# SECURITIES
AND EXCHANGE COMMISSION

# WASHINGTON,
D.C. 20549

---

# FORM 10-Q

# QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

# For the quarterly period ended September 29, 2001

| | 1-12381 | 
| | ------- | 

| | Commission File Number | 
| | ---------------------- | 

| | Linens n Things, Inc. | 
| | ---------------------- | 

| | (Exact Name of Registrant as Specified in Charter) | 
| | -------------------------------------------------- | 

|Delaware |  | 22-3463939
|-------- |  | ----------

|(State or Other Jurisdiction of Incorporation) |  | (I.R.S. Employer Identification Number)
|---------------------------------------------- |  | ---------------------------------------

|6 Brighton Road, Clifton, New Jersey | 07015 | 
|------------------------------------ | ----- | 

|(Address of Principal Executive Offices) | (Zip Code) | 
|---------------------------------------- | ---------- | 

|Registrant's telphone number, including area code | (973) 778-1300 | 
|------------------------------------------------- | -------------- | 

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

|Yes      X
          No ____ | 
|---------------------------- | 

Number of shares outstanding of
the issuer's Common Stock:

|Class |  | Outstanding at November 6, 2001
|----- |  | -------------------------------

|Common Stock, $0.01 par value |  | 40,617,437
|----------------------------- |  | ----------

# INDEX

|Part I. | Financial Information
|------- | ---------------------

| | Item 1. | Financial Statements
| | ------- | --------------------

| |  | Consolidated Statements of Operations for the
          
Thirteen and Thirty-Nine Weekds Ended September 29, 2001
          
(unaudited) and September 30, 2000 (unaudited) | 3
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -

| |  | Consolidated Balance Sheets as of September 29, 2001
          
(unaudited), December 30, 2000 and September 30, 2000
          
(unaudited) | 4
| |  | -------------------------------------------------------------------------------------------------------------------------------------------- | -

| |  | Consolidated Statements of Cash Flows for the
          
Thirty-Nine Weeks Ended September 29, 2001
          
(unaudited) and September 30, 2000 (unaudited) | 5
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | -

| |  | Notes to Consolidated Financial Statements | 6-8
| |  | ------------------------------------------ | ---

| |  | Independent Auditors' Review Report | 9
| |  | ----------------------------------- | -

| | Item 2. | Management's Discussion and Analysis of
     Financial Condition and Results of Operations | 10-13
| | ------- | ------------------------------------------------------------------------------------------ | -----

| | Item 3. | Quantitative and Qualitative Disclosures about Market Risk | 13-14
| | ------- | ---------------------------------------------------------- | -----

|Part II. | Other Information
|-------- | -----------------

| | Item 1. | Legal Proceedings | 14
| | ------- | ----------------- | --

| | Item 6. | Exhibits and Reports on Form 8-K | 14
| | ------- | -------------------------------- | --

| |  | (a)  Exhibit Index | 14
| |  | ------------------ | --

| |  | (b)  Reports on  Form 8-K | 14
| |  | ------------------------- | --

2

# PART I - FINANCIAL INFORMATION

Item 1.  
Financial Statements

`LINENS N THINGS, INC. AND SUBSIDIARIES
                                               CONSOLIDATED STATEMENTS OF OPERATIONS
                                              (in thousands, except per share amounts)
                                                            (Unaudited)

                                                Thirteen Weeks Ended                   Thirty-Nine Weeks Ended
                                           ----------------------------------    ------------------------------------
                                           September 29,       September 30,       September 29,       September 30,
                                                2001                 2000               2001                2000
                                           --------------     ---------------    ----------------    ----------------

Net sales                                      $ 468,944           $ 410,371          $1,235,904          $1,077,002

Cost of sales, including buying and
 warehousing costs                               278,710             244,285             732,807             642,932
                                           --------------     ---------------    ----------------    ----------------

Gross profit                                     190,234             166,086             503,097             434,070

Selling, general and administrative
 expenses                                        165,398             135,576             461,495             383,546

Litigation provision                                   -                   -               4,000                   -
                                           --------------     ---------------    ----------------    ----------------
Operating profit                                  24,836              30,510              37,602              50,524

   Interest income                                     -                   -                (26)               (167)
   Interest expense                                1,045                 663               2,828               1,390
                                           --------------     ---------------    ----------------    ----------------
Interest expense, net                              1,045                 663               2,802               1,223
                                           --------------     ---------------    ----------------    ----------------

Income before provision for income taxes          23,791              29,847              34,800              49,301

Provision for income taxes                         9,086              11,441              13,293              18,893
                                           --------------     ---------------    ----------------    ----------------
Net income                                      $ 14,705            $ 18,406            $ 21,507           $ 30,408
                                           ==============    ================    ================    ===============
Per share of common stock:

Basic
-----
   Net income per share                            $0.36               $0.46               $0.53              $0.77

   Weighted average shares outstanding            40,555              39,965              40,471             39,706

Diluted
-------
   Net income per share                            $0.36               $0.45               $0.52              $0.75

   Weighted average shares outstanding            41,099              40,811              41,232             40,616`

See accompanying
notes to consolidated financial statements.

3

`LINENS N THINGS, INC. AND SUBSIDIARIES
                                                    CONSOLIDATED BALANCE SHEETS
                                                (in thousands, except share amounts)

                                                                     September 29,         December 30,         September 30,
                                                                         2001                  2000                 2000
                                                                   ------------------    -----------------    ------------------
                                                                      (Unaudited)                                (Unaudited)
Assets
    Current assets:
      Cash and cash equivalents                                            $   8,633            $  38,524             $   6,039
      Accounts receivable, net                                                38,371               31,508                26,489
      Inventories                                                            561,504              437,258               475,224
      Prepaid expenses and other current assets                               34,103               25,360                23,816
                                                                   ------------------    -----------------    ------------------
    Total current assets                                                     642,611              532,650               531,568

    Property and equipment, net                                              310,962              262,409               260,990
    Goodwill, net                                                             18,339               18,977                19,189
    Deferred charges and other noncurrent assets, net                          9,298                7,521                 6,898
                                                                   ------------------    -----------------    ------------------

Total assets                                                               $ 981,210           $  821,557             $ 818,645
                                                                   ==================    =================    ==================

Liabilities and Shareholders Equity
    Current liabilities:
      Accounts payable                                                     $ 227,626           $  183,473             $ 216,987
      Accrued expenses and other current liabilities                         120,501              118,580               109,800
      Short-term borrowings                                                   76,611                3,903                15,100
                                                                   ------------------    -----------------    ------------------
    Total current liabilities                                                424,738              305,956               341,887

     Deferred income taxes and other long-term liabilities                    66,782               56,607                54,518

    Shareholders equity:
      Preferred stock, $0.01 par value; 1,000,000 shares
             authorized; none issued and outstanding                              --                  --                     --

    Common stock, $0.01 par value; 135,000,000
      shares authorized; 40,848,324 shares issued
      and 40,604,655 shares outstanding at
      September 29, 2001; 40,173,441 shares issued
      and 40,059,126 shares outstanding at December 30,
      2000; 40,074,906 shares issued and
      39,968,429 shares outstanding at September 30, 2000                        408                  402                   401

    Additional paid-in capital                                               244,791             231,547                229,738
    Retained earnings                                                        251,693             230,186                195,657
    Accumulated other comprehensive (loss) income                               (335)                289                   (308)
    Treasury stock, at cost, 243,669 shares at
       September 29, 2001; 114,315 shares at
       December 30, 2000; and 106,477 shares at
       September 30, 2000                                                     (6,867)             (3,430)                (3,248)
                                                                   ------------------    -----------------    ------------------
    Total shareholders equity                                               489,690             458,994                422,240
                                                                   ------------------    -----------------    ------------------

Total liabilities and shareholders equity                                 $ 981,210           $ 821,557              $ 818,645
                                                                   ==================    =================    ==================`

See accompanying
notes to consolidated financial statements.

4

`LINENS N THINGS, INC. AND SUBSIDIARIES
                                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                           (in thousands)


                                                                          Thirty-Nine Weeks Ended
                                                                  -----------------------------------------
                                                                    September 29,            September 30,
                                                                          2001                   2000
                                                                  -------------------    ------------------
                                                                                 (Unaudited)
Cash flows from operating activities:
-------------------------------------

Net income                                                                 $  21,507             $  30,408
   Adjustments to reconcile net income to net
     cash (used in) provided by operating activities:
     Depreciation and amortization                                            29,233                23,800
     Deferred income taxes                                                     4,561                 2,524
     Loss on disposal of assets                                                  841                   791
     Federal tax benefit from common stock
       exercised under stock incentive plans                                   3,650                 2,776
     Changes in assets and liabilities:
       Increase in accounts receivable, net                                   (6,888)               (5,654)
       Increase in inventories                                              (125,018)             (132,638)
       (Increase) decrease in prepaid expenses and
            other current assets                                              (7,663)                   40
       Increase in deferred charges                                           (2,136)               (1,680)
       Increase in accounts payable                                           44,318                72,143
       Increase in accrued expenses and other liabilities                      6,477                 8,305
                                                                  -------------------    ------------------
   Net cash (used in) provided by operating activities                       (31,118)                  815
                                                                  -------------------    ------------------
Cash flows from investing activities:
-------------------------------------

   Additions to property and equipment                                       (77,994)              (61,002)
                                                                  -------------------    ------------------
Cash flows from financing activities:
-------------------------------------

   Proceeds from stock options exercised under
      stock incentive plans                                                    9,600                 6,216
   Purchase of treasury stock                                                 (3,437)                 (814)
   Increase in short-term borrowings                                          73,052                15,100
                                                                  -------------------    ------------------
   Net cash provided by financing activities                                  79,215                20,502
                                                                  -------------------    ------------------
   Effect of exchange rate changes on cash and cash
     equivalents                                                                   6                   (27)
                                                                  -------------------    ------------------
   Net decrease in cash and cash equivalents                                 (29,891)              (39,712)
   Cash and cash equivalents at beginning of year                             38,524                45,751
                                                                  -------------------    ------------------
Cash and cash equivalents at end of period                                  $  8,633              $  6,039
------------------------------------------                        ===================    ==================`

See accompanying
notes to consolidated financial statements.

5

# LINENS N THINGS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Basis of Presentation

The accompanying
consolidated financial statements, except for the December 30, 2000 consolidated
balance sheet, are unaudited. In the opinion of management, the accompanying
consolidated financial statements contain all adjustments (consisting of only
normal recurring accruals) necessary to present fairly the financial position of
the Company as of September 29, 2001 and the results of operations for the
respective thirteen and thirty-nine weeks then ended and cash flows for the
thirty-nine weeks then ended. Because of the seasonality of the specialty
retailing business, operating results of the Company on a quarterly basis may
not be indicative of operating results for the full year.

These consolidated
financial statements should be read in conjunction with the Companys
audited consolidated financial statements for the year ended December 30, 2000,
included in the Companys Annual Report on Form 10-K filed with the
Securities and Exchange Commission. All significant intercompany accounts and
transactions have been eliminated.

The December 30, 2000
consolidated balance sheet amounts have been derived from the Companys
audited consolidated balance sheet amounts.

2.  Earnings Per Share

The calculation of basic and diluted
 earnings per share ("EPS") is as follows:

`Periods ended September 29, 2001
                                                                           (in thousands, except EPS)
                                                                                   (Unaudited)
                                                       Thirteen week period                          Thirty-nine week period
                                             --------------------------------------------    -------------------------------------------
                                              Income          Shares           EPS            Income          Shares           EPS
                                             ------------    ------------    ------------    -------------    -----------     ----------
Basic                                         $14,705          40,555           $0.36          $21,507         40,471          $0.53

Effect of outstanding stock
   options and deferred stock grants               --             544                               --            761
                                             ------------    ------------    ------------    -------------    -----------     ----------
Diluted                                       $14,705          41,099           $0.36          $21,507         41,232          $0.52
                                             ============    ============    ============    =============    ===========     ==========

                                                                        Periods ended September 30, 2000
                                                                           (in thousands, except EPS)
                                                                                   (Unaudited)
                                                       Thirteen week period                          Thirty-nine week period
                                             --------------------------------------------    -------------------------------------------
                                              Income          Shares           EPS            Income          Shares           EPS
                                             ------------    ------------    ------------    -------------    -----------     ----------
Basic                                         $18,406          39,965           $0.46          $30,408         39,706          $0.77

Effect of outstanding stock options
   and deferred stock grants                       --             846                               --            910
                                             ------------    ------------    ------------    -------------    -----------     ----------
Diluted                                       $18,406          40,811           $0.45          $30,408         40,616          $0.75
                                             ============    ============    ============    =============    ===========     ==========`

Options for which the
exercise price was greater than the average market price of common shares for
the period ended September 29, 2001 and September 30, 2000 were not included in
the computation of diluted earnings per share. These consisted of options
totaling 1,592,000 shares and 1,479,000 shares for the thirteen weeks and
1,433,000 shares and 1,600,000 shares for the thirty-nine weeks ended September
29, 2001 and September 30, 2000, respectively. Deferred stock grants excluded in
the computation of diluted earnings per share due to the application of the
treasury stock method totaled 23,000 shares and 13,000 shares for the thirteen
weeks and 17,00 shares and 20,000 shares for the thirty-nine weeks ended
September 29, 2001 and September 30, 2000, respectively.

6

3.  Short-Term Borrowing Arrangements

The Company has available a
three-year, $150 million senior revolving credit facility agreement (the
Credit Agreement) with third party institutional lenders expiring
October 20, 2003. The Credit Agreement also allows for up to $40 million of
borrowings from uncommitted lines of credit outside of the Credit Agreement.
Interest on all borrowings is based upon several alternative rates as stipulated
in the Credit Agreement, including a fixed rate plus LIBOR based rate. The
Credit Agreement contains certain financial covenants, including those relating
to the maintenance of a minimum tangible net worth, a minimum fixed charge
coverage ratio, and a maximum leverage ratio. As of September 29, 2001, the
Company was in compliance with its covenants under the Credit Agreement. In
addition, the Credit Agreement contains a covenant that limits the amount of
cash dividends. According to this covenant, the amount of dividends shall not
exceed the sum of $50 million plus on a cumulative basis an amount equal to 50%
of the consolidated net income for each fiscal quarter, commencing with the
fiscal quarter ending September 30, 2000. The Company has never made any
dividend payments. As of September 29, 2001, the Company had $58.5 million in
borrowings under the Credit Agreement and $18.1 million in borrowings against
the uncommitted lines of credit at a weighted average interest rate of 4.2%. The
Company also had $23.9 million of letters of credit outstanding as of September
29, 2001, which were primarily used for merchandise purchases.

4.  Comprehensive Income

Comprehensive income for
the thirteen weeks and thirty-nine weeks ended September 29, 2001 and September
30, 2000 is as follows:

`Thirteen Weeks Ended                        Thirty-nine Weeks Ended
                                               September 29,        September 30,           September 29,        September 30,
                                                    2001                 2000                    2001                 2000
                                              -------------------- --------------------    -------------------- ------------------
Comprehensive Income:
Net Income                                             $14,705              $18,406                 $21,507              $30,408
Other comprehensive loss--
    Foreign currency translation adjustment               (243)                (142)                   (624)                (308)
                                              -------------------- --------------------    -------------------- ------------------
Comprehensive income                                   $14,462              $18,264                 $20,883              $30,100
                                              ==================== ====================    ==================== ==================`

5.  Recent Accounting Pronouncements

The Company has adopted  Statement of Financial  Standards  (SFAS) No. 133  Accounting
for Derivative  Instruments and Hedging
Activities  (SFAS No. 133).  This statement was effective the first quarter of fiscal years  beginning after June 15, 2000. For
the Company,  implementation  was required for the first quarter of fiscal 2001. The Company has determined the  implementation of
SFAS No. 133 did not have a significant effect on its results of operations or financial position.

At a recent FASB Emerging
Issues Task Force (EITF) meeting, a consensus was reached with
respect to the issue of Accounting for Certain Sales Incentives,
including point of sale coupons, rebates and free merchandise. The consensus
included a conclusion that the value of such sales incentives that result in a
reduction of the price paid by the customer should be netted against sales and
not classified as a sales or marketing expense. In April 2001, the EITF delayed
the effective date for this consensus to 2002. The Company already includes such
sales incentives against sales and records free merchandise in cost of goods
sold as required by the new EITF consensus.

In July 2001, the FASB issued SFAS No. 141,  Business  Combinations  (SFAS No. 141),  which
supercedes  Accounting  Principles Board (APB) Opinion No. 16, Business  Combinations.
SFAS No. 141 eliminates the  pooling-of-interests  method of accounting for
business  combinations  and modifies the  application  of the purchase  method.  The  provisions  of
this  statement  apply to all business  combinations  initiated  after June 30, 2001.
The Company has determined  that the  implementation  of SFAS No. 141 will
impact only future acquisitions, if any.

7

In July 2001, the FASB issued SFAS No. 142,
Goodwill and Intangible  Assets (SFAS No. 142),  which supercedes APB Opinion No.
17,  Intangible  Assets.  SFAS No. 142  eliminated  the current  requirement  to
amortize  goodwill and  intangible  assets with indefinite  useful lives,  addresses the  amortization
of intangible  assets with finite useful lives and addresses the impairment
testing and  recognition  for goodwill and intangible  assets.  SFAS No. 142 is required for fiscal years
beginning after December 15, 2001.  The Company is currently  assessing  SFAS No.142 and has not yet
determined  its impact to the Companys  consolidated financial statements.

6.  Litigation

The Company was named as a
defendant in California litigation in which the court certified the case as a
class action on behalf of certain managers of Company stores located in
California seeking overtime pay and former employees seeking accrued vacation
pay. On October 24, 2001, the court gave preliminary approval to the settlement
that had been reached in the case. The Company has admitted no liability in
connection with this settlement. In the second quarter of fiscal 2001, the
Company had recorded a charge of $4.0 million related to the payments,
attorneys fees, and expenses of implementing the settlement.

7.  Reclassification

Certain  reclassifications  were
made to the fiscal 2000 consolidated financial statements in order to conform to the fiscal year
2001 presentation.

8

Independent Auditors' Review Report



The Board of Directors and Shareholders
Linens n Things, Inc.:

We have reviewed the
consolidated balance sheets of Linens n Things, Inc. and subsidiaries as
of September 29, 2001 and September 30, 2000, and the related consolidated
statements of operations for the thirteen and thirty-nine week periods then
ended and the related consolidated statements of cash flows for the thirty-nine
week periods ended September 29, 2001 and September 30, 2000. These consolidated
financial statements are the responsibility of the Companys management.

We conducted our review in
accordance with standards established by the American Institute of Certified
Public Accountants. A review of interim financial information consists
principally of applying analytical review procedures to financial data and
making inquiries of persons responsible for financial and accounting matters. It
is substantially less in scope than an audit conducted in accordance with
auditing standards generally accepted in the United States of America, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are
not aware of any material modifications that should be made to the consolidated
financial statements referred to above for them to be in conformity with
accounting principles generally accepted in the United States of America.

We have previously audited,
in accordance with auditing standards generally accepted in the United States of
America, the consolidated balance sheet of Linens n Things, Inc. and
subsidiaries as of December 30, 2000 and the related consolidated statements of
operations, shareholders equity, and cash flows for the year then ended
(not presented herein); and in our report dated January 31, 2001 we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet as of
December 30, 2000, is fairly presented, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.

New York, New York
October 17, 2001

9

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

# LINENS N THINGS, INC. AND
SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion
and analysis should be read in conjunction with the consolidated financial
statements of the Company and the notes thereto appearing elsewhere in this
document.

Results of Operations

Thirteen Weeks Ended September 29, 2001 Compared
 with Thirteen Weeks Ended September 30, 2000

Net sales increased 14.3%
to $468.9 million for the thirteen weeks ended September 29, 2001, up from
$410.4 million for the same period in 2000, primarily as a result of new store
openings since September 30, 2000. Comparable store net sales for the thirteen
weeks ended September 29, 2001 declined 4.8% as compared with an increase of
4.0% for the same period last year. The decline in comparable store net sales in
the third quarter of fiscal 2001 can be primarily attributed to a decline in
consumer traffic due to the slowing economy and the impact from the terrorist
attacks of September 11, 2001 through the end of the quarter.

During the thirteen weeks
ended September 29, 2001, the Company opened 25 stores, compared with opening 23
stores during the same period last year. At September 29, 2001, the Company
operated 329 stores, compared with 267 stores, at September 30, 2000. Store
square footage increased 24.1% to 11,485,000 at September 29, 2001 compared with
9,255,000 at September 30, 2000.

In addition to the cost of
inventory sold, the Company includes its buying and distribution expenses in its
cost of sales. Buying expenses include all direct and indirect costs to procure
merchandise. Distribution expenses include the cost of operating the
Companys distribution centers and freight expense related to transporting
merchandise. Gross profit for the thirteen weeks ended September 29, 2001 was
$190.2 million or 40.6% of net sales, compared with $166.1 million or 40.5% of
net sales, for the same period last year. The increase in gross profit as a
percent of net sales was primarily due to improved mark-on as a result of
product mix and the increased penetration of the Companys proprietary
product. In addition, freight expense as a percentage of net sales declined from
the prior year as a result of a reduction in the volume of inventory receipts in
response to sales trends.

The Companys selling,
general and administrative (SG&A) expenses consist of store
selling expenses, occupancy costs, advertising expenses and corporate office
expenses. SG&A expenses for the thirteen weeks ended September 29, 2001 were
$165.4 million, or 35.3% of net sales, compared with $135.6 million, or 33.0% of
net sales, for the same period last year. The Company experienced de-leveraging
in its operating expenses, primarily occupancy costs, reflecting decreased sales
volume. However, this increase was partially offset by the leverage of corporate
office expenses.

Operating profit for the
thirteen weeks ended September 29, 2001 was $24.8 million, or 5.3% of net sales,
compared with $30.5 million, or 7.4% of net sales, for the same period last
year.

The Company incurred net
interest expense of $1.0 million (including amortization of commitment fees in
connection with the Companys $150 million credit agreement) for the
thirteen weeks ended September 29, 2001, compared with $0.7 million for the same
period in fiscal 2000. The higher interest expense is primarily due to an
increase in short-term borrowings to fund the Companys operations.

The Companys income
tax expense for the thirteen weeks ended September 29, 2001 was $9.1 million as
compared with $11.4 million for the same period last year. The Companys
effective tax rate was 38.2% for the thirteen weeks ending September 29, 2001 as
compared with 38.3% for the same period in fiscal 2000.

10

# LINENS N THINGS, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

As a result of the factors
described above, net income for the thirteen weeks ended September 29, 2001 was
$14.7 million, or $0.36 per share on a fully diluted basis, compared with $18.4
million, or $0.45 per share on a fully diluted basis, for the same period last
year.

Thirty-Nine Weeks Ended
September 29, 2001 Compared with Thirty-Nine Weeks Ended September 30, 2000

Net sales increased 14.8%
to $1,235.9 million for the thirty-nine weeks ended September 29, 2001, up from
$1,077.0 million for the same period in 2000, primarily as a result of new store
openings since September 30, 2000. Comparable store net sales for the
thirty-nine weeks ended September 29, 2001 declined 3.5% as compared with an
increase of 4.3% for the same period last year. The decline in comparable store
net sales can be primarily attributed to a decline in consumer traffic as a
result of the slowing economy.

During the thirty-nine
weeks ended September 29, 2001, the Company opened 48 stores and closed two
stores, compared with opening 40 stores and closing three stores during the same
period last year.

Gross profit for the
thirty-nine weeks ended September 29, 2001 was $503.1 million, or 40.7% of net
sales, compared with $434.1 million, or 40.3% of net sales, for the same period
last year. The increase in gross profit as a percentage of net sales was
principally due to improved mark-on as a result of product mix and the increased
penetration of the Companys proprietary product. In addition, freight
expense as a percentage of net sales declined from the prior year as a result of
a reduction in the volume of inventory receipts in response to sales trends.

SG&A expenses for the
thirty-nine weeks ended September 29, 2001 were $461.5 million, or 37.3% of net
sales, compared with $383.5 million, or 35.6% of net sales, for the same period
last year. This increase as a percentage of net sales is attributable to the
de-leveraging in the Companys operating expenses primarily occupancy
costs, reflecting decreased sales volume. However, the increase was partially
offset by the leverage of corporate office expenses.

The Company recorded a
charge of $4.0 million in the second quarter of fiscal 2001 in
connection with the claims arising in a class action lawsuit in California
regarding overtime pay for certain managers, as well as for accrued vacation pay
on behalf of certain former employees. On October 24, 2001, the court gave
preliminary approval to the settlement that had been reached in the case.

Operating profit for the
thirty-nine weeks ended September 29, 2001 was $37.6 million, or 3.0% of net
sales, compared with $50.5 million, or 4.7% of net sales, for the same period
last year.

The Company had net
interest expense of $2.8 million (including the amortization of commitment fees
in connection with the Companys $150 million credit agreement) for the
thirty-nine weeks ended September 29, 2001, compared with $1.2 million of net
interest expense for the same period in 2000. The higher interest expense is
primarily due to an increase in short-term borrowings to fund the Companys
operations.

The Companys income
tax expense for the thirty-nine weeks ended September 29, 2001 was $13.3 million
as compared with $18.9 million for the same period last year. The Companys
effective tax rate was 38.2% for the thirty-nine weeks ending September 29, 2001
compared to 38.3% for the same period last year.

As a result of the factors
described above, net income for the thirty-nine weeks ended September 29, 2001
was $21.5 million, or $0.52 per share on a fully diluted basis, compared with
$30.4 million, or $0.75 per share on a fully diluted basis, for the same period
last year.

11

# LINENS N THINGS, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSISOF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

---

Liquidity and Capital Resources

The Companys capital
requirements are primarily investments in new stores, new store inventory
purchases and seasonal working capital. These requirements are funded through a
combination of internally generated cash from operations, credit extended by
suppliers and short-term borrowings.

The Company has available a
$150 million senior revolving credit facility expiring October 20, 2003. This
agreement allows for up to $40 million in borrowings from uncommitted lines of
credit.

Net cash used in operating
activities for the thirty-nine weeks ended September 29, 2001 was $31.1 million
compared with net cash provided by operating activities of $0.8 million for the
same period last year. The net cash used in operating activities in fiscal 2001
was primarily attributed to the timing of vendor payments impacted by a slight
decline in inventory turn.

Net cash used in investing
activities during the thirty-nine weeks ended September 29, 2001 was $78.0
million compared with $61.0 million for the same period last year. The increase
in net cash used in investing activities was due to capital expenditures related
to incremental new stores opened and scheduled to open in fiscal 2001 compared
with the same period last year.

Net cash provided by
financing activities during the thirty-nine weeks ended September 29, 2001 was
$79.2 million compared with $20.5 million for the same period last year. The
increase in net cash provided by financing activities was primarily the result
of an increase in short-term borrowings to fund the Companys operations.

Management currently
believes that the Companys cash flows from operations, credit extended by
suppliers, the revolving credit facility and the uncommitted lines of credit
will be sufficient to fund currently anticipated capital expenditures and
working capital requirements in the foreseeable future.

12

# LINENS N THINGS, INC. AND SUBSIDIARIES
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Inflation

The Company does not
believe that its operating results have been materially affected by inflation
during the preceding three years. There can be no assurance, however, that the
Companys operating results will not be affected by inflation in the
future.

Seasonality

The Companys business
is subject to substantial seasonal variations. Historically, the Company has
realized a significant portion of its net sales and net income for the year
during the third and fourth quarters. The Companys quarterly results of
operations may also fluctuate significantly as a result of a variety of other
factors, including the timing of new store openings. The Company believes this
is the general pattern associated with its segment of the retail industry and
expects this pattern will continue in the future. Consequently, comparisons
between quarters are not necessarily meaningful and the results for any quarter
are not necessarily indicative of future results.

Forward-Looking Statements

The foregoing contains
forward-looking statements within the meaning of The Private Securities
Litigation Reform Act of 1995. The statements were made a number of times and
have been identified by such forward-looking terminology as expect,
believe, may, will, intend,
plan, target and similar statements or variations of
such terms. All of our outlook information constitutes
forward-looking information. All such forward-looking statements are based on
our current expectations, assumptions, estimates and projections about our
Company and involve certain significant risks and uncertainties including levels
of sales, store traffic, acceptance of product offerings and fashions, the
success of our new business concepts and seasonal concepts, the success of our
new store openings, competitive pressures from other home furnishings retailers,
the success of the Canadian expansion, availability of suitable future store
locations, schedule of store expansion, the impact of the bankruptcies and
consolidations in our industry, the impact on consumer confidence and consumer
spending as a result of acts of terrorism and war, and the impact of a slowing
consumer economy. These and other important factors that may cause actual
results to differ materially from such forward-looking statements are included
in the Risk Factors section of the Companys Registration
Statement on Form S-1 as filed with the Securities and Exchange Commission
on May 29, 1997, and may be contained in subsequent reports filed with the
Securities and Exchange Commission. You are urged to consider all such factors.
In light of the uncertainty inherent in such forward-looking statements, you
should not consider their inclusion to be a representation that such
forward-looking matters will be achieved. The Company assumes no obligation for
updating any such forward-looking statements to reflect actual results, changes
in assumptions or changes in other factors affecting such forward-looking
statements.

Item 3.  Quantitative and
Qualitative Disclosures About Market Risk.

Market risks relating to
the Companys operations result primarily from changes in interest rates
and foreign exchange rates. The Company does not engage in financial
transactions for trading or speculative purposes.

Interest Rate Risk

The Companys
financial instruments include cash and cash equivalents and short-term
borrowings. The Companys obligations are short-term in nature and
generally have less than a 30-day commitment. The Company is exposed to interest
rate risks primarily through borrowings under the Credit Agreement. Interest on
all borrowings is based upon several alternative rates as stipulated in the
Credit Agreement, including a fixed rate plus LIBOR based rate. The Company
believes that its interest rate risk is minimal as a hypothetical 10 percent
increase or decrease in interest rates in the associated debts variable
rate would not materially affect the Companys results from operations and
cash flows. The Company does not use derivative financial instruments in its
investment portfolio.

13

Foreign Currency Risk

The Company enters into
some purchase obligations outside of the United States, which are predominately
settled in U.S. dollars and therefore has only minimal exposure to foreign
currency exchange risks. The Company does not hedge against foreign currency
risks and believes that foreign currency exchange risk is immaterial.

In addition, the Company
operated nine stores in Canada as of September 29, 2001. The Company believes
its foreign currency translation risk is minimal, as a hypothetical 10%
strengthening or weakening of the U.S. dollar relative to the Canadian dollar
would not materially affect the Companys results from operations and cash
flow.

Since fiscal year end 2000,
there have been no material changes in market risk exposures.

Item 1.  Legal Proceedings -

The Company was named as a
defendant in California litigation in which the court certified the case as a
class action on behalf of certain managers of Company stores located in
California seeking overtime pay as well as certain former employees seeking accrued vacation
pay. On October 24, 2001, the court gave preliminary approval to the settlement
that had been reached in the case. The Company has admitted no liability in
connection with this settlement. In the second quarter of fiscal 2001, the
Company had recorded a charge of $4.0 million related to the payments,
attorneys fees, and expenses of implementing the settlement.

Item 6.  Exhibits and Reports on Form 8-K

(a)     EXHIBIT INDEX

Exhibit
        Number        
Description

10.17        Increase Supplement

15        Letter re unaudited interim financial information


(b)     
Reports on Form 8-K:

The Company filed a
Current Report on Form 8-K dated August 10, 2001, concerning an employment agreement with a certain
executive officer of the Company.

14

SIGNATURE

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.LINENS N THINGS, INC.
(Registrant)WILLIAM T. GILESBy:_________________________________William T. Giles
       Senior Vice President,
         Chief Financial Officer
         (Duly authorized officer and
         principal financial officer)Date:
November 13, 200115