                               31,127            (6,945)
                                                                                       -----------        ----------

NET CASH PROVIDED BY / (USED BY) FINANCING ACTIVITIES                                      26,382            (6,945)
                                                                                       -----------        ----------

NET DECREASE IN CASH                                                                          (40)             (297)
Cash at beginning of period                                                                   243               450
                                                                                       -----------        ----------

CASH AT END OF PERIOD                                                              $          203        $      153
                                                                                       ===========        ==========

Supplemental schedule of cash flow information:
   Interest paid                                                                   $       13,104        $   14,720
   Income taxes paid                                                               $          853        $    1,054
Supplemental schedule of non-cash investing and financing activities: The
   Company purchased assets in conjunction with acquisitions made during the
   period. In connection with these acquisitions, liabilities were assumed as
   follows:
     Assets acquired                                                               $        1,789        $      800
     Liabilities assumed                                                           $        1,030        $        -
     Purchase price payable                                                        $          759        $      800
</TABLE>

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


<PAGE>5



                          WICKES INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

     Basis of Financial Statement Presentation
     -----------------------------------------

     The  condensed  consolidated  financial  statements  present the results of
operations,   financial  position,  and  cash  flows  of  Wickes  Inc.  and  its
consolidated subsidiaries (the "Company").  The condensed consolidated financial
statements  are  prepared  in  accordance  with  generally  accepted  accounting
principles,  which require  management to make  estimates and  assumptions  that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

     The  condensed   consolidated   financial  statements  should  be  read  in
conjunction  with the  Company's  consolidated  financial  statements  and notes
thereto  included in the Company's  Annual Report on Form 10-K (the "Form 10-K")
for the  fiscal  year  ended  December  30,  2000.  The  condensed  consolidated
financial  statements  reflect  all  adjustments   (consisting  only  of  normal
recurring  adjustments)  which are, in the opinion of management,  necessary for
the fair  presentation  of the  financial  results for the interim  period.  The
results of  operations  for interim  periods are not  necessarily  indicative of
results for the entire year.

     The Company has determined that it operates in one business  segment,  that
being the supply and  distribution of lumber and building  materials to building
professionals  and  do-it-yourself   customers,   principally  in  the  Midwest,
Northeast, and Southern United States. All information required by SFAS No. 131,
"Disclosures  about  Segments  of an  Enterprise  and Related  Information",  is
included in the Company's annual consolidated financial statements.

     Share Data
     ----------

     The Company  issued 7,087 shares of Common Stock to members of its board of
directors as compensation during the nine months ended September 29, 2001.

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

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

<PAGE>6




                          WICKES INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


2.  COMPREHENSIVE INCOME
    --------------------


The  components  of  comprehensive  income  (loss) for the three months and nine
months ended September 29, 2001 are as follows (in thousands):
<TABLE>

                                           Three Months Ended                Nine Months Ended
                                           ------------------                -----------------
                                          Sept. 29,      Sept. 23,        Sept. 29,       Sept. 23,
                                            2001            2000             2001            2000
                                            ----            ----             ----            ----
<S>                                       <C>            <C>             <C>             <C>

     Net income (loss)                     $   689        $  2,136        $  (4,813)      $    469
                                              -----          ------          -------        ------
     Change in fair value of interest
      rate swap, net of tax of
      $55 and $110, respectively               (89)            -               (177)            -
     Effect on comprehensive income
      of the adoption of SFAS 133
      net of tax of $55 and  $95               (88)            -               (155)            -
     Reclassification to earnings               88             -                155             -
                                              -----          ------          -------        ------

     Comprehensive income (loss)           $   600          $ 2,136       $  (4,990)      $    469
                                              -----          ------          -------        ------
</TABLE>


3.  LONG-TERM DEBT
    --------------

     Long-term debt is comprised of the following (in thousands):

<TABLE>
                                                           Sept. 29,         Sept. 23,
                                                             2001             2000
                                                             ----             ----
<S>                                                      <C>               <C>

         Revolving credit facility:
          Revolving notes                                 $ 122,263         $ 113,797
          Term notes                                         47,424             --
         Senior subordinated notes                           63,956           100,000
         Less current maturities                             (8,922)            --
                                                            -------           -------
         Total long-term debt                             $ 224,721         $ 213,797
                                                            =======           =======
</TABLE>

     Under the revolving line of credit,  the Company may borrow against certain
levels  of  accounts  receivable  and  inventory.  The  unused  availability  at
September 29, 2001 was $34.2 million. On August 13, 2001 the Company amended the
credit  agreement  to remove the net worth  covenant  to increase  the  required
minimum  unused  availability  from $15  million to $25  million,  and allow for
certain  corporate  structure  changes.  The Company was in compliance  with all
covenants as of September 29, 2001.

<PAGE>7




                          WICKES INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


4.  RECLASSIFICATION OF MANUFACTURING EXPENSES
    ------------------------------------------

     One of the  Company's  strategic  goals is to increase  the sales volume of
manufactured building components (roof trusses, wall panels, floor joists, etc.)
and to continue to increase the sales of internally manufactured components.  In
response  to  increases,  over time,  in the volume of  internally  manufactured
building components sold, the Company has determined that certain  manufacturing
costs previously included in Selling,  General and Administrative expense should
be classified as Cost of Sales.


     Therefore,   elements  of  costs  directly  associated  with  manufacturing
processes  such as  manufacturing  labor  and  related  benefits,  manufacturing
supplies,  equipment  depreciation,  delivery  expenses and other overhead items
have been  reclassified  for the  current  and  prior  periods  presented.  This
reclassification  had no impact on income  from  operations,  net  income or net
assets. The table presented below summarizes the impact of this reclassification
(increase / (decrease) in thousands):

<TABLE>

                                                        Three Months                  Nine Months
                                                        ------------                  -----------
                                                   Sept. 29,     Sept. 23,      Sept. 29,      Sept. 23,
                                                     2001          2000           2001           2000
                                                     ----          ----           ----           ----
<S>                                               <C>           <C>            <C>           <C>

Net sales                                          $   -         $   -          $    -        $    -

Cost of sales                                       10,301         9,242           28,756        26,886
                                                   --------      --------         -------        ------

    Gross profit                                   (10,301)       (9,242)         (28,756)      (26,886)
                                                   --------      --------         --------       ------

Selling, general and administrative
expenses                                            (9,856)       (8,873)         (27,304)      (25,803)
Depreciation, goodwill and
trademark amortization                                (445)         (369)          (1,452)       (1,083)
                                                   --------      --------          -------       ------

                                                   (10,301)       (9,242)         (28,756)      (26,886)
                                                   --------      --------         --------      --------

    Income from operations                         $   -         $    -         $    -        $    -
                                                    =======       =======         =======        ======

</TABLE>

<PAGE>8

                          WICKES INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


5.   INCOME TAXES
     ------------

     The provision for income taxes for the three-month  and nine-month  periods
ended  September  29,  2001 was an expense of $0.8 million  and  benefit of $2.0
million,  respectively,  compared to an expense of $1.7 million and $1.3 million
for the same periods last year.  An effective  federal and state income tax rate
of 38.7%  was used to  calculate  income  taxes  for  both the  three-month  and
nine-month periods ended September 29, 2001, respectively, compared to 38.8% and
38.8% for the same periods last year.  In addition to the  effective  income tax
rate,  state  franchise  taxes of $300,000 and $800,000 for the  three-month and
nine-month  periods ended  September  29, 2001,  respectively,  were  calculated
separately and are included in the provision reported.


6.  COMMITMENTS AND CONTINGENCIES
    -----------------------------

     At September 29, 2001,  the Company had accrued  approximately  $84,000 for
remediation of certain environmental and product liability matters,  principally
underground storage tank removal.

     Many of the  sales  and  distribution  facilities  presently  and  formerly
operated  by the Company at one time  contained  underground  petroleum  storage
tanks.  All such  tanks  known to the  Company  located on  facilities  owned or
operated  by the  Company  have  been  filled  or  removed  in  accordance  with
applicable environmental laws in effect at the time. As a result of reviews made
in connection with the sale or possible sale of certain facilities,  the Company
has found petroleum  contamination  of soil and ground water on several of these
sites and has taken, and expects to take, remedial actions with respect thereto.
In addition,  it is possible that similar  contamination may exist on properties
no longer owned or operated by the Company, the remediation of which the Company
could under certain  circumstances be held responsible.  Since 1988, the Company
has  incurred  approximately  $2.0  million  of  costs,  net  of  insurance  and
regulatory  recoveries,  with respect to the filling or removing of  underground
storage  tanks and related  investigatory  and remedial  actions.  Insignificant
amounts of contamination have been found on excess properties sold over the past
five years.

     The Company  previously  had been  identified  as having used two landfills
which are now  Superfund  clean up sites.  Both of these items were  settled for
immaterial amounts.


<PAGE>9


                          WICKES INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


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

     The Company is one of many defendants in approximately 425 actions, each of
which seeks  unspecified  damages,  in various  Michigan  state  courts  against
manufacturers and building  material  retailers by individuals who claim to have
suffered injuries from products containing  asbestos.  Each of the plaintiffs in
these  actions  is  represented  by  one  of  two  law  firms.  The  Company  is
aggressively  defending  these  actions and does not believe that these  actions
will have a material adverse effect on the Company.  Since 1993, the Company has
settled 50 similar actions for insignificant  amounts,  and another 253 of these
actions have been dismissed. None of these suits have made it to trial.

     Losses in excess of the  $84,000  reserved  as of  September  29,  2001 are
possible, but an estimate of these amounts cannot be made.

     The Company  was a  defendant  in a lawsuit  arising  from a 1998  accident
involving an employee  truck driver that resulted in personal  injuries to other
parties.  Plaintiffs  sought  compensatory  damages  in an  unspecified  amount.
Plaintiffs amended their complaint to include a claim for punitive damages in an
unspecified  amount.  Recently,  a  settlement  agreement  was  reached  between
Plaintiffs and the Company's  insurance  carriers and  settlement  documents are
being processed.  The entire settlement will be paid by the Company's  insurance
carriers  and will  resolve  the  matter  in its  entirety,  including  punitive
damages.

     The  Company  is the  defendant  in an  arbitration  claim  filed  with the
American  Arbitration  Association  on July 17, 2001 by David T.  Krawczyk,  the
former President and Chief Operating Officer of the Company. Mr. Krawczyk claims
he was constructively terminated by the Company as the result of certain actions
and directions given to him which were  inconsistent  with his position,  duties
and  responsibilities.  Mr.  Krawczyk  claims  that as a result of this  alleged
constructive termination, he is entitled to receive a Special Severance Bonus of
$1,000,000  pursuant to the Company's Special Severance and Stay Incentive Bonus
Plan (the "Plan").  The Company has defended the action and although it believes
that Mr. Krawscyk was not entitled to any Special  Severance  Bonus, the Company
has  elected  to pay the  Special  Severance  Bonus to Mr.  Krawczyk  because it
believes that the cost  associated with the obligation of the Company to pay Mr.
Krawczyk's attorneys
<PAGE>10

                          WICKES INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)

fees with  respect to such  litigation  could  equal or exceed  his  claim.  The
financial  statements  have been  adjusted  to reflect  this  settlement  in the
third quarter as a component of Selling, General and Administrative expenses.

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


7.  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
    -----------------------------------------

     On December 31, 2000,  the Company  adopted SFAS No. 133,  "Accounting  for
Derivative  Instruments and Hedging  Activities," as amended ("SFAS 133"), which
establishes  accounting and reporting  standards for derivative  instruments and
hedging  activities.  This standard  requires that all  derivative  instruments,
including  certain  derivative  instruments  embedded  in  other  contracts,  be
recognized  as assets or  liabilities  in the balance sheet and measured at fair
value. If a derivative is designated as a fair value hedge,  changes in the fair
value of the derivative and the hedged item will be recognized in earnings. If a
derivative is designated as a cash flow hedge,  changes in the fair value of the
derivative will be recorded in other comprehensive income and will be recognized
in the  statement of  operations  when the hedged item affects  earnings.  For a
derivative  that does not  qualify  as a hedge,  changes  in fair  value will be
recorded in earnings.  At September 29, 2001 the  Company's  interest rate hedge
qualified under SFAS 133 which resulted in an adjustment to Other  Comprehensive
Income of  $177,000,  net of income taxes of  $110,000,  and $133,000  credit to
interest  expense for the third quarter.  The Company did not have any commodity
hedges open at the end of the third quarter.

     SFAS 142,  "Goodwill and Other  Intangible  Assets",  issued July 20, 2001,
requires  companies to assess impairment of goodwill and other intangible assets
on at least  an  annual  basis  to  determine  whether  the fair  value of those
intangible  assets continues to exceed the book value.  Instead of amortization,
companies are required to record an impairment charge if the fair value is below
book value. The standard becomes  effective for the Company in fiscal year 2002.
The  Company is in the process of  evaluating  the  adoption of this  statement.
Goodwill amortization for the nine months ended September 29, 2001 and September
23, 2000 was $516,000 and $446,000, respectively.
<PAGE>11




                          WICKES INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


8.  EARNINGS PER SHARE
    ------------------

     The Company  calculates  earnings per share in accordance with Statement of
Financial  Accounting  Standards  No.  128.  In  periods  where net  losses  are
incurred,  dilutive common stock  equivalents are not used in the calculation of
diluted  EPS as  they  would  have  an  anti-dilutive  effect  on  EPS.  For the
three-month periods ended September 29, 2001 and September 23, 2000 common stock
equivalents of 170,000 shares and 227,000 shares, respectively, were included in
calculating  diluted  weighted  average shares  outstanding.  For the nine-month
periods ended September 29, 2001 common stock equivalents of 165,000 shares were
excluded as they were  antidilutive.  For the nine-month periods ended September
23, 2000 common stock equivalents of 258,000 shares were included in calculating
diluted weighted average shares  outstanding.  In addition,  options to purchase
617,000 and 219,000  weighted  average  shares of common  stock  during the nine
months of 2001 and 2000,  respectively,  had an exercise  price greater than the
average market price.


9.  RELATED PARTY TRANSACTIONS
    --------------------------

     Approximately 35% of the Company's  outstanding  shares of common stock are
owned by Riverside Group, Inc.

     In March 2000, the Company entered into an agreement with Buildscape, Inc.,
an entity  controlled by Riverside Group,  Inc. and Imagine  Investments,  Inc.,
each of which  may be deemed  an  affiliate  of the  Company.  Pursuant  to this
agreement,  the Company and  Buildscape,  Inc.  are jointly  conducting  a pilot
Internet distribution program (the "Buildscape  System"). In October,  2001, The
Company and Buildscape,  Inc.  amended the agreement to expand the pilot test of
the  Buildscape  System  to  additional  Company  centers  for  the  purpose  of
determining  its cost  savings.  The  parties  agreed to  jointly  conduct  this
investigation  and  complete it prior to December  15,  2001.  In the event that
Buildscape System does not achieve sufficient cost savings,  the Company has the
option to terminate the agreement with Buildscape, Inc.
<PAGE>12









                          WICKES INC. AND SUBSIDIARIES
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   (UNAUDITED)


     In March 2000, the Company  extended the terms of its note  receivable from
Riverside Group,  Inc. Under the revised terms, all previously  accrued interest
was paid by Riverside  Group,  Inc. to the Company on March 31,  2000.  Interest
accruing  thereafter is to be paid on a quarterly basis. In addition,  repayment
of the remaining  principal  balance was deferred for one year,  with  quarterly
principal  payments  commencing  on April 1,  2001.  As of  September  29,  2001
principal and accrued interest of approximately  $87,000 remains outstanding for
the second and third quarters.


10.  ACQUISITIONS
     ------------

     In April 2001,  the Company  acquired the real estate and other assets of a
local lumber  distributor in Kenvil,  New Jersey for approximately $1.6 million,
of which  $650,000 was paid in cash and $950,000 in a three-year  purchase money
mortgage.  The purpose of the  acquisition is to relocate an existing lumber and
distribution  center from a nearby leased  location.  In April 2001, the Company
acquired  JWatt   Construction,   a  framing   contractor  for  construction  of
residential and commercial real property,  for an immaterial purchase price. The
Company  has  accrued a  liability  for  contingent  payments  to be paid over a
three-year period. Accounting for these acquisitions has been recorded using the
purchase method.
<PAGE>13














                          WICKES INC. AND SUBSIDIARIES

Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
-------------------------------------------------------------------------------
OF OPERATIONS
-------------

     The following  discussion  should be read in conjunction with the Condensed
Consolidated  Financial  Statements and Notes thereto contained elsewhere herein
and in conjunction with the Consolidated  Financial Statements and Notes thereto
and Management's  Discussion and Analysis of Financial  Condition and Results of
Operations  contained in the Company's Annual Report on Form 10-K for the fiscal
year ended December 30, 2000.

     This Discussion and Analysis contains  statements which, to the extent that
they  are  not  recitations  of  historical  fact,  constitute  Forward  Looking
Statements  that are made pursuant to the safe harbor  provisions of the Private
Securities  Litigation  Reform  Act  of  1995  and  are  inherently  subject  to
uncertainty.  A number of important  factors could cause the Company's  business
and financial  results and financial  condition to be materially  different from
those stated in the Forward Looking Statements.

     Among the factors that could cause actual results to differ  materially are
the following:  effects of seasonality and cyclicality;  effects of competition;
interest rates and the Company's ability to service and comply with the terms of
its debt; lumber prices; the success of the Company's  operational  initiatives;
and the  outcome  of the  contingencies  discussed  in  Note 6 of the  Company's
Consolidated Financial Statements included elsewhere herein.


                                  INTRODUCTION

     Wickes Inc.  ("Wickes" or the "Company") is a leading  supplier of building
materials and  manufacturer  of building  components in the United  States.  The
Company sells its products and services  primarily to residential and commercial
building  professionals,  repair and  remodeling  contractors  and,  to a lesser
extent,  project  do-it-yourself  consumers  involved in major home  improvement
projects.  At September 29, 2001, the Company operated 99 sales and distribution
facilities  and  26  component  manufacturing  facilities  in 24  states  in the
Midwest, Northeast, and South.

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

     The Company focuses on the professional  builder and contractor market. The
Company  targets five customer  groups:  the production or volume  builder;  the
custom  builder;  the tradesman;  the repair and  remodeler;  and the commercial
developer.  Its marketing  approach  encompasses three channels of distribution:
Major  Markets,  Conventional  Markets,  and Wickes  Direct.  These channels are
supported  by  the  Company's  network  of  building   component   manufacturing
facilities.  In Major Markets,  the Company serves the national,  regional,  and
<PAGE>14

large  local  builder in larger  markets  with a total  solutions  approach  and
specialized  services. In Conventional Markets, the Company provides the smaller
building  professional  in  less-populous  markets  with  tailored  products and
services.  Wickes  Direct  provides  materials  flow  and  logistics  management
services to commercial customers. The Company also serves building professionals
through  its  network of 26  component  manufacturing  facilities  that  produce
value-added, wood framed wall panels, roof and floor truss systems, and pre-hung
interior and exterior doors.


                              RESULTS OF OPERATIONS

     The following table sets forth, for the periods  indicated,  the percentage
relationship to net sales of certain expense and income items.  This information
includes the results from all sales and distribution and component manufacturing
facilities  operated by the Company,  including  those closed or sold during the
period.
<TABLE>

                                                    Three Months Ended              Nine Months Ended
                                                    ------------------              -----------------
                                                 Sept. 29,       Sept. 23,       Sept. 29,      Sept. 23,
                                                    2001            2000            2001          2000
                                                    ----            ----            ----            ----
<S>                                             <C>             <C>             <C>            <C>

Net sales                                          100.0%          100.0%           100.0%         100.0%
Gross profit                                        20.7%           22.1%            21.5%          21.6%
Selling, general and
  administrative expense                            18.1%           18.0%            19.7%          18.6%
Depreciation, goodwill and
  trademark amortization                             0.5%            0.5%             0.6%           0.6%
Provision for doubtful accounts                      0.1%            0.3%             0.1%           0.2%

Other operating income                              (0.2)%          (0.3)%           (0.2)%         (0.3)%
Income from operations                               2.3%            3.6%             1.3%           2.6%
</TABLE>

     Certain  reclassifications  have been made to prior year amounts to conform
to the current presentation. All material intercompany balances and transactions
have  been  eliminated.  See also  Notes 1 and 4 to the  Consolidated  Financial
Statements regarding the reclassification of certain manufacturing  expenses and
other items.

     The  Company's   results  of  operations   during  the  first  nine  months
historically are affected by, among other factors, weather conditions,  interest
rates,  lumber prices,  and housing starts.  Weather conditions during the first
nine months of 2001 were relatively comparable to those of the first nine months
of 2000, however the Midwest and South experienced very wet conditions in second
quarter which  adversely  impacted sales. In the first nine months of 2001 there
have been several  reductions in the prime lending and mortgage  interest  rates
over the same period last year.  During the first quarter of 2001 framing lumber
composite  prices  decreased to $285 per thousand board feet, down 26%, from the
<PAGE>15

same period last year.  The second and third  quarters  of 2001  framing  lumber
composite  prices  increased to $366 per thousand  board feet, up 8% and to $323
per thousand board feet, up 9.3%, respectively, from the same periods last year.
Housing  starts  compared to the first nine months of last year were  relatively
flat in the  Midwest,  down  2.5% in the  Northeast,  and up 2.3% in the  South.
During the first nine  months of 2001,  the  Company  experienced  increases  in
selling, general and administrative ("SG&A") expense,  depreciation expense, and
decreases in provision for doubtful accounts, other income and interest expense.
In  the  first   quarter  of  2001  interest   expense   increased  due  to  the
implementation  of a new accounting  rule that required a decline in value of an
interest rate swap be charged to interest expense.

     Net  income  for the  three-month  periods  ended  September  29,  2001 and
September 23, 2000 was $0.7 million and $2.1 million, respectively. Net loss for
the nine-month  period ended  September 29, 2001 was $4.8 million and net income
for the nine-month period ended September 23, 2000 was $0.5 million.


                 Three Months Ended September 29, 2001 Compared
                 with the Three Months Ended September 23, 2000

Net Sales
---------

     Net sales for the third quarter of 2001  increased  4.4% to $295.3  million
from $282.7  million for the third quarter of 2000.  Same store sales  increased
4.5% compared with the same period last year.  Same store sales to the Company's
primary customers,  building professionals,  increased 5.2% and same store sales
to consumers  decreased 3.2% when compared with the third quarter of 2000. As of
September 29, 2001 the Company  operated 99 sales and  distribution  facilities,
compared to 101 at the end of the third quarter of 2000.

     The Company  believes  that the sales  increase  for the three months ended
September 29, 2001  primarily  resulted  from strength in the housing  sector as
well as the effects of lumber  inflation.  The Company estimates that the effect
of lumber  inflation  for the third  quarter of 2001  increased  total  sales by
approximately $7.0 million compared with the same period last year.

     Housing  starts  in the  third  quarter  of 2001  were  up 4.6%  nationally
compared to 2000. In the Company's primary geographical markets,  housing starts
were  relatively flat in the Midwest,  up 0.7% in the Northeast,  and up 9.2% in
the South.

     Sales to building professionals as a percentage of total sales increased to
86.6% in the  third  quarter  compared  to 86.2% in the third  quarter  of 2000.
Lumber and building  materials  accounted  for 85.9% of total sales in the third
quarter of 2001 compared with 86.6% in 2000.
<PAGE>16

     Products  that  exhibited  the  greatest  change in sales  dollars  for the
quarter ended September 29, 2001 versus the comparable quarter in the prior year
were panels and trusses (up 15.5%),  doors and windows (up 7.4%),  drywall (down
26.3%), and insulation (up 14.8%).


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

     Gross profit  decreased to $61.3  million in the third quarter of 2001 from
$62.6 million in the third quarter of 2000, a 2.1%  decrease.  Gross profit as a
percentage of sales decreased to 20.7%, compared with 22.1% in the third quarter
of 2000. The Company  believes that these  decreases  primarily  resulted from a
change in the nature of the Company's  co-operative  marketing programs with its
vendors  from  primarily  purchase  based  programs  to  primarily  co-operative
marketing  and cost  recovery  programs.  This  resulted in lowering  both gross
profit and selling,  general and  administrative  expense.  In  addition,  gross
margin dollars decreased resulting from declines in lumber product margins, down
3.7% from last year.

Selling, General and Administrative Expense ("SG&A")
----------------------------------------------------

     SG&A expense  increased to $53.3  million in the third quarter of 2001 from
$51.0 million in the third quarter of 2000, a 4.5%  increase.  SG&A expense as a
percentage of sales increased to 18.1% compared with 18.0% of sales in the third
quarter of 2000. SG&A expense increases  primarily are due to increases in total
salaries,  taxes and  benefits  (up 13.4%) and  marketing  expense (up  127.8%),
offset by  decreases  in  banking  and  credit  (down  46.0%)  and  co-operative
marketing and cost recovery programs.


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

     Depreciation, goodwill and trademark amortization increased to $1.6 million
for the third  quarter of 2001 compared with $1.5 million for the same period in
2000.  The increase in  depreciation  primarily is due to equipment and building
expenditures  related to the Company's  strategic goal to increase the volume of
internally  manufactured  building  components,  as  well as  investment  in the
Company's installed sales programs.


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

     The provision  for doubtful  accounts was $0.2 million in the third quarter
of 2001,  compared with $0.9 million in the third  quarter of 2000.  The Company
believes  the  decrease  is the result of  management's  increased  emphasis  on
collection efforts to reduce credit exposure and bad debts.
<PAGE>17


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

     Other  operating  income  for the third  quarter  of 2001 was $0.7  million
compared with $0.8 million for the third quarter of 2000. Other operating income
primarily  includes  the sale or  disposal  of  property,  plant and  equipment,
service charges assessed  customers on past due accounts  receivables,  casualty
gains/losses, and closed store expenses.


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

     In the third quarter of 2001,  interest  expense  decreased to $5.4 million
from $6.2 million  during the third  quarter of 2000.  At September 29, 2001 the
Company's  interest  rate swap  qualified for hedge  accounting  under SFAS 133,
which  resulted  in a $0.1  million  credit to  interest  expense  for the third
quarter.

     Due in part to the Company's  repurchase of 36% of its Senior  Subordinated
Debt in December of 2000,  the third  quarter of 2001  effective  interest  rate
decreased to 8.55% compared to 9.94% for the same period last year excluding the
effect of the  amortization  of debt issue  costs.  The  Company's  average debt
levels increased by 2.1% over that of the comparable period in 2000. The Company
continues  to  maximize  its use of LIBOR  contracts  to  minimize  its  overall
interest  expense.  In the third  quarter  of 2001,  approximately  92.1% of the
Company's  average borrowing on its revolving credit facility was LIBOR-based as
compared with 94.2% during the third quarter of 2000.


Provision for Income Taxes
--------------------------

     The  Company  recorded  income tax  expense of $0.8  million  for the third
quarter of 2001  compared  with expense of $1.7 million in the third  quarter of
2000.  An  effective  federal  and  state  income  tax rate of 38.7% was used to
calculate income taxes for the third quarter of 2001, compared with an effective
rate of 38.8% for the third quarter of 2000. In addition to the effective income
tax rate,  state  franchise taxes of $0.3 million for the third quarters of 2001
and 2000, were calculated separately and are included in the provision reported.

     The Company  continues to review future  earnings  projections to determine
that there is  sufficient  support  for its  deferred  tax assets and  valuation
allowance.  Management  continues  to believe that the net deferred tax asset is
properly stated.

     This assessment  constitutes  Forward-Looking  Information made pursuant to
the safe harbor  provisions of the Private  Securities  Litigation Reform Act of
1995 and is inherently  subject to uncertainty  and dependent upon the Company's
future  profitability,  which in turn depends  upon a number of  important  risk
factors  including  but not  limited  to:  the  effectiveness  of the  Company's
operational efforts,  cyclicality and seasonality of the Company's business, the
effects of the Company's substantial leverage, and competition.
<PAGE>18

                  Nine Months Ended September 29, 2001 Compared
                  with the Nine Months Ended September 23, 2000

Net Sales
---------

     Net sales  for the  first  nine  months  of 2001  decreased  3.3% to $754.2
million from $779.6 million for the first nine months of 2000.  Same store sales
decreased 3.3% compared with the same period last year.  Same store sales to the
Company's primary customers, building professionals, decreased 2.9% and consumer
same store sales decreased 9.4% when compared with such sales for the first nine
months of 2000. As of the period ended  September 29, 2001 the Company  operated
99 sales and distribution facilities, compared to 101 in 2000.

     The Company  believes  that the sales  decrease  for the nine months  ended
September 29, 2001 primarily  resulted from lumber deflation  experienced in the
first quarter and housing start  declines  experienced  during the first half of
the year. The Company  estimates that the net effect of lumber deflation for the
first nine months of 2001 decreased  total sales by  approximately  $8.7 million
compared with the same period last year.

     Housing  starts  were down the first half of 2001 and in the third  quarter
were up 4.6% nationally compared to 2000. In the Company's primary  geographical
markets,  housing starts were relatively  flat in the Midwest,  down 2.5% in the
Northeast, and up 2.3% in the South.

     Sales to building  professionals  as a percentage  of total sales  remained
unchanged at 87.3% in the first nine months of 2001  compared  2000.  Lumber and
building  materials  accounted for 85.4% of total sales in the first nine months
of 2001 compared with 86.6% in 2000.

     Products that exhibited the greatest  change in sales dollars for the first
nine months of 2001 versus the  comparable  period in the prior year were lumber
and plywood  (down 12.8%),  drywall (down 35.6%),  trusses (up 5.3%) and roofing
and roofing materials (up 7.4%).

     For  the  nine  months  ended  September  29,  2001,  sales  of  internally
manufactured  building  components  increased to $76.8 million or 59.2% of total
distributed building components from $72.3 million or 56.7% in 2000.


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

     Gross profit for the first nine months of 2001  decreased to $161.8 million
from  $168.7  million for the first nine months of 2000,  a 4.1%  decrease.  The
Company  believes that the decrease in gross profit dollars  primarily  resulted
from declining lumber prices putting pressure on margins.  The Company estimates
<PAGE>19

that  deflation in commodity  prices  decreased  gross profit for the first nine
months of 2001 by approximately  $2.3 million when compared with commodity price
levels  experienced  during the first  nine  months of 2000.  Gross  profit as a
percentage  of sales  decreased  to 21.5% for the first nine months of 2001 from
21.6% in 2000. In addition, gross profit decreases resulted from a change in the
nature of the Company's  co-operative  marketing  programs with its vendors from
primarily purchase based programs to primarily  co-operative  marketing and cost
recovery  programs.  This  resulted in lowering  both gross  profit and selling,
general and administrative expense.


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

     SG&A expense  increased to $148.2  million in the first nine months of 2001
from $145.2  million in the first nine  months of 2000,  a 2.0%  increase.  SG&A
expense as a percentage of net sales  increased to 19.7%  compared with 18.6% of
net sales in the first nine months of 2000. SG&A expense increased primarily due
to increases  in total  salaries,  taxes and  benefits  (up 5.8%) and  marketing
expense (up 72.8%),  offset by  decreases in banking and credit (down 18.2%) and
co-operative marketing and cost recovery programs.


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

     Depreciation, goodwill and trademark amortization increased to $4.7 million
for the first nine months of 2001 compared with $4.3 million for the same period
in 2000. The increase in depreciation primarily is due to equipment and building
expenditures  related to the Company's  strategic goal to increase the volume of
internally  manufactured  building  components,  as  well as  investment  in the
Company's installed sales programs.


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

     The provision for doubtful accounts was approximately $0.8 million, or 0.1%
of net sales for the first nine months of 2001  compared to  approximately  $1.4
million,  or 0.2% of net sales in the first  nine  months of 2000.  The  Company
believes  the  decrease  is the result of  management's  increased  emphasis  on
collection efforts to reduce credit exposure and bad debts.


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

     Other  operating  income for the first nine months of 2001 was $1.8 million
compared  with $2.2 million for the first nine months of 2000.  Other  operating
income primarily includes the sale or disposal of property, plant and equipment,
service charges assessed  customers on  past due accounts  receivable,  casualty
gains/losses, and closed store expenses.
<PAGE>20

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

     In the first  nine  months of 2001,  interest  expense  decreased  to $16.8
million from $18.2 million  during the first nine months of 2000.  This decrease
includes  a charge to  interest  expense  in the first  quarter  for a  $447,000
decline  in the fair value of an  interest  rate swap that did not  qualify  for
hedge accounting  under SFAS 133. At September 29, 2001, the Company's  interest
rate swap  qualified for  hedge accounting  under SFAS 133,  which resulted in a
$232,000 net expense for the first nine months.

     Due in part to the Company's  repurchase of 36% of its Senior  Subordinated
Debt in December of 2000, the effective interest rate decreased to 9.05% for the
first nine months compared to 9.8% for the same period last year,  excluding the
effect of the  amortization  of debt issue costs. In addition to the decrease in
interest rates that  contributed to the overall decrease in interest expense for
the first nine months,  the Company's average debt levels decreased by 2.6% over
that of the comparable period in 2000. The Company continues to maximize its use
of LIBOR contracts to minimize its overall interest  expense.  In the first nine
months of 2001,  approximately  94.2% of the Company's  average borrowing on its
revolving  credit  facility was  LIBOR-based  as compared  with 84.7% during the
first nine months of 2000.


Provision for Income Taxes
--------------------------

     The Company  recorded  an income tax benefit of $2.0  million for the first
nine months of 2001  compared  with an expense of $1.3 million in the first nine
months of 2000. An effective federal and state income tax rate of 38.7% was used
to calculate  income taxes for the first nine months of 2001,  compared to 38.8%
for the first nine months of 2000. In addition to the effective income tax rate,
state  franchise  taxes of $0.8  million  for the first nine  months of 2001 and
2000, were calculated separately and are included in the provision reported.

     The Company  continues to review future  earnings  projections to determine
that there is  sufficient  support  for its  deferred  tax assets and  valuation
allowance.  Management  continues  to believe that the net deferred tax asset is
properly stated. This assessment  constitutes  Forward-Looking  Information made
pursuant to the safe harbor  provisions  of the  Private  Securities  Litigation
Reform Act of 1995 and is inherently  subject to uncertainty  and dependent upon
the  Company's  future  profitability,  which in turn  depends  upon a number of
important risk factors  including but not limited to: the  effectiveness  of the
Company's  operational  efforts,  cyclicality  and  seasonality of the Company's
business, the effects of the Company's substantial leverage, and competition.
<PAGE>21





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


     On December 31, 2000,  the Company  adopted SFAS No. 133,  "Accounting  for
Derivative  Instruments and Hedging  Activities," as amended ("SFAS 133"), which
establishes  accounting and reporting  standards for derivative  instruments and
hedging  activities.  This standard  requires that all  derivative  instruments,
including  certain  derivative  instruments  embedded  in  other  contracts,  be
recognized  as assets or  liabilities  in the balance sheet and measured at fair
value. If a derivative is designated as a fair value hedge,  changes in the fair
value of the derivative and the hedged item will be recognized in earnings. If a
derivative is designated as a cash flow hedge,  changes in the fair value of the
derivative will be recorded in other comprehensive income and will be recognized
in the  statement of  operations  when the hedged item affects  earnings.  For a
derivative  that does not  qualify  as a hedge,  changes  in fair  value will be
recorded in earnings.  At September 29, 2001 the  Company's  interest rate hedge
qualified under SFAS 133 which resulted in an adjustment to Other  Comprehensive
Income of  $177,000,  net of income taxes of  $110,000,  and $133,000  credit to
interest  expense for the third quarter. The Company did not have any  commodity
hedges open at September 29, 2001.

     SFAS 142,  "Goodwill and Other  Intangible  Assets",  issued July 20, 2001,
requires  companies to assess impairment of goodwill and other intangible assets
on at least  an  annual  basis  to  determine  whether  the fair  value of those
intangible  assets continues to exceed the book value.  Instead of amortization,
companies are required to record an impairment charge if the fair value is below
book value. The standard becomes  effective for the Company in fiscal year 2002.
The  Company is in the process of  evaluating  the  adoption of this  statement.
Goodwill amortization for the nine months ended September 29, 2001 and September
23, 2000 was $516,000 and $446,000, respectively.

<PAGE>22



LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

     The  Company's  principal  sources of working  capital  and  liquidity  are
earnings and  borrowings  under its  revolving  credit  facility.  The Company's
primary  need  for  capital  resources  is to  finance  inventory  and  accounts
receivable.

     During the first nine months of 2001 net cash used by operating  activities
was $20.3  million,  $33.5 million more than the $13.2  million  provided in the
first nine months of 2000. With the peak building season historically  occurring
in the second and third quarters,  the Company normally experiences increases in
its inventory  levels during the first quarter to meet the anticipated  increase
in sales, and in the second quarter increases in accounts  receivable occur as a
result of the increased sales activity.

     The Company's  accounts  receivable balance at the end of the third quarter
of 2001  increased $1.4 million when compared to the end of the third quarter of
2000,  an  increase of 1.0%.  This  increase  primarily  is the result of a $3.3
million increase in credit sales in September 2001 over September 2000.

     The  Company's  inventory  balance at the end of the third  quarter of 2001
increased  $4.8 million or 3.9% when compared to the end of the third quarter of
2000.  This increase  primarily is  attributed to lumber  inflation in the third
quarter as well as increased  manufacturing plant sales related to the Company's
strategic  goal to  increase  the  volume of  internally  manufactured  building
components.  Accounts payable at September 29, 2001 decreased approximately $1.3
million, or 2.0% from September 23, 2000.

     The Company's capital expenditures consist primarily of the construction of
storage  facilities,  the remodeling and  reformatting of sales and distribution
facilities and component manufacturing facilities, and the purchase of vehicles,
equipment  and  management   information  systems  for  both  existing  and  new
operations.  The Company  also may make  expenditures  to  establish  or acquire
operations to expand or complement  its existing  operations,  especially in its
major  markets.  In the first nine months of 2001 the Company spent $6.3 million
on capital expenditures, excluding acquisitions, as compared to $6.7 million for
the same period in 2000. In April 2001, the Company acquired the real estate and
other  assets  of  a  local  lumber   distributor  in  Kenvil,  New  Jersey  for
approximately  $1.6  million,  of which $0.7  million  was paid in cash and $1.0
million in a three-year purchase money mortgage.  The purpose of the acquisition
is to relocate an existing lumber and  distribution  center from a nearby leased
location.   Under  the  Company's  bank  revolving  credit  agreement,   capital
expenditures  during 2001 are currently limited to $9.0 million.  In addition to
capital  expenditures,  this revolving  credit  agreement  allows the Company to
spend up to $30 million, subject to certain restrictions,  for acquisitions. The
Company  expects  to  fund  capital  expenditures  through  borrowings  and  its
internally generated cash flow.
<PAGE>23



     The Company  maintained  excess  availability  under its revolving  line of
credit  throughout  the first nine months of 2001.  At the end of the first nine
months of 2001 total  borrowings  under the revolving  line of credit were $55.9
million  higher than at the end of the first nine months of 2000.  This increase
includes the  unamortized  portion of the term loan of $47.4 million.  Under the
current  terms of the  Company's  bank  revolving  credit  agreement the Company
believes  that it will  continue  to have  sufficient  funds  available  for its
anticipated  operations and capital expenditures.  At September 29, 2001, $169.7
million was outstanding under the Company's revolving line of credit. The unused
availability was  approximately  $34.2 million.  Covenants under the amended and
restated credit agreement require, among other things, that the Company maintain
unused  availability  under  the  revolving  line of  credit  of at least  $25.0
million.  In addition,  the agreement  restricts,  among other  things,  capital
expenditures,  the  incurrence  of  additional  debt,  asset  sales,  dividends,
investments,  and  acquisitions.  Furthermore,  the amended and restated  credit
agreement  considers a change in control, as defined, as an event of default. On
May 14, 2001,  the Company  amended the credit  agreement to reduce the level of
net worth required on March 31, 2001. On August 13, 2001 the Company amended the
credit agreement to remove the net worth covenant, increase the required minimum
unused  availability  from $15 million to $25 million,  and to allow for certain
corporate structure changes. The Company was in compliance with all covenants as
of September 29, 2001. The Company's assessment of its future funds availability
constitutes  Forward-Looking Information made pursuant to the Private Securities
Litigation Reform Act of 1995 and is inherently subject to uncertainty resulting
from, among other things,  the factors  discussed under "Results of Operations -
Provision for Income Taxes".

     On November  21,  2000,  the Company  commenced a cash tender offer for its
outstanding  11-5/8%  Senior  Subordinated  Notes  due  2003,  at a  substantial
discount  from face  value.  The offer  expired on  December  20,  2000,  and on
December 26, 2000 the Company  redeemed  $36.0  million of notes  tendered  (the
"Redemption").

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

     A  commitment  fee of 0.38% is payable on the unused  amount of the amended
and restated revolving line of credit. Interest on amounts outstanding under the
amended and restated revolving line of credit bear interest at a spread of 0.75%
above  the base  rate of Fleet  National  Bank  (Fleet  Base  rate was  6.75% at
September 29, 2001) or 2.75% above the applicable  LIBOR rate (30 day LIBOR rate
<PAGE>24

was  2.56%  at  September  29,  2001).  Depending  upon  the  Company's  rolling
four-quarter  interest  coverage  ratio and  unused  availability,  as  defined,
amounts outstanding will bear interest at a spread above the base rate from 0.0%
to 0.75% or from 2.00% to 2.75% above the  applicable  LIBOR rate.  At September
29, 2001,  the Company had  designated  $5.2 million and $117.0  million as base
rate and LIBOR borrowings,  respectively.  The amount outstanding under the term
loan  portion,  $47.4  million,  bears  interest  at a spread of 3.00% above the
applicable LIBOR rate. Interest is generally payable monthly.

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

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

<PAGE>25



                          WICKES INC. AND SUBSIDIARIES

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------


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

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

     On  December  13,  2000 the Company  entered  into an amended and  restated
credit  agreement with its existing bank group to provide the funds necessary to
complete  the   redemption  of  a  portion  of  the  Company's   11-5/8%  Senior
Subordinated  Notes due 2003. The amended and restated credit  agreement,  among
other things,  increased the total  commitment  to $251.7  million,  removed the
seasonal  reduction in borrowing  capacity  provided for in the previous  credit
agreement,  increased both the base rate and LIBOR-based borrowing spreads,  and
extended the final maturity of the revolving  credit agreement to June 30, 2005.
A portion of the credit  facility  was  provided as a one-time  term loan in the
principal  amount of $51.7 million that requires  quarterly  principal  payments
beginning on March 31, 2001.  Interest on amounts  outstanding under the amended
and restated  revolving  line of credit bear interest at a spread of 0.75% above
the base rate of Fleet  National  (Fleet  Base rate was 6.75% at  September  29,
2001) or 2.75% above the  applicable  LIBOR rate (30 day LIBOR rate was 2.56% at
September 29, 2001).  Depending upon the Company's rolling four-quarter interest
coverage ratio and unused  availability,  as defined,  amounts  outstanding will
bear  interest at a spread  above the base rate from 0.0% to 0.75% or from 2.00%
to 2.75% above the applicable LIBOR rate. At September 29, 2001, the Company had
designated  $5.2 million and $117.0  million as base rate and LIBOR  borrowings,
respectively. The amount outstanding under the term loan portion, $47.4 million,
bears interest at a spread of 3.00% above the applicable LIBOR rate.

     The  Company  has  entered  into  an  interest  rate  swap  agreement  that
effectively fixes the Company's borrowing cost at 5.75% plus the Company's LIBOR
borrowing  spread on $40.0  million of the  Company's  term loan  portion of its
borrowings. The interest rate swap agreement expires in February 2002.

     Based on the  Company's  average  borrowings  under  its  revolving  credit
agreements  during  2001,  including  amounts  outstanding  under  the term loan
portion  and net of the impact of the  interest  rate swap  agreement  described
above,  a  hypothetical  25 basis point  movement in the base rate or LIBOR rate
would  result in an  approximate  $187,000  annualized  increase  or decrease in
interest expense.

     The fair value of the  Company's  outstanding  11 5/8% Senior  Subordinated
Notes was $41.6  million at September  29, 2001 and $38.3  million  December 30,
2000.  Assuming a hypothetical 100 basis point decrease in the yield to maturity
of the outstanding notes at September 29, 2001, the fair value of the fixed rate
debt would have increased by $0.5 million.
<PAGE>26

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

     The Company uses financial  instruments  from time to time to hedge against
future lumber price  fluctuations.  These  instruments  are purchased to protect
long-term  pricing  commitments on specific  future  customer  purchases.  While
lumber futures  contracts are entered on a risk management  basis, the Company's
hedge  positions  could show a net gain or loss  depending on prevailing  market
conditions.  At  September  29,  2001  the  Company  had  no  swap  arrangements
outstanding.

     For additional  discussion,  reference is made to information  contained in
Item 7A,  Quantitative and Qualitative  Disclosures  About Market Risk, filed as
part of the Company's Form 10-K as of December 30, 2000.
<PAGE>27

                                     PART II
                                OTHER INFORMATION

Item 1.  Legal Proceedings
--------------------------

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



Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------

         NONE






<PAGE>28



                                   SIGNATURES

     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, thereunto duly authorized.

                                                     WICKES INC.
                            By:      /s/ J. Steven Wilson
                               ------------------------------------
                                     J. Steven Wilson
                                     Chairman and Chief Executive Officer



                            By:      /s/ James A. Hopwood
                               ------------------------------
                                    James A. Hopwood
                                    Chief Financial Officer


Date:  November 13, 2001