EAGLE FOOD CENTERS INC, 10-K, 1996-04-26

EAGLE FOOD CENTERS INC
10-K, 1996-04-26
GROCERY STORES

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<PAGE> 1

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K

[x] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended February 3, 1996 or

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______________ to
________________.

Commission File No. 0-17871

EAGLE FOOD CENTERS, INC.

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware 36-3548019
- ------------------------------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

ROUTE. 67 & KNOXVILLE ROAD, MILAN, ILLINOIS 61264
(Address of principal executive offices)

Registrant's telephone number including area code (309) 787-7700
---------------

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
-----

The aggregate market value of the voting stock held by non-affiliates of the
Registrant was $10,322,488 as of April 8, 1996.

The number of shares of the Registrant's Common Stock, par value one cent
$(0.01) per share, outstanding on April 8, 1996 was 10,853,894.

Documents incorporated by reference include:
1) Portions of the definitive Proxy Statement expected to be
filed with the Commission on or before May 7, 1996 with
respect to the annual meeting of shareholders are incorporated
by reference into Part III.

1 of 59 Pages
Exhibit Index appears on page 45
<PAGE> 2
FISCAL YEAR ENDED FEBRUARY 3, 1996
FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

PART I

<TABLE>
<S> <C> <C>
Item 1 Business................................................................................. 3

Item 2 Properties............................................................................... 10

Item 3 Legal Proceedings........................................................................ 11

Item 4 Submission of Matters to a Vote of Security Holders...................................... 11

Item 4a Executive Officers of the Registrant..................................................... 12
</TABLE>

PART II

<TABLE>
<S> <C> <C>
Item 5 Market for the Registrant's Common Equity and Related Shareholder
Matters.................................................................................. 14

Item 6 Selected Financial Data.................................................................. 15

Item 7 Management's Discussion and Analysis of Financial Condition and Results
of Operations............................................................................ 16

Item 8 Financial Statements and Supplementary Data.............................................. 23

Item 9 Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................................ 41
</TABLE>

PART III

<TABLE>
<S> <C> <C>
Item 10 Directors and Executive Officers of the Registrant....................................... 42

Item 11 Executive Compensation................................................................... 42

Item 12 Security Ownership of Certain Beneficial Owners and Management........ 42

Item 13 Certain Relationships and Related Transactions........................................... 42
</TABLE>

PART IV

<TABLE>
<S> <C> <C>
Item 14 Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................... 43
</TABLE>

<PAGE> 3
PART I

ITEM 1: BUSINESS

GENERAL

Eagle Food Centers, Inc. (the "Company" or "Eagle"), is a Delaware
Corporation. It is a leading regional supermarket chain which owns and
operates 92 supermarkets in the Quad Cities area of Illinois and Iowa, north,
central and eastern Illinois, eastern Iowa, and the Chicago/Fox Valley and
northwestern Indiana area under the trade names "Eagle Food Centers", "Eagle
Country Markets(R)", "Eagle Country Warehouse", and "BOGO's." Eagle
supermarkets offer a full line of groceries, meats, fresh produce, dairy
products, delicatessen and bakery products, health and beauty aids and other
general merchandise, as well as video rental and floral service.

The Company's fiscal year ends on the Saturday closest to January
31st. Fiscal 1995 was a 53-week year, fiscal 1994 and fiscal 1993 were 52-week
years ended February 3, 1996, January 28, 1995, and January 29, 1994,
respectively.

In fiscal 1994 the Company formed a captive insurance company, Talon
Insurance Company ("Talon") in the State of Vermont to provide insurance for
its workers compensation and general liability claims. Talon is a wholly-owned
subsidiary of Eagle Food Centers, Inc. Prior to the formation of Talon, Eagle
used paid loss and retro programs through external insurance companies.

STORE DEVELOPMENT AND EXPANSION

Eagle currently operates stores in the four general formats discussed
below.

EAGLE COUNTRY MARKETS use a unique decor presentation in a supermarket
format introduced by management in 1991. Since that time, eight new Eagle
Country Market stores have been opened and 59 Eagle Food Centers have been
remodeled, for a total of 67 stores with the Eagle Country Market decor.
Management initiated this repositioning program to distinguish its retail
presentation from that of its competitors. The first Eagle Country Market
store was selected by Chain Store Age Executive as its "1991 Retail Store of
the Year." The Eagle Country Market format includes flooring designed to
resemble wooden slats, old-fashioned street lamps, country artifacts and wood
display tables. Displays and department presentations give the impression of
having entered a turn-of-the-century main street in a midwestern country town.
A small sign beneath the Eagle Country Market banner says "since 1893," a
reference to how long Eagle, through its predecessors, has been in business and
a further reinforcement of the store's "country image." In the new stores,
extra space has been devoted to expanded perishable departments, tying together
produce, full-service delicatessen, service bakery, service seafood and meat
departments, and, in certain stores, floral and video rental departments. All
newly-built Eagle Country Markets are designed to encourage shoppers to walk
through the higher margin "Power Aisle," which includes extensive perishable
offerings. Eagle Country Markets tend to be larger stores ranging from 38,000
square feet to 56,000 square feet for new stores. The pricing strategy in the
Eagle Country Markets is the same as in Eagle Food Centers--namely, to offer
overall lower prices than comparable supermarket competition.

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EAGLE COUNTRY WAREHOUSE, an extension of the Eagle Country Market
concept, was introduced in 1992 to capitalize on an expanding high volume,
lower price market niche. The Company currently has seven such warehouse-type
stores in operation. These 53,000 square foot or larger stores contain the
full complement of perishable and specialty departments and are currently
located in metropolitan areas where the Company believes it can capitalize on
popular demand for the warehouse shopping experience while providing a greater
variety of perishables and more customer services than a traditional warehouse
store.

EAGLE FOOD CENTERS use a traditional supermarket format ranging in size
from 16,500 square feet to 42,000 square feet. The Company currently has
seventeen stores operating under this format. These stores offer a full range
of groceries, meats, fresh produce, dairy products, delicatessen and bakery
products, health and beauty aids and other general merchandise and many stores
offer video rental and floral departments as well. Eagle Food Centers offer
overall low prices while providing high quality products and a service-oriented
shopping experience.

BOGO'S FOOD AND DEALS uses a limited assortment format covering
approximately 2,000 stock-keeping units of groceries, produce, meat, health and
beauty aids, and general merchandise. The purpose of this store is to take
advantage of consumer demand for deep discount stores in less densely populated
markets. The Company currently operates one BOGO's store opened in a previous
Eagle Food Center location. BOGO's operates on three pricing themes: BOGO (buy
one-get one free), advertised item, and BOGO everyday low price.

Management intends to build its future store development strategy
around the Eagle Country Market supermarket format. As part of its store
development program, management continuously reviews the performance of all its
stores and expects to implement a variety of strategies, including converting
or modifying certain store formats as well as selling, subleasing or closing
underperforming stores.

The Company has undertaken a store development program to identify
markets for new stores and obtain the best potential new store locations
available in any target market. In this effort, it has contracted with
Oakridge Properties, Ltd. to manage and direct its real estate activities,
including the identification and acquisition of new store sites and disposal of
closed or underproductive facilities. Management intends to focus the
Company's new store development within existing markets or new markets within
200 miles of its central distribution facility in Milan, Illinois where the
utilization of existing distribution, marketing and support systems is
advantageous to its cost structure. Within these markets, the Company expects
to select sites for its stores based upon factors such as existing competition,
demographic composition and available locations. The Company prefers to lease
stores from local developers and pursues this strategy wherever appropriate and
cost-effective. Developers have encountered difficulty in obtaining financing
in the recent past, and as a result it has been necessary for the Company to
purchase land and build stores itself. The Company completed two
sale/leaseback transactions in fiscal 1995 for five existing locations in order
to reduce the amount of capital committed to real estate.

STORE OPERATIONS

The Company's geographic market is divided into three areas, each
having an Area Vice President of Operations who is responsible for
approximately thirty stores. Areas and stores

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operate with a certain degree of autonomy to take advantage of local market and
consumer needs. Areas and stores are responsible for store operations,
associate recruitment and development, community affairs and other functions
relating to local operations.

Store managers are given relatively broad discretion in tailoring
merchandise and services to the needs of customers in the particular community.
Associate involvement and participation has been encouraged through meetings
with the President, district advisory boards and store management team
incentive bonus programs for sales and earnings improvement.

COMPUTER AND INFORMATION SYSTEMS

In February 1996, the Company signed a long-term contract with SHL
Systemhouse, Inc. to assume complete responsibility for Eagle's MIS
organization as a result of which the Company outsourced the data center
operations, legacy applications and network systems management.

Management uses technology as a means of enhancing productivity,
controlling costs, providing an easier shopping experience for customers and
learning more about shoppers' buying habits. The Company owns a royalty-free
license from its former parent, Lucky Stores, Inc. to use or modify all
computer software programs used for information processing, including the
merchandising information system which links the Company's head office, its
central distribution facility and individual stores. This system facilitates
purchasing and receiving, inventory management, warehouse reordering, accounts
payable and store point-of-sale processing and also evaluates sales and
purchasing trends, economical order size, delivery lead times and other
factors.

In order to perform time and attendance reporting, labor scheduling,
store order entry, and shelf label printing applications, the Company has
installed IBM AS-400 computers in each store. The AS-400 systems were upgraded
in 1994 to provide increased capacity to add additional applications such as
direct store delivery, receiving and scale management. The Company utilizes
IBM 4680 generation equipment for its point-of-sale systems. The systems
provide the ability to offer electronic couponing and a platform for the Eagle
Savers' Card, a customer-specific identification card designed to facilitate
targeted marketing and frequent shopper programs. In April 1994, the Company
installed an AT&T Unix processor together with data base marketing software to
store and analyze customer-specific shopping data. This system greatly
enhances the value of the Eagle Savers' Card.

The Company introduced the Eagle Savers' Card program in January 1994.
The Eagle Savers' Card program is a frequent shopper program that offers
customers discounts on specific products and participation in programs offering
rebates based upon the level of spending during a specified period.
Customer-specific spending data is stored in a central data base that is used
to target market to customers to reward loyalty and increase spending.
Currently over 80% of customer sales volume is captured by this system and the
customer identification rate is over 60%.

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MERCHANDISING STRATEGY

Eagle's strategy is to strengthen its perception as a price leader
compared to other supermarket competitors and to strengthen its image as a high
quality, service-oriented supermarket chain and provider of high quality
perishables. The Company strives to offer its customers one-stop shopping
convenience and price value for all of their food shopping needs.

CUSTOMER SERVICE

Eagle delivers a wide variety of customer services. Most
stores provide customer services such as video rental, check cashing,
film processing, lottery ticket and money order sales, and UPS
shipping. All stores provide quick, friendly checkout service.
Management intends as part of its current strategy to further enhance
customer service through training of store associates.

SELECTION

A typical Eagle store carries over 23,000 items, including
food and general merchandise. The Company carries nationally
advertised brands, an extensive selection of top quality private label
products and a variety of generic products. All stores carry a full
line of dairy, frozen food, health and beauty aids and selected
general merchandise. In addition, most stores have service
delicatessens and bakeries and some stores provide additional
specialty departments such as ethnic food items, floral service,
seafood service, salad bars, beer, wine, liquor, and in-store banking
facilities.

PRIVATE LABEL

Private label sales are an important element in Eagle's
merchandising plan. The Company became a member of the Topco
Associates, Inc. buying organization in 1994 and has engaged Daymon
Associates, Inc. as its "private label broker." Eagle has a strong
penetration in many categories with its Lady Lee brand. In 1995 the
Company entered into an agreement with Topco to carry World Classics
premium private label products and in 1996 will be introducing the
Valu Time label for the low price private label niche.

PROMOTION

The Company's promotion and merchandising strategy focuses on
its image as a high-quality, service-oriented supermarket chain while
reinforcing its reputation for price leadership and high quality
perishables. Eagle has utilized the new Eagle Savers Card for several
continuity promotions and for electronic coupon discounts. Through
its store personnel, the Company takes an active interest in the
communities in which it operates. The Company also contributes funds,
products and services to local charities and civic groups.

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CONSUMER RESEARCH

The Company utilizes consumer research to track customer
attitudes and the market shares of the Company and its competitors.
The Company also has a continuous program of soliciting customer
opinions in all of its market areas through the use of in-store
customer comment cards. This data enables management to respond to
changing consumer needs, direct advertising to specific customer
perceptions and evaluate store services and product offerings.

ADVERTISING STRATEGY

The Company utilizes a broad range of print and broadcast advertising
in the markets it serves. In addition, the Company seeks co-op advertising
reimbursements from major vendors. The additional co-op advertising has
allowed the Company to broaden its exposure in various media.

The Company eliminated its in-house advertising department in 1993.
These services are now being purchased from third party providers. This
allowed the Company to take advantage of technological advances in layout,
desktop publishing and production more quickly than if the Company had
attempted to develop such technology internally.

PURCHASING AND DISTRIBUTION

The Company's stores are located an average of approximately 120 miles
from the Company's central distribution facility in Milan, Illinois. This
complex includes the Company's executive offices, warehouse, areas used for
receiving, shipping and trailer storage and a truck repair facility.

The Company supplies approximately 70% of its stores' inventory
requirements from its 935,332 square foot central distribution facility (which
includes approximately 189,072 square feet of refrigerated and freezer space).
The remaining 30% of the stores' inventory requirements are delivered direct to
the store. The Company's purchasing and distribution functions are managed
through its central merchandising system.

The Company's purchasing and distribution operations permit rapid
turnover at its central distribution facility, allowing its stores to offer
consistently fresh, high-quality dairy products, meats, produce, bakery items
and frozen foods. Also, centralized purchasing and distribution reduces the
Company's cost of merchandise and related transportation costs by allowing the
Company to take advantage of volume buying opportunities and manufacturers'
promotional discounts and allowances and by minimizing vendor distribution
costs. The Company engages in forward buying programs to take advantage of
temporary price discounts. Due to its proximity to Chicago and other major
markets, the Company is able to reduce transportation costs included in cost of
goods sold by "backhauling" merchandise to its Milan central distribution
facility.

7
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COMPETITION

The food retailing business is highly competitive. The Company is in
direct competition with national, regional and local chains as well as
independent supermarkets, warehouse stores, membership warehouse clubs,
supercenters, limited assortment stores, discount drug stores and convenience
stores. The Company also competes with local food stores, specialty food
stores (including bakeries, fish markets and butcher shops), restaurants and
fast food chains. The principal competitive factors include store location,
price, service, convenience, product quality and variety. The number and type
of competitors vary by location, and the Company's competitive position varies
according to the individual markets in which the Company does business. The
Company's principal competitors operate under the trade names of Jewel, Hy-Vee,
Dominicks, Kroger, Cub and Sam's. Management believes that the Company's
principal competitive advantages are its value perception, the attractive Eagle
Country Market store format, concentration in certain markets and expansion of
service and product offerings. The Company is at a competitive disadvantage to
some of its competitors due to having unionized associates.

A new format appeared in the Company's trade area in 1994 as five
Super KMart supercenters opened. One Wal- Mart Supercenter opened in fiscal
1995. Additional supercenter openings by KMart, Wal-Mart, Target and Meijer are
expected in the next several years. Not only does this format add new grocery
square footage to the market but it offers traditional grocery products at low
prices to attract customers to the location with the intent to draw them to the
general merchandise side of the store. These new competitors, who operate at a
significant cost advantage to supermarkets because of part time, non-union
employees, have announced aggressive expansion plans for the next few years.

TRADEMARKS, TRADE NAMES AND LICENSES

The Company uses various trademarks and service marks in its business,
the most important of which are the "Eagle Country Market(TM)", "5-Star
Meats(R)", "Lady Lee(R)", "Eagle Savers Card(TM)", and "Harvest Day(R)"
trademarks and the "Eagle(R)" and "Eagle Country Market(R)" service marks.
Each such trademark is federally registered or has an application for
registration pending. Pursuant to a trademark license agreement (the
"Trademark License Agreement") entered into with the Company's former parent,
Lucky Stores, Inc., the Company has been granted the royalty-free use of the
"5-Star Meats(R)", "Lady Lee(R)" and "Harvest Day(R)" trademarks until November
30, 2007. The Trademark License Agreement permits the Company to use the
licensed trademarks only in the states of Illinois, Indiana, Iowa, Michigan,
Ohio, Wisconsin, Kentucky and Minnesota. Lucky Stores, Inc. has agreed not to
grant to any other person the right to use such trademarks in the states of
Illinois, Indiana and Iowa during the period of the license to the Company.

ASSOCIATES AND LABOR RELATIONS

At the end of fiscal 1995, the Company had 7,511 associates, 467 of
whom were management and administrative associates and 7,044 of whom were
hourly associates. Of the Company's hourly associates, substantially all are
represented by 19 separate locals which are associated with four international
unions. Store associates are represented by several locals of the United Food
and Commercial Workers; warehouse associates, warehouse and bakery drivers

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and office and clerical workers are represented by Teamsters Local 371; bakery
plant workers are represented by Bakery and Confectionery Workers Union Local
36; and bakery plant operating engineers are represented by Operating Engineers
Local 150. Ten contracts will expire in 1996 covering certain associates in
most of the Company's stores and the executive office clerical personnel.

The Company values its associates and believes that its relationship
with them is good. Several associate relations programs have been introduced,
including measures that allow associates to participate in store level
decisions, safety incentive programs, store and area level advisory boards and
store management team incentive bonus programs. In addition, the Company has an
associate stock purchase program and a scholarship program for associates'
children.

9
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ITEM 2: PROPERTIES

STORES

The Company currently operates 92 stores, ranging in size from 16,500
to 67,500 square feet, with an average size of 36,772 square feet. Fourteen of
the Company's stores are owned in fee by the Company. The Company is the
lessee or sublessee for the remaining 78 stores. The Company sold and leased
back five of its stores in fiscal 1995.

Selected statistics on Eagle retail food stores are presented below:

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------------
FEBRUARY 3, JANUARY 28, JANUARY 29,
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Average total sq. ft. per store . . . . . . . . . . . 36,772 36,770 35,520

Average total sq. ft. selling space per store . . . . 27,102 27,117 26,245

Stores beginning of year . . . . . . . . . . . . . . 96 102 108

Opened during year . . . . . . . . . . . . . . . . . 0 4 3
Major remodels(1) . . . . . . . . . . . . . . . . . . 3 2 13

Closed during year . . . . . . . . . . . . . . . . . 4 10 9
Stores end of year . . . . . . . . . . . . . . . . . 92 96 102

Size of stores at end of year:
Less than 25,000 sq. ft. . . . . . . . . . . . . . . 5 5 5

25,000 - 29,999 sq. ft. . . . . . . . . . . . . . . . 29 31 37
30,000 - 34,999 sq. ft. . . . . . . . . . . . . . . . 5 5 7

35,000 - 44,999 sq. ft. . . . . . . . . . . . . . . . 40 42 43

45,000 sq. ft. or greater . . . . . . . . . . . . . . 13 13 10

Type of stores:
Eagle Country Markets . . . . . . . . . . . . . . . . 67 67 70

Eagle Country Warehouses . . . . . . . . . . . . . . 7 7 4

Eagle Food Centers . . . . . . . . . . . . . . . . . 17 21 27
BOGO's Food and Deals . . . . . . . . . . . . . . . . 1 1 1
</TABLE>

(1) A remodeling project which costs $100,000 or more.

Eagle stores contain various specialty departments such as full
service delicatessen (89 stores), bakery (87 stores), floral (91 stores), video
rentals (52 stores), pharmacy (14 stores), seafood (27 stores), alcoholic
beverages (75 stores), Eagle Country Cafe (14 stores), and in-store banks (11
stores).

Most of the leases and subleases for the stores contain renewal
options for periods ranging from five to thirty years. The Company is required
to pay fixed rent and a percentage (ranging from 0.75% to 1.5%) of its gross
sales in excess of stated minimum gross sales

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amounts under 80 of the leases and subleases. The Company also has subleases
on approximately seventeen former store locations and has eleven vacant former
store properties with continuing rent obligations which the Company is
attempting to sublease. For additional information on leased premises, see
Note H in the notes to the Company's consolidated financial statements included
elsewhere in this document.

CENTRAL DISTRIBUTION AND BAKERY FACILITIES

The Company leases its central distribution facility under a lease
expiring in 2007. The Company's central distribution facility contains a total
of 935,332 square feet of space.

The Company's central bakery is a 49,000 square foot facility located
in Rock Island, Illinois, three miles from the central distribution facility.
The Company's lease for the bakery facility expires in 2001 and has two
five-year renewal options.

The Company is the sublessee of a distribution facility located in
Westville, Indiana which was closed in 1985. In 1988, the Company entered
into an agreement with a sub-sublessee under which the Company is recovering a
portion of its rent obligations for this facility. For more information, see
"Reserve for Closed Stores and Warehouse" in Notes B and D of the notes to the
Company's consolidated financial statements included elsewhere in this
document.

For the most part, store fixtures and equipment, leasehold
improvements and transportation and office equipment are owned by the Company.
The total cost of the Company's ownership of property and equipment is shown in
Note E of the notes to the Company's consolidated financial statements.

ITEM 3: LEGAL PROCEEDINGS

The legal proceedings between the Company and National NLP, Inc. have
been terminated. The court granted judgement in favor of Eagle on all issues.
The counter suit filed by NLP, Inc. claiming there was a contract was
dismissed.

The Company is subject to various unresolved legal actions which arise
in the normal course of its business. Although it is not possible to predict
with certainty the outcome of these unresolved legal actions or the range of
the possible loss, the Company believes these unresolved legal actions will not
have a material effect on its financial position or results of operations.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the
fourth quarter of fiscal 1995.

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ITEM 4A: EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information with respect to the
persons who are executive officers of the Company.

NAME AGE POSITION(S) HELD
- ---- --- ----------------
Robert J. Kelly(1) 51 Chief Executive Officer, President and Director
Herbert T. Dotterer 51 Senior Vice President-Finance and Administration,
Chief Financial Officer, Secretary and Director
David S. Norton 49 Senior Vice President-Retailing
Randy P. Smith 45 Vice President-Human Resources
Gary H. Long 33 Controller and Assistant Secretary

(1) Mr. Kelly succeeded Pasquale V. Petitti as Chief Executive Officer,
President and Director effective May 22, 1995.

The business experience of each of the executive officers during the
past five years is as follows:

Mr. Kelly joined the Company as President and Chief Executive Officer
in May 1995. Prior to May 1995, Mr. Kelly was Executive Vice President,
Retailing for The Vons Companies, Inc. and was employed by that company since
1963. Mr. Kelly has 33 years of experience in the supermarket industry.

Mr. Dotterer, who was named Secretary and a Director of the Company in
February 1992, served as Controller from August 1988 until June 1991 when he
became Vice President-Finance, Chief Financial Officer. He became Senior Vice
President-Finance and Administration in January 1994. Prior to August 1988,
Mr. Dotterer held various positions with The Kroger Co. and Jewel Companies,
Inc. Mr. Dotterer has 34 years of experience in the supermarket industry.

Mr. Norton joined the Company as Senior Vice President-Retailing in
July 1995. Prior to July 1995, Mr. Norton was Vice President-Merchandising for
Office 1 beginning in June 1994. From May 1993 to June 1994 Mr. Norton was
Vice President of Merchandising for Reliable Corporation. For the period
between September 1991 and May 1992, Mr. Norton was Senior Vice President for
Food 4 Less Corporation. Mr. Norton had been with the Alpha Beta Company, a
grocery retailer, from 1963 until September 1991. The last position held by
Mr. Norton with the Alpha Beta Company was Vice President- Sales and
Merchandising.

Mr. Smith, who was named an executive officer of the Company in
December 1995, presently serves as Vice President-Human Resources. Mr. Smith
joined the Company in April 1993. From October 1992 until April 1993, Mr.
Smith was Director - Human Resources for Bozzutto's, Inc. Mr. Smith was
Director - Human Resources with MC Sports from August 1991 until May 1992.
From January 1989 until August 1991, Mr. Smith was Director - Human Resources
for Dominick's Finer Foods.

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Mr. Long, who was named Assistant Secretary of the Company in June
1995, served as Assistant Controller from March 1992 until August 1992 when he
became Controller. Prior to March 1992, Mr. Long was Assistant Controller of
Piggly Wiggly Southern, Inc., a supermarket chain, beginning in June 1989. Mr.
Long has 17 years of experience in the supermarket industry.

The Company's directors are elected annually to serve until the next
annual meeting of shareholders and until their successors have been elected and
qualified. None of the directors or executive officers listed herein is
related to any other director or executive officer of the Company.

Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file with
the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the
Company. Officers, directors and greater than ten-percent shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.

To the Company's knowledge, based solely on review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the two fiscal years ended February 3, 1996 all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with, except that one
report of ownership by Mr. Herbert Dotterer disclosing one transaction was
inadvertently filed late.

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PART II

ITEM 5: MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

The Company's common stock trades on the NASDAQ National Market System
under the symbol "EGLE". The stock began trading on July 27, 1989. The
following table sets forth, by fiscal quarter, the high and low sale prices
reported by the NASDAQ National Market System for the periods indicated. As of
April 1, 1996, there were approximately 2,300 beneficial holders of shares.

<TABLE>
<CAPTION>
YEAR ENDED
FEBRUARY 3, 1996
----------------
HIGH LOW
---- ---
<S> <C> <C>
First Quarter $ 2 7/8 $ 3/4
Second Quarter 2 7/8 1 7/8
Third Quarter 2 1/4 1 1/4
Fourth Quarter 2 1/4 1 3/8
</TABLE>

<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 28, 1995
----------------
HIGH LOW
---- ---
<S> <C> <C>
First Quarter $ 8 1/2 $ 4 3/4
Second Quarter 5 3/4 2 1/4
Third Quarter 3 3/4 2 1/4
Fourth Quarter 2 3/4 1 1/8
</TABLE>

There were no dividends paid in fiscal 1995 or 1994. The Indenture
underlying the Company's Senior Notes and the Revolving Credit Agreement
contain restrictions on the payment of dividends. (See Note F of the notes to
the Company's consolidated financial statements). The Company does not intend
to pay dividends in the foreseeable future.

14
<PAGE> 15
ITEM 6: SELECTED FINANCIAL DATA

The following table represents selected financial data of the Company on
a consolidated basis for the five fiscal years ended February 3, 1996.

The selected historical financial data for the five fiscal years ended
February 3, 1996 are derived from the consolidated financial statements of the
Company which have been audited by Deloitte & Touche LLP, independent
accountants.

The selected financial data set forth below should be read in conjunction
with the Company's consolidated financial statements and related notes included
elsewhere in this document.

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 3, JANUARY 28, JANUARY 29, JANUARY 30, FEBRUARY 1,
1996 1995 1994 1993 1992
--------------- ---------------- -------------- ------------- -------------
(53 WEEKS)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S> <C> <C> <C> <C> <C>
CONSOLIDATED OPERATING DATA:
Sales............................... $1,023,664 $1,015,063 $1,062,348 $1,081,538 $1,112,203
Gross margin ....................... 254,355 242,452 269,188 269,967 278,636
Selling, general and administrative
expenses ......................... 227,106 221,212 225,123 218,874 231,090
Voluntary severance program(1) -- 6,917 -- -- --
Store closing and asset
revaluation(2).................... 6,519 -- 17,015 -- --
Depreciation and amortization....... 23,909 23,774 22,748 21,381 18,450
----------- ------------ ------------ ------------ ------------
Operating income (loss)............. (3,179) (9,451) 4,302 29,712 29,096
Interest expense ................... 15,497 14,780 14,244 16,451 13,743
----------- ------------ ------------ ------------ ------------
Earnings (loss) before income
taxes & extraordinary charge...... (18,676) (24,231) (9,942) 13,261 15,353
Income taxes (benefit).............. (609) (5,357) (3,779) 5,039 6,126
Extraordinary charge(3)............. 625 -- 3,969 -- --
----------- --------------- ------------ ------------------------------
Net earnings (loss)................. $ (18,692) $ (18,874) $ (10,132) $ 8,222 $ 9,227
============ ============ ============ ============ =============
Earnings (loss) per common
share............................. $ (1.68) $ (1.71) $ (.91) $ .74 $ .82

CONSOLIDATED BALANCE
SHEET DATA (AT YEAR-END):
Total assets........................ 265,278 $ 311,484 $ 335,165 $ 331,809 $ 307,351

Total debt (including
capital leases)................... 122,791 143,883 126,126 116,990 99,368
Total shareholders'
equity............................ 23,921 42,485 61,746 71,389 64,696
</TABLE>

(1) Represents a charge of $6.9 million for a voluntary severance program for
approximately 600 clerks in the Chicago area in fiscal 1994.
(2) Represents a charge of $6.5 million to reduce book value of certain
assets to estimated fair value for asset impairment in fiscal 1995.
Represents a charge of $17.0 million to provide for costs of closing
certain stores and asset revaluations in connection therewith in fiscal
1993. See Notes B and D of the notes to the Company's consolidated
financial statements included elsewhere in this document.
(3) Represents a charge of $625,000 related to the refinancing of the
Revolving Credit Facility in fiscal 1995. Represents a charge of $4.0
million related to the early retirement of debt in fiscal 1993.

15
<PAGE> 16
ITEM 7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The following table sets forth certain key operating statistics as a
percentage of sales for the periods indicated:

(53 WEEKS)
<S> <C> <C> <C> <C> <C>
Operations Statement Data:
Sales . . . . . . . . . . . . . . . . 100.00% 100.00% 100.00% 100.00% 100.00%
Gross margin . . . . . . . . . . . . 24.85 23.89 25.34 24.96 25.05
Selling, general and
administrative expenses . . . 22.19 21.79 21.20 20.24 20.77
Depreciation and amortization
expenses . . . . . . . . . . . 2.34 2.35 2.14 1.98 1.66
Voluntary severance program . . . . . -- .68 - - -
Provision for store closing and
asset revaluation . . . . . . . .64 -- 1.60 -- --
Operating income (loss) . . . . . . . (.31) (.93) .40 2.75 2.62
Interest expense . . . . . . . . . . 1.51 1.46 1.34 1.52 1.24
Earnings (loss) before income
taxes & extraordinary charge . . . (1.82) (2.39) (.94) 1.23 1.38
Income taxes (benefit) . . . . . . . (.06) (.53) (.36) 0.47 0.55
Extraordinary charge . . . . . . . . .06 -- 0.37 -- --
Net earnings (loss) . . . . . . . . . (1.83)% (1.86)% (0.95)% 0.76% 0.83%
</TABLE>

RESULTS OF OPERATIONS

SALES
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
2/03/96 1/28/95 1/29/94
----------- ----------- -----------
(53 WEEKS)
<S> <C> <C> <C>
SALES . . . . . . . . . . $1,023,664 $1,015,063 $1,062,348
PERCENT CHANGE . . . . . . 0.8% (4.5)% (1.8)%
SAME STORE CHANGE . . . . 1.8% (2.6)% (3.4)%
</TABLE>

Sales for fifty-three week fiscal 1995 were $1.024 billion, an
increase of $8.6 million or .8% from fiscal 1994. Same store sales increased
1.8% from fiscal 1994 to fiscal 1995 on an equal week basis. Sales increases
are attributed to a better in-stock position, more consistent promotions,
increased margins and increased Eagle Savers Card usage. The Company was
operating four fewer stores as of the end of 1995 compared to 1994.

Sales for fiscal 1994 were $1.015 billion, a decrease of $47.3
million or 4.5% from fiscal 1993. Same store sales declined 2.6% from fiscal
1993 to fiscal 1994. Management believes the sales decline was primarily due
to 14 new competitive store openings, including five

16
<PAGE> 17
supercenters, in the Company's markets and that the Company was operating six
fewer stores as of the end of 1994 compared to 1993.

GROSS MARGIN

Gross margin as a percentage of sales increased to 24.85% in fiscal
1995 from 23.89% in fiscal 1994 and decreased from 25.34% in fiscal 1993. The
increase in gross margin in fiscal 1995 is primarily attributed to better
buying practices, improved product mix, and a return to more historical pricing
levels. The gross margin improvements coincided with improving same store
sales trends to positive for the last three quarters of fiscal 1995. The
decrease in gross margin in fiscal 1994 was primarily due to increased
promotional expenditures in an attempt to stop continued sales erosion. Gross
margin included a charge for LIFO in fiscal 1995 of .06% of sales, in fiscal
1994 of 0.18% of sales, and a slight charge for LIFO in fiscal 1993.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses as a percentage of sales
were 22.19% in fiscal 1995 compared to 21.79% in fiscal 1994 and 21.20% in
fiscal 1993. Selling, general and administrative expenses were $5.9 million or
2.7% higher in fiscal 1995 than 1994 primarily due to higher store payroll and
associate benefit costs. Selling, general and administrative expenses were
$3.9 million or 1.7% lower in fiscal 1994 than fiscal 1993 primarily due to a
lower store count. The Company added more service hours for its stores to
supplement the pricing strategy discussed above during fiscal 1994.

DEPRECIATION AND AMORTIZATION EXPENSE

Depreciation and amortization expense as a percentage of sales was
2.34% in fiscal 1995 as compared to 2.35% in fiscal 1994 and 2.14% in fiscal
1993. There were no new stores opened in fiscal 1995. The fiscal 1994
increase reflects higher investment in new stores, Eagle Country Market
conversions and investment in technology.

PROVISION FOR STORE CLOSING AND ASSET REVALUATION

During 1995, the Company adopted Statement of Financial Accounting
Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for
Long Lived Assets to be Disposed Of." Under the new standard, if the sum of
expected future undiscounted cash flows is less than the carrying amount of the
asset, an impairment loss is recognized. The impairment is measured based on
the estimated fair value of the asset.

In determining whether an asset is impaired, assets are required to
be grouped at the lowest level for which there are identifiable cash flows that
are largely independent of the cash flows of other groups of assets, which, for
the Company, is generally on a store by store basis. Prior to the adoption of
this standard the Company evaluated impairment for stores which were not to be
closed, sold, or otherwise disposed of on an aggregate basis.

Based upon a review on a store by store basis of those stores where
there is an indication that the carrying amount of assets may not be
recoverable, the Company recorded a $6.5 million

17
<PAGE> 18
charge to reduce the carrying amounts to their estimated fair value. Estimated
fair values were primarily determined based on independent appraisals.

The Company provided a $17.0 million charge in the fourth quarter of
fiscal 1993 to provide for the closing costs, writedown of assets to estimated
net realizable values and estimated occupancy costs until disposition for 13
stores intended to be closed in fiscal 1994 and additional amounts for
continuing expenses for 13 stores closed prior to January 29, 1994.
Approximately one-half of the charge was non-cash to write down book values of
property and equipment to estimated realizable values. See Notes B and D of
the notes to the Company's consolidated financial statements.

The Company did not provide reserves for additional store closings
during fiscal 1995. The Company closed four stores during fiscal 1995. The
costs of these closings were covered by amounts previously reserved. It is
management's opinion that the previously reserved amount will be adequate to
cover these costs plus other anticipated fiscal 1996 closings.

During fiscal 1994 the Company did not record an additional provision
for closed stores or anticipated closings. The Company closed seven of the 13
stores scheduled for closure in fiscal 1994 and closed an additional three
stores not previously scheduled to be closed. The costs associated with the
closure of the three additional stores in 1994 were offset by a change in
estimate for prior store closings.

VOLUNTARY SEVERANCE PROGRAM

The fiscal 1994 loss includes a $6.9 million pre-tax charge in the
second quarter for a voluntary severance program for approximately 600 clerks
in the Chicago area. Management expects that such severance costs should be
offset in the future as a result of lower wage and benefit costs of replacement
associates.

OPERATING INCOME (LOSS)

An operating loss of $3.2 million or .31% of sales was incurred in
fiscal 1995 compared to a operating loss of $9.5 million or 0.93% of sales in
fiscal 1994 and to operating income for fiscal 1993 of $4.3 million or .40% of
sales. The operating loss in fiscal 1995 was reduced from the prior year's
loss primarily due to increased sales and gross margins. Store wages and
related benefits and taxes increased $4.4 million from fiscal 1994 to 1995.
The 1995 loss includes a $6.5 million charge for asset impairments as discussed
above. The decline in sales and gross margin as compared to fiscal 1993 were
the primary reasons for the 1994 operating loss. The 1994 loss also includes a
$6.9 million charge in the second quarter for a voluntary severance program for
approximately 600 clerks in the Chicago area. Before the store closing charge
that was taken in fiscal 1993, operating income would have been $21.3 million
or 2.00% of sales in fiscal 1993.

INTEREST EXPENSE

Interest expense increased to 1.51% of sales in fiscal 1995 compared
to 1.46% of sales in fiscal 1994 and 1.34% of sales in fiscal 1993. In fiscal
1995 interest expense increased due to

18
<PAGE> 19
higher short term borrowings and higher interest rates compared to the prior
year. In fiscal 1994 interest expense increased due to higher short term
borrowings than the prior year.

EXTRAORDINARY CHARGE

In the second quarter of fiscal 1995 an extraordinary charge of
$625,000 or $.06 per share was related to the refinancing of the Revolving
Credit Facility. In fiscal 1993 an extraordinary charge of approximately $4.0
million or $.36 per share was related to the early retirement of the 13 1/2%
Senior Subordinated Notes. See Note L of the notes to the Company's
consolidated financial statements.

NET EARNINGS (LOSS)

The Company incurred net losses for fiscal 1995, fiscal 1994 and
fiscal 1993 of $18.7 million or $1.68 per share, $18.9 million or $1.71 per
share and $10.1 million or $.91 per share, respectively. The 1995 net loss
includes a $6.5 million pre-tax charge for asset impairment as discussed above.
The 1994 net loss includes a $6.9 million pre-tax charge in the second quarter
for a voluntary severance program for approximately 600 clerks in the Chicago
area. The 1993 net loss includes $17.0 million pre-tax charge for store
closing and asset evaluation. The average shares outstanding increased to
11,120,815 in fiscal 1995 from 11,051,994 shares in fiscal 1994 and 11,103,276
shares in fiscal 1993.

The effective income tax rate was 3.3% for 1995 compared to 22.1% for
1994 and 38.0% for fiscal 1993. The lower tax rate in fiscal 1995 and 1994 was
primarily due to limiting the income tax benefits recognized for operating
losses to carryback amounts available because of the uncertainty of future
recoverability of operating loss carryforwards.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities was $14.6 million in fiscal
1995 from $4.1 million in fiscal 1994 and $24.5 million in fiscal 1993. The
fiscal 1995 improvement was primarily due to positive working capital
changes. Working capital changes used $1.6 million of cash in fiscal 1995
compared to a use of $9.0 million in fiscal 1994 and a use of $10.5 million in
fiscal 1993. Capital expenditures totaled $4.6 million in fiscal 1995, $19.3
million in fiscal 1994 and $32.0 million in fiscal 1993, including $2.2
million, $7.0 million and $13.8 million invested in property held for resale in
fiscal 1995, 1994 and fiscal 1993, respectively.

The following table summarizes store development and planned reductions:

<TABLE>
<CAPTION>
PLANNED
FISCAL FISCAL FISCAL
1996 1995 1994
------ -------- -------
<S> <C> <C> <C>
New stores . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0 4
Store closings . . . . . . . . . . . . . . . . . . . . . . . . 4 4 10
Expansions and major remodels . . . . . . . . . . . . . . . . . 2 3 2
Store count, end of year . . . . . . . . . . . . . . . . . . . 90 92 96
</TABLE>

19
<PAGE> 20
The Company is planning capital expenditures of approximately $16.0
million in fiscal 1996, which is expected to be funded primarily from
internally generated cash flows.

Developer financing for real estate projects has been difficult to
obtain over the past several years. As a result, certain projects have been
delayed, cancelled or financed internally. The Company owned 14 of its 92
stores as of February 3, 1996 and leased or subleased the remainder. Five
stores were sold and leased back which provided $14.0 million of proceeds
during fiscal 1995.

The Company completed a three year agreement in May of 1995 with
Congress Financial Corporation (Central) for a $40.0 million Revolving Credit
Facility (subsequently expanded to $50.0 million), which replaced its existing
revolving credit facility. The Revolving Credit Facility is secured by
inventories located at the Company's central distribution facility and stores
to provide for the Company's short-term liquidity needs. Cash borrowings under
the Company's Revolving Credit Agreement were $2.0 million at February 3, 1996,
a reduction of $20.0 million from the prior year end.

The following table summarizes borrowing and interest information:

<TABLE>
<CAPTION>
FISCAL FISCAL FISCAL
1995 1994 1993
2/3/96 1/28/95 1/29/94
------ ------- -------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Borrowed as of year-end $ 2.0 $22.0 $ 3.0
Letters of Credit as of year-end $12.3 $ 0 $ 5.3
Weighted average interest rate 9.5% 8.9% 7.5%
Maximum amount outstanding during year $26.4 $31.0 $21.0
Average amount outstanding during year $16.1 $11.9 $ 5.5
</TABLE>

The Company was in compliance with all covenants at February 3, 1996.

The Company expects to be in compliance with all covenants for fiscal
1996 based on management's estimates of fiscal 1996 operating results and cash
flows. Such estimates include certain improvements in operations for fiscal
1996.

The Company's cash contingency plan has identified assets that could
be converted to cash in the event operating improvements are not achieved.
Plans include sales or sale/leaseback transactions of owned stores, land held
for future development, closed stores and other selected asset dispositions.

Working capital (current assets minus current liabilities) and the
current ratio (current assets divided by current liabilities) were as follows:

20
<PAGE> 21
WORKING CURRENT
CAPITAL RATIO
------------ ---------
(DOLLARS IN MILLIONS)
February 3, 1996 $ 1.6 1.01 to 1
January 28, 1995 $ 0.8 1.01 to 1
January 29, 1994 $25.7 1.25 to 1

Management believes that working capital is adequate for the Company's
reasonably foreseeable needs.

Pursuant to the share repurchase plan adopted by the Board of
Directors in December 1995, the Company re- purchased 231,900 shares at a total
cost of $416,000 for an average price of $1.80 per share. Also, during fiscal
1995 125,000 shares of treasury stock were sold to Robert J. Kelly per his
employment agreement. The difference between the $6.36 average share price at
cost and the purchase price of $2.25 per share (market value at date of sale)
reduced capital in excess of par value to the extent allowable and the
remainder was a reduction of retained earnings. During fiscal 1993 the Company
purchased 120,500 shares at a total cost of $842,000 for an average price of
$6.98 per share. Additionally, during fiscal 1993, 183,442 shares of treasury
stock were used to satisfy awards to the participants of the Performance Equity
Plan. These shares were taken out of treasury stock at the average cost of
$6.14 per share. The difference between $7.25 issue price and $6.14 treasury
stock cost was recorded as Capital in excess of par value. There were no
treasury stock purchases during fiscal 1994. Total treasury shares at February
3, 1996 were 554,906 at an average cost of $4.45 per share.

On April 26, 1993 the Company completed a public offering and sale of
$100 million principal amount of 8 5/8% Senior Notes due April 15, 2000. In
addition, the Company entered into a new $35 million credit facility to replace
its then existing $85 million facility. The net proceeds of the offering were
approximately $96.5 million, of which approximately $92.5 million was used to
defease and retire the Senior Subordinated Notes and the Bank Revolving Credit
Facility. The balance was used for general corporate purposes.

The Company has entered into an agreement in which it expects to
terminate the Westville warehouse lease as of April 29, 1996. The Company will
incur a net cash outflow of approximately $9.0 million for this transaction.
The expected cash outflow is covered by an existing letter of credit under the
Company's Revolving Credit Facility, and hence the Company's net cash
availability will not be affected. This transaction will not impact reported
earnings as the payment is covered in the Reserve for Closed Stores and
Warehouse.

INFLATION

Inflation has had only a minor effect on the operations of the Company
and its internal and external sources of liquidity and working capital.

21
<PAGE> 22
SAFE HARBOR STATEMENTS UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995

The statements under Management's Discussion and Analysis of Financial
Condition and Results of Operations and the other statements in this Form 10-K
which are not historical facts are forward looking statements. These forward
looking statements involve risks and uncertainties that could render them
materially different, including, but not limited to, the effect of economic
conditions, the impact of competitive stores and pricing, availability and
costs of inventory, the rate of technology change, the availability of capital,
supply constraints or difficulties, the effect of the Company's accounting
policies, the effect of regulatory and legal developments, and other risks
detailed in the Company's Securities and Exchange Commission filings.

NEW PRONOUNCEMENTS

In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation." The Company expects to elect to continue to apply
APB Opinion No. 25 to its stock based compensation awards to employees. The
1996 adoption of FASB No. 123, therefore, will have no effect on reported
earnings.

22
<PAGE> 23
ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Shareholders of
Eagle Food Centers, Inc.:

We have audited the accompanying consolidated balance sheets of Eagle
Food Centers, Inc. as of February 3, 1996 and January 28, 1995, and the related
consolidated statements of operations, equity and cash flows for each of the
three years in the period ended February 3, 1996. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Eagle Food Centers, Inc. as
of February 3, 1996 and January 28, 1995, and the results of its operations and
its cash flows for each of the three years in the period ended February 3, 1996
in conformity with generally accepted accounting principles.

As discussed in Note B to the financial statements, in 1995 the
Company changed its method of accounting for the impairment of long-lived
assets and long-lived assets to be disposed of.

DELOITTE & TOUCHE LLP

Davenport, Iowa
March 22, 1996

23
<PAGE> 24
EAGLE FOOD CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

ASSETS
<TABLE>
<CAPTION>
FEBRUAARY 3, JANUARY 28,
Current assets: 1996 1995
--------------- ---------------
<S> <C> <C>
Cash and cash equivalents . . . . . . . . . . . . . . . $ 1,481 $ 4,096
Restricted assets - marketable securities,
at fair value . . . . . . . . . . . . . . . . . . . . 8,855 5,239
Accounts receivable . . . . . . . . . . . . . . . . . . 13,129 11,035
Income taxes receivable . . . . . . . . . . . . . . . . 4,015 7,213
Inventories . . . . . . . . . . . . . . . . . . . . . . 80,892 83,939
Prepaid expenses and other . . . . . . . . . . . . . . 3,745 2,663
---------- ----------
Total current assets . . . . . . . . . . . . . 112,117 114,185

Property and equipment (net) . . . . . . . . . . . . . . 136,453 167,749

Other assets:
Deferred debt issuance costs . . . . . . . . . . . . . 2,444 2,960
Excess of cost over fair value of net assets acquired . 2,569 2,650
Property held for resale . . . . . . . . . . . . . . . 9,253 20,710
Other . . . . . . . . . . . . . . . . . . . . . . . . . 2,442 3,230
---------- ----------
Total other assets . . . . . . . . . . . . . . . . . . . 16,708 29,550
---------- ----------
Total assets . . . . . . . . . . . . . . . . . $265,278 $311,484
========= =========
</TABLE>

LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C>
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . $ 42,025 $ 44,738
Payroll and associate benefits . . . . . . . . . . . . 15,385 14,678
Accrued liabilities . . . . . . . . . . . . . . . . . . 18,434 11,982
Reserve for closed stores and warehouse . . . . . . . . 17,754 8,203
Accrued taxes . . . . . . . . . . . . . . . . . . . . . 9,752 8,117
Bank revolving credit facility . . . . . . . . . . . . 1,992 22,000
Current portion of long-term debt . . . . . . . . . . 5,205 3,667
---------- ----------
Total current liabilities . . . . . . . . . . . 110,547 113,385
Long-term debt:
Senior Notes . . . . . . . . . . . . . . . . . . . . . 100,000 100,000
Capital lease obligations . . . . . . . . . . . . . . . 15,594 18,216
---------- ---------
Total long-term debt . . . . . . . . . . . . . 115,594 118,216
Other liabilities:
Reserve for closed stores and warehouse . . . . . . . . 4,337 27,082
Other deferred liabilities . . . . . . . . . . . . . . 10,879 10,316
---------- ---------
Total other liabilities . . . . . . . . . . . . 15,216 37,398
Shareholders' equity:
Preferred stock, $.01 par value, 100,000 shares
authorized . . . . . . . . . . . . . . . . . . . . . -- --
Common stock, $.01 par value, 18,000,000 shares
authorized, 11,500,000 shares issued . . . . . . . . 115 115
Capital in excess of par value . . . . . . . . . . . . 53,336 53,541
Common stock in treasury, at cost, 554,906 and
448,006 shares . . . . . . . . . . . . . . . . . . . (2,471) (2,850)
Other . . . . . . . . . . . . . . . . . . . . . . . . . (124) (387)
Retained earnings (deficit) . . . . . . . . . . . . . (26,935) (7,934)
--------- ----------
Total shareholders' equity . . . . . . . . . . 23,921 42,485
---------- ----------
Total liabilities and shareholders' equity . . $265,278 $311,484
========= =========
</TABLE>

See notes to the consolidated financial statements.

24
<PAGE> 25
EAGLE FOOD CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 3, JANUARY 28, JANUARY 29,
1996 1995 1994
----------- ----------- -----------
(53 WEEKS)
<S> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . . $ 1,023,664 $ 1,015,063 $ 1,062,348

Cost of goods sold . . . . . . . . . . . . . . . 769,309 772,611 793,160
----------- ------------ ------------

Gross margin . . . . . . . . . . . . . . 254,355 242,452 269,188

Operating expenses:

Selling, general and administrative . . . . . 227,106 221,212 225,123

Voluntary severance program . . . . . . . . . . -- 6,917 --

Store closing and asset revaluation . . . . . . 6,519 -- 17,015

Depreciation and amortization . . . . . . . . . 23,909 23,774 22,748
----------- ----------- -----------

Operating income (loss) . . . . . . . . (3,179) (9,451) 4,302

Interest expense . . . . . . . . . . . . . . . . 15,497 14,780 14,244
----------- ----------- -----------

Earnings (loss) before income taxes and
extraordinary charge . . . . . . . . . . . . . (18,676) (24,231) (9,942)

Income taxes (benefit) . . . . . . . . . . . . . (609) (5,357) (3,779)
---------- ------------ ------------

Earnings (loss) before extraordinary charge . . . (18,067) (18,874) (6,163)

Extraordinary charge . . . . . . . . . . . . . . 625 -- 3,969
---------- -------------- -----------

Net earnings (loss) . . . . . . . . . . . . . . . $ (18,692) $ (18,874) $ (10,132)
========== =========== ===========

Weighted average common shares
outstanding . . . . . . . . . . . . . . . . . . 11,120,815 11,051,994 11,103,276

Earnings (loss) per share:
Earnings (loss) before extraordinary charge . . $ (1.62) $ (1.71) $ (0.55)
Extraordinary charge . . . . . . . . . . . . . (.06) -- (0.36)
------------ -------------- -------------
Net earnings (loss) . . . . . . . . . . . . . . $ (1.68) $ (1.71) $ (0.91)
============ =========== =============
</TABLE>

See notes to the consolidated financial statements.

25
<PAGE> 26

EAGLE FOOD CENTERS, INC.
CONSOLIDATED STATEMENTS OF EQUITY
(DOLLARS IN THOUSANDS)

COMMON STOCK
--------------------------------------------------
CAPITAL IN RETAINED
PAR EXCESS OF TREASURY EARNINGS
SHARES VALUE PAR VALUE SHARES DOLLARS OTHER (DEFICIT)
------- ----- --------- ------ -------- ------ -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, January 30, 1993 . . . . . . . . . 11,500,000 $115 $53,336 510,948 $(3,134) $ -- $ 21,072

Net loss . . . . . . . . . . . . . . . (10,132)

Distribution of treasury shares
to performance share plan . . . . . 205 (183,442) 1,126

Purchase of treasury shares . . . . . 120,500 (842)
------------ ------- ------------ -------- --------- --------- --------

Balance, January 29, 1994 . . . . . . . . . 11,500,000 115 53,541 448,006 (2,850) -- 10,940

Net loss . . . . . . . . . . . . . . . (18,874)

Pension liability adjustment . . . . . (179)

Change in unrealized loss on marketable
securities . . . . . . . . . . . . . (208)
------------ ------- ------------ -------- --------- --------- --------

Balance, January 28, 1995 . . . . . . . . . 11,500,000 115 53,541 448,006 (2,850) (387) (7,934)

Net loss . . . . . . . . . . . . . . . (18,692)

Pension liability adjustment . . . . . 50

Change in unrealized gain (loss) on marketable
securities . . . . . . . . . . . . . 494

Purchase of treasury shares . . . . . . 231,900 (416)

Officer stock sale . . . . . . . . . . (205) (125,000) 795 (281) (309)
------------ ------- ------------ -------- --------- --------- --------

Balance, February 3, 1996 . . . . . . . . . 11,500,000 $115 $53,336 554,906 $(2,471) $(124) $(26,935)
========== ==== ======= ======== ======== ====== =========
</TABLE>

See notes to the consolidated financial statements.

26
<PAGE> 27
EAGLE FOOD CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
FEBRUARY 3, JANUARY 28, JANUARY 29,
1996 1995 1994
--------------- -------------- ---------------
(53 WEEKS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss) . . . . . . . . . . . . . . . . . $ (18,692) $ (18,874) $ (10,132)
Adjustments to reconcile net earnings
(loss) to net cash flows from operating
activities:
Extraordinary charge before income tax effect . . . 658 -- 6,402
Depreciation and amortization . . . . . . . . . . . 23,909 23,774 22,748
Store closing and asset revaluation . . . . . . . . 6,519 -- 17,015
Deferred income taxes . . . . . . . . . . . . . . . 1,389 844 (4,637)
LIFO charge . . . . . . . . . . . . . . . . . . . . 604 1,810 42
Deferred charges and credits . . . . . . . . . . . . 3,232 4,614 3,997
Loss (gain) on disposal of assets . . . . . . . . . (1,448) 967 (451)
Changes in assets and liabilities:
Accounts receivable and other assets . . . . . . . . (1,268) (1,377) (4,191)
Inventories . . . . . . . . . . . . . . . . . . . . 2,443 15,261 5,999
Accounts payable . . . . . . . . . . . . . . . . . . (2,713) (16,093) (1,481)
Accrued and other liabilities . . . . . . . . . . . 6,687 1,986 (2,643)
Payments on reserve for closed stores and warehouse (6,764) (8,785) (8,177)
------- --------- ---------
Net cash flows from operating
activities . . . . . . . . . . . . . . . . . 14,556 4,127 24,491
Cash flows from investing activities:
Additions to property and equipment . . . . . . . . . (2,419) (12,391) (18,242)
Purchase of marketable securities . . . . . . . . . . (3,122) (5,447) --
Additions to property held for resale . . . . . . . . (2,163) (6,944) (13,766)
Cash proceeds from dispositions of
property and equipment . . . . . . . . . . . . . . 15,568 1,208 2,634
--------- ---------- ---------
Net cash flows from investing activities . . . 7,864 (23,574) (29,374)
Cash flows from financing activities:
Proceeds from borrowings . . . . . . . . . . . . . . -- -- 100,000
Deferred financing costs . . . . . . . . . . . . . . (684) (175) (3,861)
Debt prepayment costs . . . . . . . . . . . . . . . . -- -- (4,239)
Principal payments on capital lease obligations . . . (3,927) (3,101) (2,558)
Retirement of debt . . . . . . . . . . . . . . . . . -- (237) (69,116)
Net bank revolving credit borrowing (repayment) . . . (20,008) 19,000 (18,000)
Purchase of treasury stock . . . . . . . . . . . . . (416) -- (841)
----------- ------------- ----------
Net cash flows from financing activities . . . (25,035) 15,487 1,385
---------- ---------- ---------
Decrease in cash and cash equivalents . . . . . . . . . (2,615) (3,960) (3,498)
Cash and cash equivalents at beginning
of year . . . . . . . . . . . . . . . . . . . . . . . 4,096 8,056 11,554
--------- ---------- --------
Cash and cash equivalents at end of year . . . . . . . $ 1,481 $ 4,096 $ 8,056
========== ========== ========
</TABLE>

See notes to the consolidated financial statements.

27
<PAGE> 28
EAGLE FOOD CENTERS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 3, 1996, JANUARY 28, 1995, AND JANUARY 29, 1994

NOTE A--ORGANIZATION

Eagle Food Centers, Inc. (the "Company"), a Delaware corporation,
engaged in the operation of retail food stores, was the General Partner of
Eagle Food Centers, L.P. ("EFC"), a Delaware limited partnership, which
previously conducted the Eagle Food Centers business. On July 27, 1989, the
owners of all of the outstanding common limited partnership interests in EFC
exchanged their partnership interests for 8.3 million shares of Common Stock of
the Company. As a result, and following the consummation of the offering by
the Company of 3.2 million shares of Common Stock and the redemption by EFC of
the preferred limited partnership interests in EFC held by Lucky Stores, Inc.
("Lucky") on August 3, 1989, the Company succeeded to the business and assets
and assumed the liabilities of EFC.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

FISCAL YEAR

The Company's fiscal year ends on the Saturday closest to January
31st. Fiscal 1995 was a 53 week year, fiscal 1994 and fiscal 1993 were 52 week
years ended February 3, 1996, January 28, 1995, and January 29, 1994,
respectively.

BASIS OF CONSOLIDATION

The consolidated financial statements include the accounts of Eagle
Food Centers, Inc. and all subsidiaries. All significant intercompany
transactions have been eliminated.

RESTRICTED ASSETS - MARKETABLE SECURITIES

Marketable securities are restricted to satisfy state insurance
reserve requirements related to claim liabilities recorded, classified as
current, for workers' compensation, automobile and general liability costs.

The Company has classified its entire holdings of marketable
securities as available for sale reflecting management's intention to hold such
securities for indefinite periods of time. Such securities are reported at
fair value and the difference between cost and market value is reported as a
separate component of shareholders' equity until gains and losses are realized.

INVENTORIES

Inventories are valued at the lower of cost or market; cost is
determined by the last-in, first-out (LIFO) method for substantially all
inventories. The current cost of the inventories was greater than the LIFO
value by $8.1 million at February 3, 1996 and $7.5 million at January 28, 1995.

28
<PAGE> 29
PROPERTY AND EQUIPMENT

Property and equipment are stated at cost less accumulated
depreciation and amortization. Depreciation is computed by using the
straight-line method over the estimated useful lives of buildings, fixtures and
equipment. Leasehold costs and improvements are amortized over their estimated
useful lives or the remaining lease term, whichever is shorter. Leasehold
interests are amortized over the lease term plus expected renewal periods or 25
years, whichever is shorter.

Property acquired under capital lease is amortized on a straight-line
basis over the shorter of the life of the property or the lease term.

RESERVE FOR CLOSED STORES AND WAREHOUSE

The Company continually monitors underperforming stores and
under-utilized facilities and in the event their performance or utilization
cannot be improved, management may decide to close, sell or otherwise dispose
of such stores or facilities. The reserve for closed stores and a warehouse
arises primarily from the discounted value of future lease commitments in
excess of the discounted value of estimated sublease revenue on stores and a
warehouse which management has reached the decision to close, sell or otherwise
dispose of within one year. Reserves are established in the year such
decisions are made by management and the costs can be reasonably estimated.
The discount rates used for these reserves is 10% for reserves established
prior to fiscal 1993, 6% for reserves established in fiscal 1993 and 9% for
reserves established in fiscal 1994. The discount rate used was a risk-free
rate of return for a duration equal to the average remaining lease term
(generally eight years) at the time the reserve was established.

LONG-LIVED ASSETS

In determining whether an asset is impaired, assets are required to be
grouped at the lowest level for which there are identifiable cash flows that
are largely independent of the cash flows of other groups of assets, which, for
the Company, is generally on a store by store basis. Prior to the adoption of
this standard the Company evaluated impairment for stores which were not to be
closed, sold, or otherwise disposed of on an aggregate basis.

Based upon a review on a store by store basis of those stores where
there is an indication that the carrying amount of assets may not be
recoverable, the Company recorded a $6.5 million charge to reduce the carrying
amounts to their estimated fair value. Estimated fair values were primarily
determined based on independent appraisals.

DEBT ISSUANCE COSTS

Debt issuance costs are amortized over the terms of the related debt
agreements.

29
<PAGE> 30
EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED ("GOODWILL")

The Company amortizes goodwill using the straight-line method over 40
years. The Company continually reviews goodwill to assess recoverability from
future operations using undiscounted cash flows. Impairments would be
recognized in operating results if an other than temporary diminution in value
occurred.

PROPERTY HELD FOR RESALE

Property held for resale is reported at lower of cost or estimated
market value.

SELF-INSURANCE

The Company is primarily self-insured, through its captive insurance
subsidiary, for workers' compensation, automobile and general liability costs.
The self-insurance claim liability is determined actuarially based on claims
filed and an estimate of claims incurred but not yet reported.

RECLASSIFICATIONS

Certain reclassifications were made to prior years' balances for
comparative purposes.

EARNINGS(LOSS) PER SHARE

Net earnings(loss) per share of Common Stock, throughout the periods
presented, is based on the weighted average shares outstanding. Equivalent
shares in the form of contingent stock rights, stock appreciation rights and
stock options are excluded from the calculation since they are not materially
dilutive or were anti-dilutive.

RISKS AND UNCERTAINTIES

The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles necessarily requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities
at the date of financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

Material estimates that are particularly susceptible to significant
change in the near-term relate to the determination of the reserve for closed
stores and warehouse, workers' compensation and general liability insurance
accruals, asset impairments, litigation reserves and income tax accruals
including valuation allowances for deferred income tax assets.

The Company is party to 26 collective bargaining agreements with local
unions representing substantially all of the Company's associates. Ten
contracts will expire in 1996 covering certain associates in most of the
Company's stores and the executive office clerical personnel. The Company
expects to negotiate with the unions and to enter into new collective
bargaining agreements. There can be no assurance, however, that such
agreements will be reached without a work stoppage. A prolonged work stoppage
affecting a substantial number of stores could have a material adverse effect
on results of the company's operations.

30
<PAGE> 31
NOTE C--CONSOLIDATED STATEMENTS OF CASH FLOWS

For purposes of the Consolidated Statements of Cash Flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents. Supplemental cash flow information:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash paid for interest . . . . . . . . . . . . . . . . $ 14,416 $ 13,718 $ 15,125
Cash paid (received) for income taxes . . . . . . . . . (6,374) (2,683) 1,164
Non-cash additions to property and equipment . . . . . 2,843 2,095 -
Capital lease retirement . . . . . . . . . . . . . . . - - 1,190
Treasury stock issued . . . . . . . . . . . . . . . . . - - 1,329
</TABLE>

NOTE D--RESERVE FOR CLOSED STORES AND WAREHOUSE

In fiscal 1993 the Company incurred a charge of $17.0 million to
provide for closing costs and continuing rental obligations, less anticipated
sublease rentals, and to revalue certain related fixed assets to estimated
realizable values. The store closing and asset revaluation charge included
additional amounts for continuing expenses for thirteen stores closed prior to
January 29, 1994 and included a provision for another thirteen stores scheduled
to be closed in fiscal 1994. The components of the charge are summarized as
follows:

<TABLE>
<CAPTION>
YEAR ENDED
JANUARY 29, 1994
(IN THOUSANDS)
--------------
<S> <C>
Revalue related fixed assets to estimated realizable values . . . . $7,521
Present value of continuing rental obligations less
anticipated sublease rentals . . . . . . . . . . . . . . . . . . 6,783
Closing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,180
Change in estimate for prior store closings . . . . . . . . . . . . 1,221
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 310
--------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $17,015
=======
</TABLE>

Approximately one half of the charge represented estimated future cash
outflows.

The Company did not provide reserves for additional store closings
during fiscal 1995. The Company closed four stores during fiscal 1995 and six
dark stores were disposed of through subleases or negotiated terminations. The
costs of these closings were covered by amounts previously reserved. It is
management's opinion that the previously reserved amount will be adequate to
cover these costs plus other anticipated fiscal 1996 closings.

31
<PAGE> 32
An analysis of activity in the reserve for closed stores and a
warehouse for the years ended February 3, 1996, and January 28, 1995, is as
follows:
<TABLE>
<CAPTION>
FEBRUARY 3, JANUARY 28,
1996 1995
-------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
Balance at beginning of year . . . . . . . . . . . . . . . $35,285 $43,916

Payments, primarily rental payments net of
sublease rentals . . . . . . . . . . . . . . . . . . . . (6,764) (8,785)

Revaluation/reclassification of fixed assets . . . . . . . (8,424) (1,879)

Interest cost . . . . . . . . . . . . . . . . . . . . . . 1,994 2,033

Provision for store closing and asset revaluation . . . . -- --
---------- ----------

Balance at end of year (including $17.8 million
and $8.2 million, respectively, classified as current) . $22,091 $35,285
======= =======
</TABLE>

The reserve at February 3, 1996, represents estimated future cash
outflows primarily related to the present value of net future rental payments.
It is management's opinion that the reserve will be adequate to cover
continuing costs for the existing closed stores and a warehouse and the stores
scheduled to be closed in fiscal 1996.

NOTE E--PROPERTY AND EQUIPMENT

The investment in property and equipment is as follows:
<TABLE>
<CAPTION>
FEBRUARY 3, JANUARY 28,
1996 1995
-------------- ---------------
(IN THOUSANDS)
<S> <C> <C>
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 11,294 $ 9,823
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33,326 35,792
Leasehold costs and improvements . . . . . . . . . . . . . . . . . 38,745 41,152
Fixtures and equipment . . . . . . . . . . . . . . . . . . . . . . 112,871 131,172
Leasehold interests . . . . . . . . . . . . . . . . . . . . . . . . 28,812 39,871
Property under capital lease . . . . . . . . . . . . . . . . . . . 30,155 30,656
---------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255,203 288,466
Less accumulated depreciation and amortization . . . . . . . . . . (118,750) (120,717)
--------- ----------
Property and equipment (net) . . . . . . . . . . . . . . . . . . . $136,453 $167,749
========= ========
</TABLE>

32
<PAGE> 33
Developer financing for real estate projects has been difficult to
obtain over the past several years. As a result, certain projects have been
delayed, cancelled or financed internally. The Company owned 14 of its 92
stores as of February 3, 1996 and leased or subleased the remainder. Five
stores were sold and leased back which provided $14.0 million of proceeds
during fiscal 1995. The operating leases on the five stores have a 25 year
term with one ten year option and four five year options. The gain on the sale
of these properties has been deferred over the life of the original lease term.

Depreciation and amortization are computed using the straight-line
method over the estimated useful lives of the assets. The useful lives of the
various classes of assets are as follows:

Buildings 10-25 years Leasehold Interests 3-25 years

Fixtures and 3-12 years Property under Capital Lease Shorter of
Equipment economic life
or lease term

Leasehold Costs &
Improvements 5-23 years

NOTE F--DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
FEBRUARY 3, JANUARY 28,
1996 1995
-------------- --------------
(IN THOUSANDS)
<S> <C> <C>
8 5/8% Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . $100,000 $100,000
Capital leases (Note H) . . . . . . . . . . . . . . . . . . . . . . 20,799 21,883
--------- ---------
120,799 121,883
Less current maturities . . . . . . . . . . . . . . . . . . . . . . 5,205 3,667
--------- ----------
$115,594 $118,216
======== ========
</TABLE>

The Company's 8 5/8% Senior Notes are due April 15, 2000. The
indenture relating to the 8 5/8% Senior Notes contains provisions as well as
certain restrictions relating to certain asset dispositions, sale and leaseback
transactions, payment of dividends, repurchase of equity interests, incurrence
of additional indebtedness and liens, and certain other restricted payments.

The Company had a Credit Agreement with Caisse Nationale De Credit
Agricole, Chicago branch ("CNCA") and the First National Bank of Chicago as
co-agents to make available to the Company an aggregate amount of $35 million
for revolving credit loans, working capital loans and letters of credit. This
$35 million facility was replaced on May 25, 1995 with a new Credit Agreement
with Congress Financial Corporation (Central). The new agreement is a $40
million facility (subsequently amended to $50.0 million) which provides for
revolving credit loans and letters of credit. No more than an aggregate of
$20.0 million of the total commitment may be drawn by the Company as letters of
credit. Total availability under the Credit Agreement is based on percentages
of allowable inventory up to a maximum of $50.0 million. The Credit Agreement
terminates on May 31, 1998 and is secured by a first priority security interest
in all inventories of the Company located in its stores and distribution center
in Milan, Illinois. Loans made pursuant to the Credit Agreement bear interest
at a fluctuating interest rate based, at the Company's option, on a margin over
the base interest rate or a margin over the London Interbank offered rate
multiplied by the applicable reserve requirement (the adjusted LIBOR Rate).
The Credit Agreement has one financial covenant related to minimum net worth as
defined by the agreement. At February 3, 1996, the defined net worth of the
Company exceeds the minimum amount by $25 million.

33
<PAGE> 34
At February 3, 1996, the Company had $2.0 million in revolving credit
loans outstanding plus $12.3 million in letters of credit outstanding resulting
in $29.5 million of availability under the Credit Agreement.

At January 28, 1995, the Company had $22.0 million in revolving credit
loans outstanding and had no outstanding letters of credit and thus had $13.0
million available under the Credit Agreement. The interest rates on the
outstanding amounts were 9.5% at February 3, 1996 and 8.9% at January 28, 1995.

The Company was in compliance with all the covenants in its debt
agreements at February 3, 1996. The Company expects to be in compliance with
all covenants for fiscal 1996 based on management's estimates of fiscal 1996
operating results and cash flows. Such estimates include certain improvements
in operations for fiscal 1996.

NOTE G--TREASURY STOCK

The Company acquired 231,900 shares of its Common Stock during the
fourth quarter of fiscal 1995 at a total cost of $416,337 or an average price
of $1.80 per share.

During the year the Company sold 125,000 shares of treasury stock to
its Chief Executive Officer Robert J. Kelly for $2.25 per share (market value
at date of sale) in exchange for a note receivable, which is deducted from
equity until paid. Total treasury shares at February 3, 1996 were 554,906 at
an average cost of $4.45 per share or a total of $2.47 million.

The Company did not acquire or distribute any shares of its Common
Stock during fiscal 1994. In the second quarter of fiscal 1993, the Company
acquired 120,500 shares of its Common Stock at a total cost of $0.8 million or
an average price of $6.98 per share. During the year the Company distributed
183,442 treasury shares to the performance share plan participants.

NOTE H--LEASES

Most of the retail stores are leased. Many of the leases have renewal
options for periods ranging from five to thirty years. Some provide the option
to acquire the property at certain times during the initial lease term for
approximately its estimated fair market value at that time, and some require
the Company to pay taxes and insurance on the leased property. The Company
also leases its central distribution facility under a lease expiring in 2007.
Rent expense consists of:

<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------------
FEBRUARY 3, JANUARY 28, JANUARY 29,
1996 1995 1994
------------- -------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Minimum rent under operating leases . . . . . . . . . . . $21,461 $21,403 $21,526
Additional rent based on sales . . . . . . . . . . . . . 249 197 213
Less rentals received on non-cancelable
subleases . . . . . . . . . . . . . . . . . . . . . . . (2,432) (1,796) (1,749)
---------- --------- --------

$19,278 $19,804 $19,990
======= ======= =======
</TABLE>

34
<PAGE> 35
Future minimum lease payments under operating and capital leases as of
February 3, 1996 are as follows:
<TABLE>
<CAPTION>
OPERATING CAPITAL
LEASES LEASES
-------- -------
(IN THOUSANDS)
<S> <C> <C>
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,637 $ 7,113
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,466 4,256
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,105 2,456
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,141 2,456
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,922 2,456
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,726 14,350
-------- -------
Total minimum lease payments . . . . . . . . . . . . . . . . . . $231,997 33,087
========
Less amount representing interest . . . . . . . . . . . . . . . . 12,288
--------
Present value of minimum capital lease payments, including $5.2
million classified as current portion of long-term debt . . . $20,799
=======
</TABLE>

The above future minimum lease payments do not include minimum
commitments of $49.7 million (exclusive of sublease income) the present value
of which is included in the consolidated balance sheet caption "Reserve for
closed stores and warehouse".

NOTE I--INCOME TAXES

Prior to fiscal 1993, the Company recognized income taxes based on
Accounting Principles Board Opinion No. 11, Accounting For Income Taxes.
Effective January 31, 1993 the Company changed its method of accounting for
income taxes from the deferred method to the liability method required by
Statement of Financial Accounting Standards No. 109, Accounting for Income
Taxes (SFAS 109).

The following summarizes significant components of the provision for
income taxes:

<TABLE>
<CAPTION>
YEAR ENDED
----------------------------------------------------
FEBRUARY 3, JANUARY 28, JANUARY 29,
1996 1995 1994
------------------ --------------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income taxes (benefit):
Federal . . . . . . . . . . . . . . . . . . . . . . . . $ ( 609) $( 4,287) $( 3,084)
State . . . . . . . . . . . . . . . . . . . . . . . . . 0 ( 1,070) ( 695)
---------- -------- ----------
$ ( 609) $( 5,357) $( 3,779)
========== ========= =========
Income taxes (benefit) consists of the following:
Current:
Federal . . . . . . . . . . . . . . . . . . . . . . $( 1,734) $( 4,648) $( 676)
State . . . . . . . . . . . . . . . . . . . . . . (222) ( 1,598) ( 282)
---------- -------- ---------
$( 1,956) $( 6,246) $( 958)
========= ========= =========
Deferred:
Federal . . . . . . . . . . . . . . . . . . . . . . $ 1,125 $ 361 $( 2,408)
State . . . . . . . . . . . . . . . . . . . . . . 222 528 (413)
--------- --------- ----------
$ 1,347 $ 889 $( 2,821)
======== ========= =========
</TABLE>

35
<PAGE> 36
The differences between income taxes (benefit) at the statutory
Federal income tax rate and income taxes (benefit) reported in the consolidated
statements of operations are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
---------------------------------------------------
FEBRUARY 3, JANUARY 28, JANUARY 29,
1996 1995 1994
---------------- -------------- ---------------
(IN THOUSANDS)
<S> <C> <C> <C>
Income taxes (benefit) at statutory Federal
tax rate of 35% . . . . . . . . . . . . . . . . . . . $ (6,537) $( 8,481) $( 3,480)
Surtax exemption . . . . . . . . . . . . . . . . . . . . . 187 241 99
State income taxes, net of Federal benefit . . . . . . . . (934) (706) (459)
Tax credits . . . . . . . . . . . . . . . . . . . . . . . . 0 (85) (83)
Valuation allowance . . . . . . . . . . . . . . . . . . . . 6,662 3,483 --
Other . . . . . . . . . . . . . . . . . . . . . . . . . 13 191 144
--------- -------- ---------
Total . . . . . . . . . . . . . . . . . . . . . . $( 609) $( 5,357) $( 3,779)
======== ========= =========
</TABLE>

Deferred tax assets and liabilities arise because of differences
between the financial accounting bases for assets and liabilities and their
respective tax bases. Deferred income tax assets and liabilities are comprised
of the following significant temporary differences:

<TABLE>
<CAPTION>
FEBRUARY 3, JANUARY 28,
1996 1995
--------------- -------------
(IN THOUSANDS)

<S> <C> <C>
Deferred Tax Assets:
Store closing and asset revaluation . . . . . . . . . . . . . . $ 6,794 $ 8,660
Accrued reserves . . . . . . . . . . . . . . . . . . . . . . . . 6,200 7,255
Deferred revenues . . . . . . . . . . . . . . . . . . . . . . . 3,077 2,582
Associate benefits . . . . . . . . . . . . . . . . . . . . . . . 1,530 2,729
Tax credit and net operating loss carryforwards . . . . . . . . 12,727 5,970
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . (10,145) ( 3,483)
-------- -------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $20,183 $23,713
======= =======

Deferred Tax Liabilities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . $17,323 $19,379
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,860 2,987
-------- --------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $20,183 $22,366
======= =======

Net deferred tax asset, included in other current assets . . . . $ 0 $ 1,347
========= ========
</TABLE>

A valuation allowance has been established for the entire amount of
the net deferred tax assets as of February 3, 1996 due to the uncertainty of
future recoverability. Deferred tax assets were recognized as of January 28,
1995, to the extent of the tax carryback benefit associated with the expected
reversal of temporary differences in fiscal 1995 which were not offset by
temporary differences originating in 1995. A valuation allowance had been
established for the remainder of the net deferred tax assets due to the
uncertainty of future recoverability.

The amount of tax credit carryforwards available, in thousands of
dollars primarily related to the alternative minimum tax and net operating loss
carry forwards, and expiration dates are as follows: 1995 - $148, 1996 - $215,
1997 - $454, 1998 - $158, 1999 - $210, 2109 - $2,230, 2110 - $7,268, and
unlimited - $2,044.

36
<PAGE> 37
NOTE J--ASSOCIATE BENEFIT PLANS

RETIREMENT PLANS

Substantially all associates of the Company are covered by trusteed,
non-contributory retirement plans of the Company or by various multi-employer
retirement plans under collective bargaining agreements.

The Company's defined benefit plans covering salaried and hourly
associates provide benefits that are based on associates' compensation during
years of service. The Company's policy is to fund no less than the minimum
required under the Employee Retirement Income Security Act of 1974. During the
years ended February 3, 1996, January 28, 1995, and January 29, 1994, pension
costs under the plans totaled $736,000, $844,000, and $885,000, respectively.

Net periodic pension cost under the Milan office and non-foods
warehouse retirement plan (Milan Plan) and the Eagle Food Centers, Inc.
Associate Pension Plan (Eagle Plan) includes the following benefit and cost
components for the years ended February 3, 1996, January 28, 1995, and January
29, 1994:
<TABLE>
<CAPTION>
YEAR ENDED
-----------------------------------------------------
FEBRUARY 3, JANUARY 28, JANUARY 29,
1996 1995 1994
-------------- ------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Service cost . . . . . . . . . . . . . . . . . . . . . . . $ 505 $ 626 $ 671
Interest cost . . . . . . . . . . . . . . . . . . . . . . . 583 561 512
Actual return on plan assets . . . . . . . . . . . . . . . (1,001) 139 (282)
Net amortization and deferral . . . . . . . . . . . . . . . 649 (482) (16)
----- ----- ------
Net periodic pension cost . . . . . . . . . . . . . . . . . $ 736 $ 844 $ 885
===== ===== =====
</TABLE>

The funded status and amounts recognized in the Company's consolidated
balance sheets for the Milan Plan and Eagle Plan, as of the measurement dates
of December 31, 1995 and 1994, are as follows:
<TABLE>
<CAPTION>
DEC. 31, DEC. 31,
1995 1994
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Plan assets at market value . . . . . . . . . . . . . . . . . . . . . . . . $ 6,844 $ 5,385
Actuarial present value of projected benefit obligation . . . . . . . . . . (8,634) (7,650)
-------- --------
Funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,790) (2,265)
Unrecognized net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . 282 765
Minimum pension liability recognized . . . . . . . . . . . . . . . . . . . (518) (562)
---------- ------------
Accrued pension cost . . . . . . . . . . . . . . . . . . . . . . . . . . . $(2,026) $(2,062)
======== ========
</TABLE>

The actuarial present value of the Company's vested benefit obligation
for the Milan Plan and Eagle Plan was $7.4 million and $6.4 million and the
accumulated benefit obligation was $7.9 million and $7.0 million at December
31, 1995 and 1994, respectively. Plan assets are held in a trust and include
corporate and U.S. government debt securities and common stocks.

Actuarial assumptions used to develop net periodic pension cost for
the fiscal years 1995, 1994 and 1993 were as follows:
<TABLE>
<CAPTION>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Discount rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5% 8.25% 7.5%
Expected long-term rate of return on assets . . . . . . . . . . . . . 8.0% 8.0% 8.0%
Rate of increase in compensation levels . . . . . . . . . . . . . . . 4.0% 4.0% 4.0%
</TABLE>

37
<PAGE> 38
The Company also participates in various multi-employer plans. The
plans provide for defined benefits to substantially all unionized workers.
Amounts charged to pension cost and contributed to the plans for the years
ended February 3, 1996, January 28, 1995, and January 29, 1994, totaled $6.4
million, $6.7 million, and $7.0 million, respectively. Under the provisions of
the Multi-employer Pension Plan Amendments Act of 1980, the Company would be
required to continue contributions to a multi-employer pension fund to the
extent of its portion of the plan's unfunded vested liability if it
substantially or totally withdraws from such plans. Management does not intend
to terminate operations that would subject the Company to such liability.

INCENTIVE COMPENSATION PLANS

The Company has incentive compensation plans for store management,
department heads and certain other management personnel. Incentive plans
included approximately 750 associates. Provisions for payments to be made
under the plans are based upon achievement of sales and earnings in excess of
specific performance targets.

Non-qualified stock option plans were ratified by stockholders and
implemented in 1990 and 1995 for key management employees. The number of
shares outstanding and exercisable is shown in the following table. As of
February 3, 1996, there were 983,950 options available for future grants.

STOCK OPTIONS OUTSTANDING AND EXERCISABLE

<TABLE>
<CAPTION>
SHARES SUBJECT OPTION PRICE
TO OPTION RANGE PER SHARE
--------- ---------------
<S> <C> <C>
Outstanding 1/30/93 73,375 $8.50 - $10.00
Granted - -
Exercised - -
Cancelled or expired 10,225 $8.50 - $10.00

Outstanding 1/29/94 63,150 $8.50 - $10.00
Granted 287,475 $3.375 - $4.75
Exercised - -
Cancelled or expired 5,275 $3.375 - $10.00

Outstanding 1/28/95 345,350 $3.375 - $10.00
Granted 1,016,050 $1.50 - $4.50
Exercised - -
Cancelled or expired 76,150 $3.375 - $10.00

Outstanding 2/3/96 1,285,250 $1.50 - $10.00
</TABLE>

38
<PAGE> 39
NOTE K--QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
NET
NET EARNINGS
GROSS EARNINGS (LOSS)
SALES MARGIN (LOSS) PER SHARE
----- ------ ---------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)

<S> <C> <C> <C> <C> <C>
1995
Quarter --First $ 245,530 $ 61,425 $ (4,483) $ (.41)
--Second 249,045 62,100 (5,291)(3) (.47)(3)
--Third 246,201 61,836 (2,643) (.24)
--Fourth 282,888(1) 68,994 (6,275)(4) (.56)(4)
---------- -------- ------------- --------
Total $1,023,664(2) $254,355 $ (18,692) $(1.68)
========== ======== =========== =======

1994
Quarter --First $ 250,097 $ 62,522 $ ( 361) $ (.03)
--Second 252,222 62,305 (6,328)(5) (.58)(5)
--Third 252,183 57,376 (7,423) (.67)
--Fourth 260,561 60,249 (4,762)(6) (.43)(6)
----------- --------- ----------- ----
Total $1,015,063 $242,452 $ (18,874) $(1.71)
========== ======== ========== ======

1993
Quarter --First $ 267,402 $ 66,947 $ (1,554)(7) $ (.14)(7)
--Second 265,364 67,203 559 .05
--Third 260,085 66,872 1,363 .12
--Fourth 269,497 68,166 (10,500)(8) (.94)(8)
----------- ---------- ----------- ---------
Total $1,062,348 $269,188 $ (10,132) $ (.91)
========== ======== ========== ========
</TABLE>

(1) Fourteen week quarter.
(2) Fifty-three week year.
(3) Net loss increased by an extraordinary charge of $625,000 related to
the refinancing of the Revolving Credit Facility.
(4) Net loss increased by a $6.5 million charge related to the
revaluation of certain assets (FAS 121).
(5) Net loss was increased by a voluntary severance program after-tax
charge of $4.2 million or $.38 per share.
(6) Net loss was increased by an after-tax charge of $1.2 million or $.11
per share resulting from an adjustment to the LIFO estimate.
(7) Net earnings were reduced by an after-tax extraordinary charge of
$4.0 million or $.36 per share related to the early retirement of
debt. Earnings before the extraordinary charge were $2.4 million or
$.22 per share.
(8) Net earnings were reduced by a after-tax store closing charge of
$10.6 million or $.95 per share. Net earnings were increased by $0.3
million or $.03 per share resulting from a LIFO credit.

NOTE L--EXTRAORDINARY CHARGE

The extraordinary charge in fiscal 1995 relates to the refinancing of
the Revolving Credit Facility (net of applicable income taxes). The
extraordinary charge in fiscal 1993 relates to the premium paid to retire the
Senior Subordinated Notes early of $4.2 million and the write-off of related
deferred financing costs of $2.2 million (net of applicable income taxes).

NOTE M--VOLUNTARY SEVERANCE PROGRAM

39
<PAGE> 40
The fiscal 1994 net loss includes a $6.9 million pre-tax charge in
the second quarter for a voluntary severance program for approximately 600
clerks in the Chicago area. Management expects that such severance costs
should be offset in the future as a result of lower wage and benefit costs of
replacement associates.

NOTE N -- FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Company's financial
instruments as of February 3, 1996, and January 28, 1995, are as follows:

<TABLE>
<CAPTION>
FEBRUARY 3, 1996 JANUARY 28, 1995
---------------- ----------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
------ ----- ------ -----
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash and cash equivalents . . . . . . . . . . $ 1,481 $ 1,481 $ 4,096 $ 4,096
Marketable securities . . . . . . . . . . . . 8,855 8,855 5,239 5,239
Bank revolving credit loan . . . . . . . . . 1,992 1,992 22,000 22,000
Senior Notes . . . . . . . . . . . . . . . . 100,000 70,000 100,000 40,000
</TABLE>

The fair value of cash and cash equivalents approximated its carrying
value due to the short-term nature of these instruments. The fair value of
marketable securities are based on quoted market prices. The fair value of the
Bank revolving credit loan approximated its carrying value due to its floating
interest rate. The fair value of the Senior Notes are based on quoted market
prices.

The amortized cost, gross unrealized gains and losses, estimated fair
values and maturities of the Company's marketable securities at February 3,
1996, are summarized as follows:

<TABLE>
<CAPTION>
FEBRUARY 3, 1996
----------------
UNREALIZED UNREALIZED FAIR
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
Money market mutual fund, due
within one year . . . . . . . . . . . . . . . $ 2,080 $ -- $ -- $ 2,080
Municipal bonds, due from 5 to 10
years . . . . . . . . . . . . . . . . . . 7,061 286 -- 6,775
--------- ----------- --------- ---------
Total marketable securities . . . . . . . . . . $ 9,141 $ 286 $ -- $ 8,855
======== ========== ======== ========
</TABLE>

NOTE O -- LITIGATION

NOTE P -- NEW PRONOUNCEMENTS

40
<PAGE> 41
awards to employees. The 1996 adoption of FASB No. 123, therefore, will have no
effect on reported earnings.

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

There have been no disagreements on accounting principles or practices
or financial statement disclosure between the Company and its independent
certified public accountants during the two fiscal years ended February 3,
1996.

41
<PAGE> 42

PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information required by this item concerning directors is set forth
under "Election of Directors" in the definitive proxy statement filed by the
Company with the Securities and Exchange Commission and is hereby incorporated
by reference into this 10-K. Certain information concerning the Company's
executive officers is included in Item 4(a) of Part I of this report.

ITEM 11: EXECUTIVE COMPENSATION

The information required by this item is set forth in the section
entitled "Executive Compensation" in the definitive proxy statement filed by
the Company with the Securities and Exchange Commission and is hereby
incorporated by reference into this Form 10-K.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is set forth in the tabulation of
the amount and nature of beneficial ownership of the Company's Common Stock
under the heading "Principal Shareholders and Election of Directors" in the
definitive proxy statement filed by the Company with the Securities and
Exchange Commission and is hereby incorporated by reference into this Form
10-K.

ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is set forth in the section
entitled "Compensation of Directors" in the definitive proxy statement filed by
the Company with the Securities and Exchange Commission and is hereby
incorporated by reference into this Form 10-K.

42
<PAGE> 43
PART IV

ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(a) The following documents are filed as a part of this report:

1. Financial Statements:

- Independent Auditors' Report 23

- Consolidated Balance Sheets as of February 3, 1996 and January 28, 1995 24

- Consolidated Statements of Operations for the years ended February 3, 1996, 25
January 28, 1995, and January 29, 1994

- Consolidated Statements of Equity for the years ended February 3, 1996, 26
January 28, 1995, and January 29, 1994

- Consolidated Statements of Cash Flows for the years ended 27
February 3, 1996, January 28, 1995, and January 29, 1994

- Notes to the Consolidated Financial Statements 28

2. Financial Statement Schedules:

All schedules are omitted because they are not applicable or not required, or because the information required
therein is included in the consolidated financial statements or the notes thereto.

3. Exhibits - see Exhibit Index on page 45.

(b) Reports on Form 8-K:

No reports on Form 8-K were filed during the fourth quarter of fiscal 1995.
</TABLE>

43
<PAGE> 44
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

EAGLE FOOD CENTERS, INC.

By: /s/ Robert J. Kelly
Robert J. Kelly
President, Chief Executive Officer

DATED: April 19, 1996

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

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Martin J. Rabinowitz Chairman and Director April 19, 1996
- ------------------------
Martin J. Rabinowitz

/s/ Robert J. Kelly President and Director April 19, 1996
- -------------------
Robert J. Kelly (Principal Executive Officer)

/s/ Herbert T. Dotterer Senior Vice President-Finance and April 19, 1996
- -----------------------
Herbert T. Dotterer Administration, Chief Financial Officer,
Secretary and Director
(Principal Financial and Accounting Officer)

/s/ Peter B. Foreman Director April 19, 1996
- --------------------
Peter B. Foreman

/s/ Steven M. Friedman Director April 19, 1996
- ----------------------
Steven M. Friedman

/s/ Michael J. Knilans Director April 19, 1996
- ----------------------
Michael J. Knilans

/s/ Alain Oberrotman Director April 19, 1996
- --------------------
Alain Oberrotman

/s/ Marc C. Particelli Director April 19, 1996
- ----------------------
Marc C. Particelli

/s/ Pasquale V. Petitti Director April 19, 1996
- -----------------------
Pasquale V. Petitti

/s/ William J. Snyder Director April 19, 1996
- ---------------------
William J. Snyder
</TABLE>

44
<PAGE> 45
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
3.1-- Certificate of Incorporation of the Company (filed as Exhibit 3.1 to the
Registration Statement on Form S-1 No. 33-29404 and incorporated herein by reference).

3.2-- By-laws of the Company (filed as Exhibit 3.2 to the Registration Statement on Form S-1 No. 33-29404
and incorporated herein by reference).

4.1-- Form of Note (filed as Exhibit 4.3 to the Registration Statement on Form S-1 No. 33-59454 and
incorporated herein by reference).

4.2-- Form of Indenture, dated as of April 26, 1993, between the Company and First Trust National
Association, as trustee (filed as Exhibit 4.4 to the Registration Statement on Form S-1 No. 33-59454
and incorporated herein by reference).

10.1-- Transaction Agreement, dated as of October 9, 1987, between EFC and Lucky Stores, Inc. (filed as
Exhibit 10.8 to the Registration Statement on Form S-1 No. 33-20450 and incorporated herein by
reference).

10.2-- Assignment and Assumption Agreement, dated November 10, 1987, among EFC, Lucky Stores, Inc. and
Pasquale V. Petitti regarding the Deferred Compensation Agreement (filed as Exhibit 10.11 of the
Registration Statement on Form S-1 No. 33-20450 and incorporated herein by reference).

10.3-- Trademark License Agreement, dated November 10, 1987, between Lucky Stores, Inc. and EFC (filed as
Exhibit 10.19 to the Registration Statement on Form S-1 No. 33-20450 and incorporated herein by
reference).

10.4-- Letter Agreement, dated June 10, 1988, between the Company's predecessor and Lucky Stores, Inc.
amending the Trademark License Agreement (filed as Exhibit 10.20 to the Company's Annual Report on
Form 10-K for the year ended January 28, 1989 (the "1988 10-K") and incorporated herein by
reference).

10.5-- Management Information Services Agreement, dated November 10, 1987, between Lucky Stores, Inc. and
the Company's predecessor (filed as Exhibit 10.20 to the Registration Statement on Form S-1 No. 33-
20450 and incorporated herein by reference).

10.6-- Letter Agreement, dated June 10, 1988, between the Company's predecessor and Lucky Stores, Inc.
Stores, Inc. amending the Management Information Services Agreement (filed as Exhibit 10.22 to the
Company's Annual Report on Form 10-K for the year ended January 28, 1989 and incorporated herein by
reference).

10.7-- Non-Competition Agreement, dated November 10, 1987, between the Company's predecessor and Lucky
Stores, Inc. (filed as Exhibit 10.21 to the Registration Statement on Form S-1 No. 33-20450 and
incorporated herein by reference).

10.8-- Credit Agreement, dated as of April 26, 1993, among the Company, as borrower, the lenders party
thereto and Caisse Nationale de Credit Agricole, Chicago Branch, and the First National Bank of
Chicago as co-agents; as amended by First Amendment to Credit Agreement dated as of October 15, 1993,
a Second
</TABLE>

45
<PAGE> 46
<TABLE>
<S> <C>
Amendment to Credit Agreement and Waiver dated as of January 28, 1994, and a Third Amendment to
Credit Agreement dated April 29, 1994.

10.9-- Letter Agreement, dated April 28, 1988, among American Stores Company, the Company's predecessor and
Odyssey Partners (filed as Exhibit 10.29 to the Registration Statement on Form S-1 No. 33-20450 and
incorporated herein by reference).

10.10-- Eagle Food Centers, Inc. Stock Incentive Plan, adopted in June 1990 (filed as Exhibit 19 to the
Company's Annual Report on Form 10-K for the year ended February 1, 1992 and incorporated herein by
reference).

10.11-- Agreement, dated as of February 8, 1993, by and between the Company and Oakridge Properties, Ltd.
(filed as Exhibit 10.17 to the Registration Statement on Form S-1 No. 33-59454 and incorporated
herein by reference).

10.12-- Form of Irrevocable Trust Agreement, to be dated as of April 26, 1993, among the Company, Eagle
Capital Corporation II and Shawmut Bank Connecticut, National Association, as trustee (filed as
Exhibit 10.18 to the Registration Statement on Form S-1 No. 33-59454 and incorporated herein by
reference).

10.13-- Performance Equity Plan of the Company as amended March 12, 1992. (Filed as Exhibit 10.18 to the
Company's Annual Report on Form 10-K for the year ended January 30, 1993 and incorporated herein by
reference.)

10.14-- Fourth Amendment to the Credit Agreement and waiver dated September 7, 1994. Fifth Amendment to the
Credit Agreement and waiver dated December 9, 1994. Sixth Amendment to the Credit Agreement dated
January 27, 1995.

10.15-- Seventh Amendment to the Credit Agreement and waiver dated April 24, 1995.

10.16-- Loan and Security Agreement, dated as of May 22, 1995, among the Company, as borrower, and the lender
party thereto, Congress Financial Corporation (Central).

10.17-- First Amendment to the Loan and Security Agreement dated August 21, 1995.

10.18-- 1995 Stock Incentive Plan as approved on June 21, 1995.

10.19-- Employment agreement dated May 10, 1995 between the Company and Robert J. Kelly, its President and
C.E.O.

10.20*-- Employment agreement dated July 10, 1995 between the Company and David S. Norton, its Senior Vice
President-Retailing.

10.21*-- Employment agreement dated November 14, 1995 between the Company and John N.A. Turley, its Vice
President-Grocery.

10.22*-- Agreement between the Company, Lucky Stores, Inc., The Midland Grocery Company and Roundy's Inc. to
terminate the Westville warehouse lease.
</TABLE>

46
<PAGE> 47
<TABLE>
<S> <C>
12.1-- Computation of Ratio of Earnings to Fixed Charges (filed as Exhibit 12.1 to the Registration
Statement on Form S-1 No. 33-59454 and incorporated herein by reference).

22.*-- Subsidiaries of the Registrant.

27*-- Financial Data Schedule (for SEC use only).
</TABLE>

*Filed herewith.

<PAGE> 1
EXHIBIT 10.20

June 27, 1995

Mr. David Norton
103 Andover Drive
Prospect Heights, IL 60070

Dear Dave:

This letter is intended to define the terms of the employment offer being
proposed by Eagle Food Centers, Inc. and is contingent on the final approval of
the Board of Directors.

Title: Senior Vice President of Retailing

Duties: Position shall be responsible for sales, marketing,
procurement, merchandising, gross profit, inventory and
inventory turns covering all product divisions and retail
stores. At company discretion, these functional alignments
and responsibilities may be modified.

Salary: $125,000 per year

Bonus: Participation in the Eagle bonus plan at the senior vice
president targeted norm of fifty (50%) percent of base
salary in accordance with the amount set by the Board of
Directors. Payout or partial payout is contingent on
company performance with final determination solely vested
with the Board of Directors.

Hiring Effective on the start date of hire, Eagle will provide a
Incentive: one time payment in the amount of ten thousand ($10,000)
dollars. Should you elect to leave Eagle's employ within
six (6) months of your start date of hire, said money shall
be repaid within thirty (30) days of the effective
termination.

Stock Eagle will provide options based on the following criteria:
Option: -- Award Level

(1) Effective on the one year anniversary of the start date,
25,000 shares @$2.50 per share
(2) Effective on the second year anniversary of the start
date, 25,000 shares @$3.50 per share
(3) Effective on the third year anniversary of the start
date, 25,000 shares @$4.50 per share
(4) Any change of ownership defined as the sale of more than
fifty (50%) percent of common stock to an entity other
than the public shall immediately vest said options
regardless of accumulated length of service
-- Options must be exercised within ten (10) years of
award thereof or once eligible, within thirty (30) days
following the termination of employment.

Relocation: Eagle will provide reimbursement of all usual and customary
real estate fees associated with the sale of your primary
residence not to exceed seven percent

48
<PAGE> 2
(7%) of the purchase price. Packing and movement of
household goods will be provided in accordance with company
policy. Execution of the physical move must be completed
within nine (9) months of your date of hire or the terms
described above shall be vacated.

Vacation: 1995: one (1) week
1996: three (3) weeks
1997: four (4) weeks

Benefits: Enrollment in all company benefit plans shall coincide and
be effective as of your start date. (Packet has been
previously provided).

Separation: If at any time during your employ with Eagle you are
terminated with or without cause, except for the conviction
of a felony, plead of no lo contendre to a felony, failure
to perform duties after receipt of appropriate warnings, or
embezzlement, fraud, or theft of company property, you shall
receive eighteen (18) months of compensation based on your
base salary at the time of separation. Health benefits will
also be continued throughout this eighteen (18) month
period; however, if you become eligible to participate in
any other group plan within this continuation period,
benefits as provided by Eagle will be terminated.

Hopefully, you will find this summary to be acceptable. Eagle offers a great
challenge and the chance to participate in an exciting turnaround effort. It
will be a pleasure working with you again and I look forward to building a
successful company with you as a key member of the senior management team.
Please give me a call so we can finalize. Thanks.

Cordially,

Robert J. Kelly
President and C.E.O.

<PAGE> 1
EXHIBIT 10.21

October 20, 1995

Mr. John N. A. Turley
13770 Moon Shadow Place
Chino Hills, CA 91709

Dear John:

This letter is intended to define the terms of the employment offer being
proposed by Eagle Food Centers, Inc. Please review to assure it is consistent
with prior discussions.

Title: Vice President of Grocery

Duties: Position shall be responsible for sales, procurement,
merchandising, gross profit, inventory and inventory turns
covering all product commodities within the grocery
operation. At company discretion, these functional
alignments and responsibilities may be modified.

Salary: $100,000 per year

Bonus: Participation in the Eagle bonus plan at the vice
president's targeted norm of thirty percent (30%) of base
salary which is in accordance with the plan design as
approved by the Board of Directors. Payout or partial
payout is contingent on company performance with final
determination solely vested with the Board of Directors.

Interim Eagle shall provide a one time payment of three thousand
Expenses: dollars ($3,000) for use with respect to interim moving and
temporary housing. Amount shall be grossed up to assure you
the three thousand dollar ($3,000) payout.

Stock Eagle will provide options based on the following criteria:
Options: Award Level

(1) Effective on the one year anniversary of the start date,
15,000 shares @$2.50 per share
(2) Effective on the second year anniversary of the start
date, 15,000 shares @$3.50 per share
(3) Effective on the third year anniversary of the start
date, 15,000 shares @$4.50 per share
(4) Any change of ownership defined as the sale of more than
fifty percent (50%) of common stock to an entity other
than the public shall immediately vest said options
regardless of accumulated length of service (5) Options
must be exercised within ten (10) years of award thereof
or once eligible, within thirty (30) days following
termination of employment.

Relocation: Eagle will provide reimbursement of all usual and customary
real estate fees associated with the sale of your primary
residence not to exceed seven percent (7%) of the purchase
price. Packing and movement of household goods will be
provided in accordance with company policy. Execution of
the physical move

50
<PAGE> 2
should be completed within nine (9) months of your date of
hire or the terms described above will become subject to
renegotiation.

Vacation: 1996: three (3) weeks
1997: four (4) weeks

Benefits: Enrollment in all company benefit plans shall coincide and
be effective as of your start date (packet enclosed).

Separation: If at any time during your employ with Eagle you are
terminated with or without cause, except for the conviction
of a felony, plead on no lo contendre to a felony, failure
to perform duties after receipt of appropriate warnings, or
embezzlement, fraud, or theft of company property, you shall
receive twelve (12) months of compensation based on your
base salary at the time of separation. Health benefits will
also be continued throughout this period; however, if you
become eligible to participate in any other group plan
within this continuation period, benefits as provided by
Eagle will be terminated.

Hopefully, you will find this summary to be acceptable. Eagle offers a great
challenge and the chance to participate in an exciting turnaround effort. It
will be a pleasure working with you again and I look forward to building a
successful company with you as a key member of the management team. Please
give me a call so we can finalize. Thanks.

Cordially,

Dave Norton
Senior Vice President of Retailing

<PAGE> 1
EXHIBIT 10.22

FOUR PARTY AGREEMENT

among

LUCKY STORES, INC., A DELAWARE CORPORATION,

EAGLE FOOD CENTERS, INC., A DELAWARE CORPORATION,

THE MIDLAND GROCERY COMPANY, AN OHIO CORPORATION,

and

ROUNDY'S, INC., A WISCONSIN CORPORATION

Dated: August 3, 1995

Location: U. S. Highway 421
Westville, Indiana

Store Number: 31-20

52
<PAGE> 2
FOUR PARTY AGREEMENT

THIS FOUR PARTY AGREEMENT ("AGREEMENT") is entered into as
of August 3, 1995, by and among EAGLE FOOD CENTERS, INC., a Delaware
corporation, ("EAGLE"), THE MIDLAND GROCERY COMPANY, an Ohio corporation
("MIDLAND"), ROUNDY'S, INC., a Wisconsin corporation ("ROUNDY'S") and LUCKY
STORES, INC., a Delaware corporation ("LUCKY"), also "PARTIES" or "PARTY".

RECITALS

A. Alidanorth, Inc., an Indiana corporation ("ALIDA"), an
affiliate of Lucky, is the owner of certain land (the "LAND") situated in the
County of La Porte, State of Indiana, and further described in Exhibit A.
Westville Associates, an Indiana limited partnership ("WESTVILLE") is the owner
of improvements (the "IMPROVEMENTS") located on the Land, and pursuant to a
Ground Lease dated as of August 20, 1981 (as amended, the "GROUND LEASE"), is
the ground lessee of the Land (the Land and the Improvement collectively, the
"SUBJECT PROPERTY"). Westville subleased the Land and leased the Improvements
pursuant to a Lease, Sublease and Agreement dated as of August 20, 1982 (as
amended, the "MASTER LEASE"). Lucky is presently the tenant under the Master
Lease. Lucky subleased the Land and Improvements pursuant to a Sublease dated
as of November 10, 1987 (as amended, the "EAGLE SUBLEASE"). Eagle is presently
the subtenant under the Eagle Sublease. In connection with the Eagle Sublease,
Lucky, Alida and Eagle are parties to an Agreement dated as of December 22,
1988 (the "LAND SALE AGREEMENT ') whereby Alida agreed to sell the Land to
Eagle (or its designee) upon the terms and conditions stated therein. Eagle
sub-subleased the Land and Improvements to Midland pursuant to a Sublease dated
as of December 28, 1988 (as amended, the "MIDLAND SUBLEASE"). Midland
presently occupies the Subject Property.

B. As of August 2, 1995, Eagle has provided Lucky with (i)
notice of Eagle's intention to terminate the Eagle Sublease pursuant to Section
15 of the Eagle Sublease, and, in connection therewith made an irrevocable
offer to purchase the Subject Property in accordance with the terms of the
Eagle Sublease (the "EAGLE TERMINATION NOTICE AND OFFER"); and (ii) notice of
Eagle's subsequent assignment to Midland of its interest as tenant under the
Eagle Sublease. Lucky has agreed to give a related notice and offer (the
"LUCKY TERMINATION NOTICE AND OFFER") to Westville as of August 3, 1995. Eagle
and Midland have delivered to Lucky letters of credit (the "Letters of Credit")
to secure their obligations arising from the Eagle Termination Notice and Offer
including the obligation of Midland to purchase the Subject Property if the
Lucky offer to purchase is not rejected by Westville or any other person
entitled to reject such offer.

C. The Parties acknowledge that the Subject Property was
financed by notes (the "Notes") issued to PW Westville Holding Corporation (the
"Corporation") and that Westville's interest in the Master Lease has been
assigned to Corporation and reassigned to Shawmut Bank, N.A. (the "Trustee") as
security for Corporation's notes.

53
<PAGE> 3
D. The Parties desire to set forth certain additional
agreements in connection with the transaction described above, all on the terms
and conditions set forth below.

AGREEMENT

NOW, THEREFORE, for valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties agree as follows:

1. RISK OF TERMINATION . The Parties acknowledge that, as a
result of Lucky giving the Lucky Termination Notice and Offer to Westville,
Westville may either (i) accept Lucky's offer to purchase the Subject Property,
in which case Westville will become obligated under the Master Lease to
transfer its interest in the Subject Property in accordance with the provisions
of the Master Lease, or (ii) reject Lucky's offer, in which case the Master
Lease shall terminate on the date determined pursuant to the Master Lease. The
Parties agree that termination of the Master Lease will automatically terminate
the Eagle Sublease on that same date.

2. EFFECT OF PURCHASE. The Parties agree to execute and deliver
all documents reasonably required to terminate the Ground Lease, Master Lease,
Eagle Sublease, Land Sale Agreement, and all other agreements relating to the
Subject Property concurrently with the acquisition by Midland of the Subject
Property as contemplated by this Agreement.

3. LUCKY'S EXERCISE: MIDLAND'S ASSUMPTION. The Parties
acknowledge that Lucky has exercised its right to terminate the Master Lease
and offer to purchase the Subject Property at the request of Eagle, Midland and
Roundy's and in reliance on this Agreement and the Letters of Credit and that
Lucky would not otherwise have exercised such rights at this time. Midland
hereby expressly assumes and agrees to perform all of the obligations of the
tenant under the Eagle Sublease arising out of the Eagle Termination Notice and
Offer, including the obligation to purchase the Subject Property if the Lucky
offer is not rejected.

4. REJECTION BY WESTVILLE. If, for any reason, Westville,
Trustee or any other person entitled to do so rejects the Lucky Notice of
Termination and Offer as invalid or untimely and attempts to keep the Master
Lease in effect, then the Parties agree that (i) the Master Lease and Eagle
Sublease and Midland Sublease shall not be deemed terminated by the Eagle
Termination Notice and Offer or the Lucky Termination Notice and Offer, and
(ii) Lucky shall have no responsibility to enforce the purchase or termination,
whether by legal action or otherwise; provided, however, Midland, Eagle and
Roundy's, at their respective sole expense, shall have the right, at their
respective option, to prosecute legal proceedings in Lucky's name and stead to
enforce the provisions of the Master Lease and the electing Party shall defend
and hold Lucky harmless from any cost or liability arising therefrom; provided,
however, if Eagle is the electing Party it shall provide a letter of credit or
such other security for its indemnification as Lucky may reasonably require. If
Westville or any such other person treats the Lucky Termination Notice and
Offer as effective but untimely for a purchase of the Subject Property on April
29, 1996, Lucky,

54
<PAGE> 4
Eagle, Midland and Roundy's agree that all of their obligations under this
Agreement and the Eagle Sublease shall be extended to include such later date
(but not beyond October 29, 1996) for purchase and that the Letters of Credit
shall be extended to cover such later date for purchase. The Eagle offer to
purchase the Subject Property and Midland's obligation to do so shall likewise
be extended. If the Letters of Credit have not been so extended on or prior to
April 25, 1996, Lucky shall have the right to draw on the Letters of Credit,
place the draw proceeds in escrow with the Trustee (or another financial
institution or institutional escrow holder if the Trustee is unwilling or
unable to act in such capacity), with the proceeds to be invested in
obligations of the Federal Government. Such Letter of Credit proceeds shall be
applied to the purchase price of the Subject Property or, if the Lucky offer is
rejected, returned to the Party whose Letter of Credit was not extended. Any
earnings on such investments shall be paid to the Party whose Letter of Credit
was not extended.

5. WAIVER AND INDEMNITY. Lucky acknowledges that Midland will
continue to occupy the Subject Property and hereby agrees to waive, solely on
its own behalf, the provisions of Section 16(c) of the Eagle Sublease.

Notwithstanding the foregoing, the Parties acknowledge that provisions of such
Section 16(c) expressly run for the benefit of Westville, the Corporation, the
Trustee, and the holders of the Corporation's notes and shall survive the
termination of the Eagle Lease.

Accordingly, Roundy's and Eagle, jointly and severally hereby indemnify, holds
harmless and agree to defend Lucky from and against all claims, damages,
expenses (including, without limitation, reasonable attorneys' fees and
reasonable investigative and discovery costs), liabilities and judgments on
account of the action of any of the persons or entities referred to in the
preceding paragraph based upon an alleged violation of Section 16(c) of the
Eagle Sublease.

6. GUARANTEE BY ROUNDY'S. Roundy's hereby unconditionally and
absolutely guarantees to Lucky, and independently assumes liability to Lucky,
without any requirement whatsoever of resort by Lucky to any other person,
entity or security, of (i) the payment of any and all sums to be paid by
Midland, and (ii) the performance of each and every obligation of Midland,
under the Eagle Sublease, the Eagle Termination Notice and Offer and this
Agreement (collectively, the "OBLIGATIONS"). Roundy's hereby fully waives all
requirements of demand, presentment, protest, and notice of every kind
concerning the Obligations. Roundy's guarantee shall extend to any amendment or
modification of the Obligations signed in writing by Midland. Roundy's hereby
consents to any action or inaction by Lucky with respect to the Obligations.
Roundy's waives any right to require Lucky to proceed against Midland or any
other security or the Obligations.

7. NOTICES. All notices, requests, demands, and other
communications (collectively, "NOTICES") hereunder shall be in writing and
given by (i) established express delivery service which maintains delivery
records, (ii) hand delivery, or (iii) certified or registered mail, postage
prepaid, return receipt requested, to the Parties at the following addresses,
or at such other address as the Parties may designate by Notice in the above
manner:

55
<PAGE> 5

<TABLE>
<S> <C>
To Lucky: With copy to:
c/o American Stores Properties, Inc. Roger L. Ellison, Esq.
444 East 100 South Loeb and Loeb
Salt Lake City, UT. 84111 1000 Wilshire Boulevard, Ste 1800
Attn: Legal Department Los Angeles, California 90017
Fax: 801-320-5595 Fax: 213-688-3460

To Eagle: With copy to:
Eagle Food Centers, Inc. William Snyder, Esq.
Rt. 67 and Knoxville Rd. Snyder & Schwarz, P.C.
Milan, Illinois 61264 1600 Fourth Avenue, Ste 200
Fax: (309) 787-7264 Rock Island, Illinois 61204
Fax: 309-786-0463

To Midland: With copy to:
23000 Roundy Drive Larry Dalton
Pewaukee, Wisconsin 53072 Whyte Hirschboeck Dudek, S.C.
Attn: Secretary Suite 2100
Fax (414) 547-4540 111 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Fax: (414) 224-5890

To Roundy's: With copy to:
23000 Roundy Drive Larry Dalton
Pewaukee, Wisconsin 53072 Whyte Hirschboeck Dudek, S.C.
Attn: Secretary Suite 2100
Fax (414) 547-4540 111 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 224-5890
</TABLE>

Notices may also be given by fax, provided the Notice is
concurrently given by one of the above methods. Notices are effective upon
receipt, or upon attempted delivery if delivery is refused or impossible
because of failure to provide a reasonable means for accomplishing delivery.

8. ATTORNEYS' FEES. If a Party commences a legal proceeding to
enforce any of the terms of this Agreement, the prevailing Party in such action
shall have the right to recover reasonable attorneys' fees and costs from the
other Party to be fixed by the court in the same action.

56
<PAGE> 6
9. SURVIVAL. The indemnities and guarantee set forth in
Sections 4, 5 and 6 shall survive any expiration or termination of this
Agreement and shall not merge into any deed delivered and accepted upon the
closing of the transaction herein contemplated.

10. CONFLICT. In the event of any inconsistencies between the
terms of this Agreement and the terms of the Eagle Sublease and/or Midland
Sublease, the terms of this Agreement shall control.

11. EXHIBITS. Exhibit A attached hereto is incorporated herein
by this reference.

12. MISCELLANEOUS. The terms, covenants and conditions herein
contained shall be binding upon and inure to the benefit of the Parties and
their heirs, successors, transferees and assigns. No Party may assign this
Agreement or any rights hereunder to anyone except with the prior written
consent of the other Parties, provided that Midland may assign this Agreement
or any rights hereunder to a third party so long as Roundy's remains liable for
all of Roundy's and Midland's obligations with respect to this transaction, and
further provided that Lucky may assign this Agreement or its rights hereunder:
(i) to any entity which is wholly-owned or ultimately owned (i. e. through
various subsidiaries) by American Stores Company (a "LUCKY AFFILIATE"); or (ii)
in connection with a sale or disposal of the assets of Lucky, American Stores
Company or any Lucky Affiliate. This Agreement and those additional agreements
referenced herein constitute the entire agreement among the Parties with
respect to the subject matter hereof and may only be modified by a subsequent
writing executed by all Parties. Time is expressly made of the essence of all
the provisions of this Agreement. This Agreement shall be interpreted and
construed only by the contents hereof, and there shall be no presumption or
standard of construction in favor of or against any Party. This Agreement shall
be construed and enforced in accordance with, and governed by, the law of the
state in which the Subject Property is located. The individuals executing this
Agreement represent and warrant that they have the power and authority to do
so, and to bind the entities for whom they are executing this Agreement.

14. COUNTERPARTS. The Parties agree that this Agreement may be
executed in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument. Facsimile signatures will be binding upon the Parties Upon the
request of any Party, the Parties shall exchange fully executed counterpart
originals of this Agreement.

15 CONFIDENTIALITY AND NO THIRD PARTY BENEFICIARIES. The
Parties agree that this Agreement and all of the terms and conditions hereof
are confidential and shall not be disclosed to any third party without the
prior written consent of the Parties hereto, unless such disclosure is made
pursuant to the order of a court having jurisdiction of the Party who is being
requested to make such disclosure. The parties agree that this Agreement is
solely for the benefit of the Parties and is not intended and shall not be
construed to grant, create or confer any rights upon or for the benefit of any
third parties.

57
<PAGE> 7
IN WITNESS WHEREOF, this Agreement has been executed as of
the date first above written.

EAGLE FOOD CENTERS INC., a
Delaware corporation

By:____________________________
Its :__________________________

"EAGLE"

THE MIDLAND GROCERY COMPANY,
an Ohio corporation

By:____________________________
Its: __________________________

By:____________________________
Its:___________________________

"MIDLAND"

ROUNDY'S, INC., a Wisconsin
corporation

By:____________________________
Its: __________________________

"ROUNDY'S"

LUCKY STORES, INC., a Delaware
corporation

By:____________________________
Its: __________________________

ATTEST

By:________________________
Its:_______________________

"LUCKY"

<PAGE> 1

EXHIBIT 22

EAGLE FOOD CENTERS, INC.
SUBSIDIARIES

Eagle Pharmacy Co.

Milan Distributing Co.

Eagle Country Markets, Inc.

BOGO'S, Inc.

Talon Insurance Company, Inc.

<ARTICLE> 5

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-03-1996
<PERIOD-END> FEB-03-1996
<CASH> 1,481,000
<SECURITIES> 8,855,000
<RECEIVABLES> 17,144,000
<ALLOWANCES> 1,024,000
<INVENTORY> 80,892,000
<CURRENT-ASSETS> 112,117,000
<PP&E> 270,369,000
<DEPRECIATION> 133,916,000
<TOTAL-ASSETS> 265,278,000
<CURRENT-LIABILITIES> 110,547,000
<BONDS> 100,000,000
<COMMON> 115,000
0
0
<OTHER-SE> 23,806,000
<TOTAL-LIABILITY-AND-EQUITY> 265,278,000
<SALES> 1,023,664,000
<TOTAL-REVENUES> 1,023,664,000
<CGS> 769,309,000
<TOTAL-COSTS> 769,309,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 472,000
<INTEREST-EXPENSE> 15,497,000
<INCOME-PRETAX> (18,676,000)
<INCOME-TAX> (609,000)
<INCOME-CONTINUING> (18,067,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 625,000
<CHANGES> 0
<NET-INCOME> (18,692,000)
<EPS-PRIMARY> (1.68)
<EPS-DILUTED> (1.68)

</TABLE>