EAGLE FOOD CENTERS INC - 10-K Annual Report

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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 2, 2002 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 whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court: 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 $1,106,650 as of April 19, 2002.

The number of shares of the Registrant's Common Stock, par value four cent
$(0.04) per share, outstanding on April 19, 2002 was 3,114,470.

Documents incorporated by reference include:
1) Portions of the definitive Proxy Statement expected to be filed with the
Commission on or about May 20, 2002 with respect to the annual meeting of
shareholders are incorporated by reference into Part III.

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FISCAL YEAR ENDED FEBRUARY 2, 2002
FORM 10-K ANNUAL REPORT

TABLE OF CONTENTS

PART I

Item 1: Business 3

Item 2: Properties 7

Item 3: Legal Proceedings 8

Item 4: Submission of Matters to a Vote of Security Holders 8

PART II

Item 5: Market for Registrant's Common Equity and Related Shareholder Matters 9

Item 6: Selected Financial Data 10

Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations 11

Item 7a: Quantitative and Qualitative Disclosure About Market Risk 19

Item 8: Financial Statements and Supplementary Data 20

Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosures 45

PART III

Item 10: Directors and Executive Officers of the Registrant 46

Item 11: Executive Compensation 47

Item 12: Security Ownership of Certain Beneficial Owners and Management 47

Item 13: Certain Relationships and Related Transactions 47

PART IV

Item 14: Exhibits, Financial Statement Schedules and Reports on Form 10-K 48

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PART I

ITEM 1: BUSINESS

GENERAL

Eagle Food Centers, Inc. (the "Company" or "Eagle"), is a Delaware Corporation.
Eagle is a leading regional supermarket chain operating 64 supermarkets as of
the end of fiscal 2001 in northern and central Illinois and eastern Iowa under
the trade names "Eagle Country Market-Registered Trademark-", "Foodco"-TM-"",
"Eagle Discount Foods"-TM-"" and "BOGO's Food and Deals"-TM-"." Most 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, and in certain stores, service seafood, prescription
medicine, video rental, floral service, in-store banks, dry cleaners and coffee
shops.

The Company's fiscal year ends on the Saturday closest to January 31st. Fiscal
2001 was a 52-week year ending on February 2, 2002, fiscal 2000 was a 53-week
year ending on February 3, 2001 and fiscal 1999 was a 52-week year ending
January 29, 2000.

Talon Insurance Company ("Talon"), formed in the State of Vermont to provide
insurance for Eagle's workers' compensation, general liability and automobile
(effective November 1, 2001) claims, is a wholly owned subsidiary of Eagle Food
Centers, Inc.

REORGANIZATION PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE

On February 29, 2000 (the "Petition Date"), the Company filed a voluntary
petition under Chapter 11 of Title 11 of the United States Code. The petition
was filed in the United States Bankruptcy Court for the District of Delaware
under case number 00-01311. The Company continued to manage its affairs and
operate its business as a debtor-in-possession while the Bankruptcy Case was
pending. The Bankruptcy Case, which proceeded before the United States District
Court for the District of Delaware, was commenced in order to implement a
financial restructuring of the Company that had been pre-negotiated with holders
of approximately 29% of the principal amount of the Company's Senior Notes due
April 15, 2000. On March 10, 2000, the Company filed a plan of reorganization
(the "Plan") to implement the financial restructuring, which Plan was
subsequently amended on April 17, 2000.

The Plan was confirmed on July 7, 2000 and consummated on August 7, 2000. The
Company replaced the Senior Notes with new Senior Notes that have the following
material terms and conditions; (i) maturity date of April 15, 2005, (ii) an
interest rate of 11%, (iii) a $15 million repayment of outstanding principal by
the Company upon the effective date of the Plan, and (iv) the Company may, at
its option and with no prepayment penalty, redeem the Senior Notes at any time
at 100% of the principal amount outstanding at the time of redemption. In
addition, under the Plan, the Company agreed to issue 15% of fully-diluted
common stock of the Company (482,605 shares after adjusting for reverse stock
split - see item 5) to the holders of the old Senior Notes, of which 10% would
have been returned to the Company had the Company been sold or the debt retired
prior to October 15, 2001. If the Company is sold or the debt is retired prior
to October 15, 2002, 5% of the common stock will be returned to the Company.
None of the common stock will be returned to the Company if the Company is not
sold or the debt retired prior to October 15, 2002. The shares were recorded at
fair value in the amount of $2.1 million with the offsetting amount recorded as
a discount against the Senior Notes. The discount is being amortized over the
life of the debt.

The United States Bankruptcy Court for the District of Delaware, on January 28,
2002, entered a final decree and order closing the Chapter 11 case.

STORE DEVELOPMENT AND EXPANSION

The Company operates 61 Eagle Country Markets, one Eagle Discount Foods, one
Foodco and one Bogo's Food and Deals. Eagle Country Markets represent the
Company's primary full line supermarket format. Most Eagle Country Markets offer
extra space devoted to expanded perishable departments, tying together meat,
produce, full-service delicatessen and service bakery departments, and, in
certain stores, offering service seafood, prescription medicine, video rental,
floral service, in-store banks, dry cleaners and coffee shops. Eagle Country
Markets range in size from 16,500 to 67,500 square feet, with the majority of
the stores over 30,000 square feet. The pricing strategy in the Eagle Country
Markets is to offer overall lower prices than comparable supermarket
competition. The Company converted one Eagle Country Market to the Eagle
Discount Foods format during fiscal 2001. This format offers many of the same
product selection, quality and service features as an Eagle Country Market, with
the addition of a wall of

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values, fewer stock keeping units and lower overall prices. The Company also
converted one Eagle Country Market to the Foodco format during fiscal 2001.
Foodco will operate as a high standard, price impact store designed to serve the
needs of value conscious customers. The Foodco store will maintain an aggressive
pricing strategy while meeting the needs of the local market for product
selection, quality and service. The Company expects the lower prices in Eagle
Discount Foods and Foodco to be more than offset by the benefits of higher sales
and a lower labor rate. The Company operates one BOGO's Food and Deals, which
uses a limited assortment format covering approximately 2,000 stock-keeping
units of groceries, produce, meat, health and beauty aids, and general
merchandise.

The Company continuously reviews the performance of all stores and expects to
implement a variety of strategies, including converting or modifying certain
store formats and selling, subleasing or otherwise closing underperforming
stores. The Company will continue to evaluate the financial performance of the
recent store conversions to the Eagle Discount Foods and Foodco formats.

Management intends to focus the Company's store development within existing
markets or new markets within a 300 mile radius of its headquarters and 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 evaluate store
development based on factors such as existing competition, demographic
composition and available locations.

The Company completed six major remodels in fiscal 2001 and plans to complete
three additional major remodels in fiscal 2002. The Company closed 19 stores and
sold one store during fiscal 2000.

The Company prefers to lease stores from local developers and pursues this
strategy wherever appropriate and cost-effective. The Company completed three
sale/leaseback transactions in fiscal 1999 to reduce the amount of capital
committed to real estate. As of year-end, the Company owned eight operating
stores and one closed store, with the closed store classified in "Property held
for resale." The Company leased 56 operating stores and two subleased stores.

The Company continues to seek opportunities for growth through alignment with
other supermarket retail companies or acquisition of individual stores to
achieve economies of scale relating to office and distribution functions.

STORE OPERATIONS

The Company's geographic market is divided into five districts, each having a
District Manager responsible for approximately 12 stores. Districts and stores
operate with a certain degree of autonomy to take advantage of local market and
consumer needs. Districts and stores are responsible for store operations,
associate recruitment and development, community affairs and other functions
relating to local operations.

Store managers and marketing work together in tailoring merchandise and services
to the needs of customers in the particular community. Associate involvement and
participation has been encouraged through district meetings and a store
management incentive bonus program for sales and earnings improvement.

COMPUTER AND INFORMATION SYSTEMS

The Company outsources its Information Systems function to Electronic Data
Systems ("EDS") to assume complete responsibility for the Company's information
systems. The Company signed a new Services Agreement with EDS on July 1, 2000
with a term of five years. Either party may terminate the Services Agreement at
any time after the first three contract years by giving the other party at least
ninety days written notice designating the termination date.

Eagle management uses technology as a means of enhancing productivity,
controlling costs, providing a quality shopping experience for customers and
learning more about shoppers' buying preferences. Eagle has embraced
client/server technology and completed the replacement of all mainframe-based
legacy systems with new client/server systems as of the end of fiscal year 1999.
Eagle will continue to research and explore all possibilities to enhance service
to its customers and suppliers through technology.

During fiscal 2001, the Company implemented and integrated several new or
modified client/server applications that will equip the Company for processing
well into the future. These applications, which support essential business
functions, include a category management and pricing system, gift cards, a web
site, loyalty card database management and in-store printing of signs, tags and
labels. The Company also completed the upgrade of numerous systems including
human resources, warehouse and distribution, store applications (cash
management, direct store delivery and pricing) and payment processing systems
(debit, credit and check processing).

4

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 and general merchandise 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 sales and money order sales. All stores provide
quick, friendly checkout service. Management intends as part of its current
strategy to further enhance customer service through additional training of
store associates, as well as incentive programs linked to customer satisfaction
ratings.

CORPORATE BRANDS (PRIVATE LABEL) - Corporate brand sales are an important
element in Eagle's merchandising plan. The Company is a member of the Topco
Associates, Inc. ("Topco") buying organization and has engaged Daymon
Associates, Inc. as its "corporate brand" broker. Eagle has a strong penetration
in many categories with its Lady Lee, Food Club, Best Yet, Top Care and Top
Crest brands. Eagle also has the Valu Time label for the low price corporate
brand niche.

SELECTION - A typical Eagle store carries over 23,000 items, including food,
general merchandise and specialty department items. The Company carries
nationally advertised brands and an extensive selection of top quality corporate
brand products. Most 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, and in certain stores, service
seafood, prescription medicine, video rental, floral service, in-store banks,
dry cleaners and coffee shops. Product selection also includes ethnic food
items, beer, wine and liquor.

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 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.

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. The Company seeks co-op advertising reimbursements from
vendors, which has allowed the Company to broaden its exposure in various media.

In fiscal 2001 the Company brought the advertising process in-house instead of
utilizing an advertising agency. Advances in technology and lower technology
costs have allowed the Company to support its advertising strategy at a lower
cost utilizing in-house staff and equipment.

PURCHASING AND DISTRIBUTION

The majority of the Company's stores are located within 200 miles of the
Company's central distribution facility in Milan, Illinois. This complex
includes the Company's corporate office, 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 a 935,332 square foot central distribution facility (which includes
approximately 189,072 square feet of refrigerated and freezer space). The
Company discontinued warehousing most health and beauty care products during the
third quarter of fiscal 1999 and currently purchases these products,
representing approximately 6% of the stores' inventory requirements, from a
wholesaler. The remaining 24% of the stores' inventory is delivered direct from
product vendors to the stores. The Company's purchasing and warehousing
functions are managed through its central merchandising system.

5

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 participates in "consortium buys" (consolidated volume buys) involving
other regional chains and independent retailers to reduce product cost. 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. The
Company believes that its relationship with suppliers is good. However, there
can be no assurance that suppliers will continue to provide product to Eagle on
the same terms and conditions in the future.

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 Hy-Vee, Cub, Dominicks, Jewel Osco,
Kmart, Kroger, Meijer, Shop-N-Save, Target and Wal-Mart (Supercenters and Sam's
Clubs). Management believes that the Company's principal competitive advantages
are its value perception, strength of perishables (especially meat and produce),
the attractive Eagle 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 work rules, labor and benefit
costs of unionized associates.

Supercenters continue to open in trade areas served by the Company. Wal-Mart
Supercenters opened two stores in fiscal 2001, two stores in fiscal 2000, and
three stores in fiscal 1999. Meijer opened two stores in fiscal 2001, three
stores in fiscal 2000 and one store in fiscal 1999. Additional supercenter
openings by Kmart, Wal-Mart, Target and Meijer are likely in the next several
years. The supercenter format, which adds new grocery square footage to the
market, offers traditional grocery products at low prices with the intent to
attract customers to the general merchandise side of the store. These new
competitors operate at a significant cost advantage to supermarkets by using
mostly part-time, non-union employees. In addition, the Company expects
continued growth of the traditional supermarket competitor.

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-Registered Trademark-", "5-Star
Meats-Registered Trademark-", "Lady Lee-Registered Trademark-", "Eagle Savers'
Card-Registered Trademark-" and "Harvest Day-Registered Trademark-" trademarks,
and the "Eagle-Registered Trademark-", "Eagle Country Market-Registered
Trademark-", "Eagle Discount Foods"-TM-"", "Foodco"-TM-"", "BOGO's Food and
Deals"-TM-"" and "Liquor Locker"-TM-"" service marks. Each such trademark is
federally registered. 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-Registered Trademark-", "Lady Lee-Registered Trademark-" and "Harvest
Day-Registered Trademark-" trademarks until November 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 2001, the Company had 4,116 associates, 290 of whom were
management and administrative associates and 3,826 of whom were hourly
associates. Of the Company's hourly associates, substantially all are
represented by 15 collective bargaining agreements with seven separate locals
that are associated with two international unions. Store associates are
represented by several locals of the United Food and Commercial Workers;
warehouse associates, warehouse drivers and office and clerical workers are
represented by Teamsters Local 371. Four contracts will expire during fiscal
2002, covering 48% of the Company's associates. 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.

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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, an
associate stock purchase program, preferential discounts and a 401(k) savings
plan.

ITEM 2: PROPERTIES

STORES

The Company operated 64 stores as of the fiscal year end, ranging in size from
16,500 to 67,500 square feet, with an average size of 39,762 square feet. Nine
of the Company's stores, including one closed store, are owned in fee by the
Company. The closed store is classified in "Property held for resale." The
Company is the lessee for the remaining 56 operating stores and two subleased
stores. The Company sold and leased back three of its stores in fiscal 1999.

Selected statistics on Eagle retail food stores are presented below:

(1) A major remodeling project is one that costs $300,000 or more.

Eagle stores contain various specialty departments such as delicatessen (63
stores), bakery (62 stores), service seafood (17 stores), pharmacies (16
stores), video rentals (35 stores), floral service (53 stores), in-store banks
(14 stores) and alcoholic beverages (59 stores).

Most of the leases for the stores contain renewal options for periods ranging
from five to 30 years. The Company is required to pay fixed rent on 56 operating
stores and a percentage (ranging from 0.75% to 3.0%) of its gross sales in
excess of stated minimum gross sales amounts under 40 of these leases. The
Company leases two subleased store locations. For additional information on
leased premises, see Notes D and H of the notes to the Consolidated Financial
Statements.

7

CENTRAL DISTRIBUTION

The Company leases its central distribution facility under a lease expiring
February 28, 2007. The Company's central distribution facility contains a total
of 935,332 square feet of space.

Substantially all 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 Consolidated Financial Statements.

ITEM 3: LEGAL PROCEEDINGS

BANKRUPTCY CASE

The Bankruptcy Case was consummated on August 7, 2000 and closed on January 28,
2002. Additional information relating to the Bankruptcy Case is set forth in
PART 1, ITEM 1 of this Form 10-K report under the caption "Reorganization
Proceedings Under Chapter 11 of the Bankruptcy Code." Such information is
incorporated herein by reference. (See Note M of the notes to the Consolidated
Financial Statement.)

OTHER CASES

The Company is subject to various other unresolved legal actions that arise in
the normal course of its business. Although it is not possible to predict with
certainty and no assurances can be given with respect to such matters, the
Company believes the outcome of these unresolved legal actions will not have a
materially adverse effect on its results of operations, liquidity or financial
position.

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 2001.

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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 SmallCap Market under the symbol
"EGLE." The stock began trading publicly on July 27, 1989 on the Nasdaq National
Market. Trading of the Company's common stock was suspended subsequent to the
close of business on February 29, 2000 as a result of the Bankruptcy Case.
Trading resumed on August 10, 2000. The Company's common stock began trading on
the Nasdaq SmallCap Market on May 15, 2001. As of April 19, 2002, there were
approximately 5,500 beneficial holders of shares. The following table sets
forth, by fiscal quarter, the high and low closing prices reported for the
periods indicated.

There were no dividends paid in fiscal 2001 or fiscal 2000. The indenture
underlying the Company's Senior Notes and the Amended and Restated Loan and
Security Agreement contain restrictions on the payment of dividends (see Note F
of the notes to the Consolidated Financial Statements). The Company does not
intend to pay dividends in the foreseeable future.

Nasdaq staff informed the Company, by letter dated November 13, 2000, that it
had not maintained a minimum market value of public float of $5,000,000 and a
minimum bid price of $1.00 over 30 consecutive trading days as required for
continued listing on the Nasdaq National Market. Nasdaq staff had determined
that the Company's Common Stock would be delisted from quotation on the Nasdaq
National Market at the opening of business on February 14, 2001. On February 12,
2001, the Company delivered a request for an appeal to the Nasdaq Listing
Qualifications Panel. The delisting process was suspended pending resolution of
the appeal.

The Company presented a plan to the Nasdaq Listing Qualifications Panel for
achieving compliance with the listing requirements of the Nasdaq National Market
at a hearing held March 28, 2001. No decision was made at the hearing regarding
the continued listing of the Company's shares. Members of the Listing
Qualifications Panel suggested that the Company consider a reverse stock split
and applying for listing on the Nasdaq SmallCap Market. The Company sent a
letter to the panel on April 2nd in which the Company modified its earlier plan
by (i) consenting to the possible change from listing on the Nasdaq National
Market to listing on the Nasdaq SmallCap Market and (ii) consenting to recommend
shareholder approval of a reverse stock split in the event other measures are
not sufficient to achieve compliance with the Nasdaq listing requirements for
either the Nasdaq National Market or the Nasdaq SmallCap Market.

The Company's common stock began trading on the Nasdaq SmallCap Market on May
15, 2001. On June 27, 2001 the Shareholders of Eagle Food Centers, Inc. approved
an amendment to the Company's Certificate of Incorporation to accomplish a
reverse stock split. This was effective on June 29, 2001 and resulted in each
four outstanding shares of the Company's common stock being automatically
reclassified and changed into one share of the Company's common stock. Prior
period common stock information has been presented on a comparative basis.

Nasdaq staff again informed the Company, by letter dated February 14, 2002, that
it had not maintained a minimum closing bid price of $1.00 per share over 30
consecutive trading days as required for continued listing on the Nasdaq
SmallCap Market. Nasdaq staff has given the Company until August 13, 2002 to
regain compliance with the minimum closing bid price of $1.00 per share for at
least ten consecutive trading days. The Company will be granted an additional
180 days to achieve the minimum closing bid price requirement, after August 13,
2002, if Nasdaq staff determines the Company meets the initial listing criteria
for the Nasdaq SmallCap Market, which are stockholder's

9

equity of $5 million, market capitalization of $50 million or net income of
$750,000 (excluding extraordinary or non-recurring items) in the most recently
completed fiscal year or in two of the last three most recently completed fiscal
years.

If the Company's common stock is not listed for trading on the Nasdaq SmallCap
Market, trading of the common stock would likely be on the OTC Bulletin Board or
similar quotation system. Inclusion of the Company's common stock on the OTC
Bulletin Board or similar quotation system could adversely affect the liquidity
of the Company's common stock and may impact the public's perception of the
Company. There can be no assurance that delisting would not have a material
adverse effect on liquidity or business operations.

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 2, 2002.

The selected historical financial data for the five fiscal years ended February
2, 2002 are derived from the audited Consolidated Financial Statements of the
Company. The fiscal years ended February 2, 2002 and February 3, 2001 have been
audited by KPMG LLP, independent auditors, and the fiscal year ended January 29,
2000 has been audited by Deloitte & Touche LLP, independent auditors, and are
included in this Form 10-K.

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.

(1) Represents a charge of $821 thousand for asset revaluation in fiscal 2000.
Represents a charge of $1.7 million to provide for costs of closed stores,
$4.6 million for asset revaluations, and a $2.1 million goodwill write off
in fiscal 1999. Represents a $2.9 million charge related to future lease
costs for the mainframe, and various related software, software licenses
and contracting costs in connection with the migration from mainframe to
client/server technology in fiscal 1998. (See Notes B and D of the notes to
the Consolidated Financial Statements.)
(2) See Item 7: Management's Discussion and Analysis of Financial Condition and
Results of Operations, "Reorganization Items, Net."
(3) Represents gain of $2.5 million and $5.3 million related to the buy back of
the Senior Notes in fiscal 2001 and fiscal 2000, respectively. (See Note F
of the notes to the Consolidated Financial Statements.)

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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:

RESULTS OF OPERATIONS

SALES

Sales for fiscal 2001 (52 weeks) were $723.1 million, a decrease of $53.8
million or 6.9% from fiscal 2000 (53 weeks). Same store sales decreased 2.1%
from fiscal 2000 to fiscal 2001, after adjusting fiscal 2000 to a comparable 52
week year. The Company was operating 64 stores as of the end of fiscal 2001 and
fiscal 2000.

Sales for fiscal 2000 were $776.8 million, a decrease of $156.0 million or 16.7%
from fiscal 1999. Same store sales increased 0.1% from fiscal 1999 to fiscal
2000, after adjusting fiscal 1999 to a comparable 53 week year. The Company was
operating 64 stores as of the end of fiscal 2000 and 84 stores at the end of
fiscal 1999.

The reduction in total sales in fiscal 2001 and fiscal 2000, after adjusting to
a comparable one year period, is due primarily to the closure of seventeen
stores and sale of one store during the first quarter of fiscal 2000 and the
closure of two stores in the second quarter of fiscal 2000.

GROSS MARGIN

Gross margin as a percentage of sales was 25.92% in fiscal 2001 compared to
25.52% in fiscal 2000 and 25.98% in fiscal 1999. Gross margin was $10.8 million
or 5.5% lower in fiscal 2001 than in fiscal 2000 partially due to a decrease of
$4.7 million relating to the closure of nineteen stores and sale of one store
during fiscal 2000. Gross margin was $44.1 million or 18.20% lower in fiscal
2000 than in fiscal 1999 due primarily to a decrease of $27.8 million relating
to a reduction in the number of stores from 84 at the end of fiscal 1999 to 64
at the end of fiscal 2000 and a decrease of $14.2 million relating to other
stores closed during fiscal 1999. Gross margin included a charge for the LIFO
reserve of $0.1 million, or 0.01% of sales, in fiscal 2001, a net benefit of
$1.2 million, or 0.15% of sales, in

11

fiscal 2000 and a net benefit of $0.7 million, or 0.08% of sales, in fiscal
1999. The LIFO reserve reductions in fiscal 2000 and fiscal 1999 primarily
reflect the reduction in inventory due to the closure or sale of underperforming
stores during the two years.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses as a percentage of sales were
22.30% in fiscal 2001 compared to 22.39% in fiscal 2000 and 22.07% in fiscal
1999. Selling, general and administrative expenses were $12.7 million or 7.30%
lower in fiscal 2001 than in fiscal 2000 primarily due to a decrease of $8.2
million relating to the closure of nineteen stores and sale of one store during
fiscal 2000. Selling, general and administrative expenses were $31.9 million or
15.50% lower in fiscal 2000 than in fiscal 1999 due primarily to a decrease of
$28.7 million relating to a reduction in the number of stores from 84 at the end
of fiscal 1999 to 64 at the end of fiscal 2000 and a decrease of $9.9 million
relating to other stores closed during fiscal 1999, partially offset by an
increase of $2.5 million in associate benefit costs and income of $1.5 million
in fiscal 1999 relating to the sale of certain stores, including capital lease
assets and related obligations and deferred gains.

PROVISION FOR STORE CLOSING, ASSET REVALUATION AND LEASE TERMINATION

During fiscal 2001, the Company benefited $1.0 million from the favorable
settlement of leases included in the reserve at the end of fiscal 2000. Fourteen
of the 17 stores included in the reserve at the end of fiscal 2000 were either
terminated or expired during the year. An agreement to terminate one additional
store, included in the Reserve for Closed Stores, was reached prior to the end
of fiscal 2001, with the payment in fiscal 2002. The net benefit is included in
Reorganization Items, Net as presented below.

During fiscal 2000, the Company added 15 stores to the reserve for which $10.4
million was provided for estimated future lease costs. In addition, the Company
benefited from net favorable changes in estimates of $3.9 million for both the
18 stores in the reserve at the end of fiscal 1999 and new stores added to the
reserve in the first quarter of fiscal 2000. The leases for 16 stores terminated
or expired during fiscal 2000. The net cost is included in Reorganization Items,
Net as presented below.

During fiscal 2000, the Company also recognized a charge of $821 thousand for
asset revaluations. The charge represents revaluation of assets for one
underperforming store. (See Note B of the notes to the Consolidated Financial
Statements.)

During fiscal 1999, the Company added three stores to the reserve for which $1.7
million was provided for estimated future costs, including $0.9 million for
future lease costs and $0.8 million for asset revaluations.

During fiscal 1999, the Company also recognized a charge of $6.7 million for
asset revaluations. This charge represents $4.6 million in revaluation of assets
for underperforming stores and a $2.1 million write off of the entire
unamortized balance of goodwill. (See Note B of the notes to the Consolidated
Financial Statements.)

The Company closed 19 stores and sold one store during fiscal 2000 and closed
five stores during fiscal 1999.

12

REORGANIZATION ITEMS, NET

A summary of costs recognized during the fiscal years ended February 2, 2002 and
February 3, 2001 relating to the Company's reorganization is as follows:

EMPLOYEE TERMINATION BENEFITS - In connection with the Bankruptcy Case, the
Company recognized $1.4 million in employee termination benefits during fiscal
2000, representing severance costs for 353 employees terminated as a result of
the store closings under the provisions of the Plan.

PROFESSIONAL FEES - Professional fees relate to legal, accounting, consulting
and other professional costs directly attributable to the Bankruptcy Case and
have been expensed as incurred.

NET REALIZED GAINS - During fiscal 2000, the Company had realized gains on the
sale/disposal of leases and equipment and release of capital lease obligations
of $944 thousand, all related to the 20 closed or sold stores as part of the
Plan.

DEPRECIATION AND AMORTIZATION EXPENSE

Depreciation and amortization expense as a percentage of sales was 2.52% in
fiscal 2001, 2.42% in fiscal 2000 and 2.22% in fiscal 1999. Depreciation and
amortization expense was $0.6 million or 2.98% lower in fiscal 2001 than in
fiscal 2000 primarily due to a decrease of $0.4 million relating to the closure
of nineteen stores and sale of one store during fiscal 2000. Depreciation and
amortization expense was $2.0 million or 9.46% lower in fiscal 2000 than in
fiscal 1999 due primarily to a decrease of $2.4 million relating to a reduction
in the number of stores from 84 at the end of fiscal 1999 to 64 at the end of
fiscal 2000 and a decrease of $2.0 million relating to other stores closed
during fiscal 1999, partially offset by an increase in depreciation for
continuing operations. There were three replacement stores and one new store
opened in fiscal 1999.

OPERATING INCOME

Operations for fiscal 2001 resulted in an operating income of $8.7 million or
1.21% of sales compared to an operating loss of $6.1 million or 0.79% of sales
in fiscal 2000 and operating income of $7.4 million or 0.79% of sales during
fiscal 1999. The increase in operating income for fiscal 2001 included an $830
thousand benefit for reorganization items and a $12.7 million reduction in
selling, general and administrative expenses, offset by a decrease of $10.8
million in gross margin. The decrease in operating income for fiscal 2000
included reorganization charges of $10.8 million and income of $1.5 million in
fiscal 1999 relating to the sale of certain stores, partially offset by a
reduction in asset revaluation charges from $8.4 million in fiscal 1999 to $821
thousand in fiscal 2000. The remaining decrease in fiscal 2000 of $8.8 million
relates primarily to continuing operations, including an increase of $5.2
million in selling, general and administrative expenses, an increase of $2.4
million in depreciation and a decrease of $2.1 million in gross margin.

13

INTEREST EXPENSE

Interest expense, which is net of interest income, increased to 1.78% of sales
in fiscal 2001 compared to 1.73% of sales in fiscal 2000 and 1.49% of sales in
fiscal 1999. Interest expense as a percentage of sales increased in fiscal 2001
and fiscal 2000 due to lower sales resulting from the closure or sale of stores.
Interest expense decreased $0.6 million in fiscal 2001 compared to fiscal 2000
due primarily to lower interest on the Senior Notes due to redemptions that have
taken place, partially offset by increased interest expense on revolver
borrowings.

EXTRAORDINARY ITEM

An extraordinary gain of $2.5 million was recorded in fiscal 2001 relating to
the repurchase of Senior Notes. Senior Notes with a face value of $6.2 million
were repurchased for $3.7 million. In fiscal 2000, an extraordinary gain of $5.3
million was recorded relating to the repurchase of Senior Notes. Senior Notes
with a face value of $13.0 million were repurchased for $7.7 million. (See Note
F of the notes to the Consolidated Financial Statements.)

NET EARNINGS (LOSS)

The Company recognized a net loss of $1.6 million or $0.51 per share for fiscal
2001 compared to $14.3 million or $4.80 per share for fiscal 2000 and $6.5
million or $2.40 per share for fiscal 1999. The weighted average common shares
outstanding were 3,178,109, 2,969,013 and 2,733,972 for fiscal years 2001, 2000
and 1999, respectively.

No tax benefit was recognized in fiscal 2001, 2000, or 1999 as the Company is in
a net operating loss carryforward position. Valuation allowances have been
established for the entire amount of net deferred tax assets due to the
uncertainty of future recoverability (See Note I of the notes to the
Consolidated Financial Statements).

CRITICAL ACCOUNTING POLICIES

Critical accounting policies are those accounting policies that management
believes are important to the portrayal of Eagle's financial condition and
results of operations and require management's most difficult, subjective or
complex judgments, often as a result of the need to make estimates about the
effect of matters that are inherently uncertain.

INVENTORY- Inventories are stated at the lower of cost or market. Cost is
determined through use of the last-in, first-out ("LIFO") method, for
substantially all inventories, applied to inventory values determined primarily
by the retail inventory method ("RIM") for store inventories and the weighted
average inventory method for warehouse inventories.

Under RIM the valuation of inventories are at cost and the resulting gross
margins are calculated by applying a cost-to-retail ratio to sales. Inherent in
the RIM calculations are certain management judgments and estimates, including
shrinkage, which could impact the ending inventory valuation at cost, as well as
the resulting gross margins. RIM is an averaging method that has been widely
used in the retail industry due to its practicality.

LONG-LIVED ASSETS--The Company continually monitors under-performing stores and
under-utilized facilities for an indication that the carrying amount of assets
may not be recoverable. If the sum of the expected future undiscounted cash
flows is less than the carrying amount of the asset, including goodwill where
applicable, an impairment loss is recognized. Impairment is measured based on
the estimated fair value of the asset. Fair value is based on management's
estimate of the amount that could be realized from the sale of assets in a
current transaction between willing parties based on professional appraisals,
offers, actual sale or disposition of assets subsequent to year end and other
indications of fair value. In determining whether an asset is impaired, assets
are 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.

SELF-INSURANCE - The Company is primarily self-insured, through its captive
insurance subsidiary, for workers' compensation, general liability and
automobile (effective November 1, 2001) claims. The self-insurance claim
liability is determined actuarially based on claims filed and an estimate of
claims incurred but not yet reported. Actuarial projections of the losses are
employed due to the high degree of variability in the liability estimates. Some
factors affecting the uncertainty of claims include the timeframe of
development, settlement patterns, litigation and adjudication direction and
medical treatment and cost trends. The liability is not discounted.

A single parent captive is used to fund the self-insurance liabilities. The
captive allows greater flexibility and management control over the claims
activities while earning income on the reserves.

14

LIQUIDITY AND CAPITAL RESOURCES

As a result of the Company's inability to refinance its Senior Notes, due April
15, 2000, the Company filed the Bankruptcy Case on February 29, 2000. The
Company operated its business and managed properties as a debtor-in-possession
pursuant to the Bankruptcy Code, through August 7, 2000, the date on which the
Plan became effective (See Item 1: Business "Reorganization Proceedings Under
Chapter 11 of the Bankruptcy Code").

In connection with the reorganization under the Plan, the Company paid $7.9
million relating to lease rejection costs and other reorganization costs of $175
thousand during fiscal 2001. The Company paid $4.1 million relating to lease
rejection costs, $3.6 million in professional fees and $1.4 million in employee
severance costs during fiscal 2000. The Company sold certain assets and
terminated leases in fiscal 2000 for net proceeds of $3.7 million.

The Company entered into a Second Amended and Restated Loan and Security
Agreement ("Revolver") with Congress Financial Corporation (Central) on August
24, 2001, which amends and restates the Amended and Restated Loan and Security
Agreement dated August 7, 2000 and extends the term of the facility to August
24, 2004. The Revolver is a $50 million facility that provides for revolving
credit loans and letters of credit. No more than an aggregate of $20 million of
the total commitment may be drawn by the Company as letters of credit. Total
availability under the Revolver is based on percentages of allowable inventory
and selected real estate up to a maximum of $50 million. The terms of the
Revolver provide capital expenditures up to $75 million per year and purchase
money security interests and purchase money mortgage amounts to a combined
maximum outstanding amount of $75 million. The Revolver is secured by a first
priority security interest in selected real estate with a book value of $22.7
million and in all inventories of the Company located in its stores and
distribution center in Milan, Illinois. Loans made pursuant to the Revolver bear
interest at a fluctuating interest rate based, at the Company's option, on a
margin over the Prime Rate or a margin over the London Interbank Offered Rate
(LIBOR). The Revolver has one financial covenant relating to minimum net worth
as defined by the Revolver. At February 2, 2002, the defined net worth of the
Company exceeded the minimum amount by approximately $10.5 million. The Revolver
also has as an event of default the actual or likely occurrence or existence of
any event or circumstance which, in the lender's reasonable judgement, has a
material adverse effect on the Company or the lender, as defined in the
Revolver.

At February 2, 2002, the Company had $23.3 million in loans against the Revolver
and no letters of credit outstanding, resulting in $21.0 million of availability
remaining under the Revolver. Of the $23.3 million, $15.0 million was at an
average rate of 4.28% using the LIBOR option. The remaining $8.3 million was at
a rate of 5.25%. At February 3, 2001, the Company had $4.4 million in loans
against the Revolver and no letters of credit outstanding, resulting in $28.2
million of availability remaining under the Revolver. The interest rate as of
February 3, 2001 was 9.50%.

The Plan expenditures discussed in this section and expenditures relating to the
reserve for closed stores have been funded primarily from existing cash, loans
against the Revolver and proceeds from the sale of certain of the Company's
assets.

Cash used by operating activities was $1.3 million for fiscal 2001 compared to
cash provided of $5.3 million in fiscal 2000. The net loss and non-cash charges
provided $13.8 million of cash. Working capital used $15.1 million primarily due
to increases in receivables and inventories, and decreases in accrued
liabilities and the reserve for closed stores, partially offset by an increase
in accounts payable.

Capital expenditures, including property held for resale, were $7.4 million for
fiscal 2001 compared to $7.5 million for fiscal 2000. During fiscal 2001, six
major remodels were completed and no major remodels were in progress at
year-end. The Company opened the first Eagle Discount Foods store on January 5,
2002. This store, a remodeled and converted Eagle store, will offer many of the
same product selection, quality and service features as an Eagle Country Market,
with the addition of a wall of values and lower overall prices. The Company
opened the first Foodco store on November 10, 2001. This store, also a remodeled
and converted Eagle Country Market store, will operate as a high standard, price
impact store designed to serve the needs of value conscious customers. The
Foodco store will maintain an aggressive pricing strategy while meeting the
needs of the local market for product selection, quality and service.

Working capital on February 2, 2002 was $18.5 million and the current ratio was
1.29 to 1 compared to $3.3 million and 1.05 to 1 on February 3, 2001.

15

The following table summarizes store development and reductions:

The Company is planning capital expenditures of approximately $9.0 million in
fiscal 2002, which is expected to be funded primarily from cash flows from
operations and loans against the Revolver. The Company may also utilize
sale/leaseback transactions to provide additional funding.

As of February 2, 2002, the Company owned eight operating stores and one closed
store, with the closed store classified in "Property held for resale" and leased
56 operating stores and two subleased stores. Three stores were sold and leased
back providing $18.5 million of proceeds during fiscal 1999. The Company sold
four stores, including property, equipment and inventory, during fiscal 1999
providing $11.9 million of proceeds.

State insurance reserve requirements for funds held in escrow by third parties
to satisfy claim liabilities recorded for workers' compensation, general
liability and automobile claims were reduced by $1.5 million in fiscal 2001,
$1.7 million in fiscal 2000, and increased by $0.7 million in fiscal 1999.

The Company repurchased $6.2 million of its Senior Notes during fiscal 2001 at a
cost of $3.7 million, recording an extraordinary gain of $2.5 million. The
Company repurchased $13.0 million of its Senior Notes during fiscal 2000 at a
cost of $7.7 million, recording an extraordinary gain of $5.3 million. The
repurchase of the Senior Notes was primarily funded from cash on hand, cash
flows from operations and loans against the Revolver.

The Company may periodically purchase shares of its common stock to the extent
that the Board of Directors believes that the shares are undervalued and that
such purchases are in the best interests of the Company and consistent with its
cash requirements. The Company expects to fund any such purchases from cash on
hand, cash flows from operations and loans against the Revolver. The market
price of the Company's common stock fluctuates and it is likely that the price
will change subsequent to any such purchases by the Company.

The following table summarizes loans and interest information for the Revolver:

16

The table below presents significant contractual obligations of the Company at
year-end 2001:

Working capital and the current ratio were as follows:

Accounts receivable increased to $9.6 million on February 2, 2002 from $7.7
million on February 3, 2001. This temporary increase relates primarily to
loyalty card vendor billing which was delayed due to the implementation of a new
category management and pricing system. The allowance for doubtful accounts
declined to $1.2 million at the end of fiscal 2001 from $1.7 million at the end
of fiscal 2000 due primarily to the writeoff of balances that were previously
carried in the reserve. Inventories increased to $56.6 million at the end of
fiscal 2001 from $51.5 million at the end of fiscal 2000. The increase includes
higher than normal levels of general merchandise due to the transition to a new
wholesaler and a milder than normal winter which affected the sale of seasonal
items. The Company believes that general merchandise inventories will return to
normal levels without a significant reduction in retail prices.

The Company was in compliance with all covenants in its debt agreements on
February 2, 2002 and expects to be in compliance with all covenants for fiscal
2002 based on management's estimates of fiscal 2002 operating results, cash
flows and capital expenditures.

Based on the current level of operations, management believes that cash on hand,
cash provided by operations, loans against the Revolver and proceeds from the
sale of certain of the Company's assets will provide sufficient liquidity to
meet anticipated requirements for working capital, capital expenditures,
interest payments and scheduled principal payments for the coming fiscal year.
There can be no assurance, however, that Eagle's business will continue to
generate cash flow at or above current levels. Risk factors that could affect
business operations include, but are not limited to, the impact of competitive
stores and pricing, work rules and labor and benefit costs under collective
bargaining agreements, supply constraints or difficulties and availability under
the Revolver.

See Item 5: Market for Registrant's Common Equity and Related Shareholder
Matters for a discussion of the Company's common stock listing on the Nasdaq
SmallCap Market.

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.

17

NEW ACCOUNTING STANDARDS

Existing accounting principles generally accepted in the United States of
America do not provide specific guidance on the accounting for sales incentives
that many companies offer to their customers. The Financial Accounting Standards
Board ("FASB") Emerging Issues Task Force (EITF), a group responsible for
promulgating changes to accounting policies and procedures, has issued an
accounting pronouncement, EITF Issue Number 00-14, "Accounting for Certain Sales
Incentives," which addresses the recognition, measurement and income statement
classification for certain sales incentives offered by companies in the form of
discounts, coupons or rebates. The implementation of this accounting
pronouncement will require the Company to make certain reclassifications between
Total Sales, Cost of Goods Sold and Selling, General and Administrative Expenses
in the Company's Consolidated Statements of Operations. The effective date of
EITF 00-14 is for fiscal quarters beginning after December 15, 2001. The Company
will implement EITF 00-14 in the first quarter of fiscal 2002. The
implementation of EITF 00-14 will not have an effect on reported Operating
Income (Loss) or Net Earnings (Loss). In accordance with such implementation,
the Company expects to reclassify certain prior period financial statements, for
comparability purposes, having the following impact on Sales, Cost of Goods Sold
and Selling, General and Administrative Expenses:

In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, which was later amended by SFAS No. 137,
DEFERRAL OF THE EFFECTIVE DATE OF FASB STATEMENT NO. 133, and SFAS No. 138,
ACCOUNTING FOR CERTAIN DERIVATIVE INSTRUMENTS AND CERTAIN HEDGING ACTIVITIES, AN
AMENDMENT TO SFAS NO. 133. This statement as amended establishes accounting and
reporting standards for derivative instruments and all hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities at their fair values. Accounting for changes in the fair value of a
derivative depends on its designation and effectiveness. For derivatives that
qualify as effective hedges, the change in fair value will have no impact on
earnings until the hedged item affects earnings. For derivatives that are not
designated as hedging instruments or for the ineffective portion of a hedging
instrument, the change in fair value will affect current period earnings. The
Company implemented the statement on February 4, 2001 and there is no impact on
the Company's financial statements as a result of the implementation.

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No.143 requires a company to record the fair value of an asset
retirement obligation as a liability in the period in which it incurs a legal
obligation associated with the retirement of tangible long-lived assets that
result from the acquisition, construction, development and/or normal use of the
assets. A corresponding asset is also recorded, which is depreciated over the
life of the asset. Subsequent to the initial measurement of the asset retirement
obligation, the obligation is adjusted at the end of each period to reflect the
passage of time and changes in the estimated future cash flows underlying the
obligation. The Company is required to adopt SFAS No. 143 for fiscal years
beginning after June 15, 2002. The Company does not expect this statement to
have a material effect on its consolidated financial statements.

In August, 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT OR
DISPOSAL OF LONG-LIVED Assets. SFAS No. 144 supersedes SFAS No. 121 and the
accounting and reporting provision of APB Opinion No 30 for the disposal of a
segment of a business. SFAS No. 144 addresses financial accounting and reporting
for the impairment or disposal of long-lived assets and requires that long-lived
assets be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the
carrying amount of an asset to future net cash flows expected to be generated by
the asset. If the carrying amount of an asset exceeds its estimated future cash
flows, an impairment charge is recognized by the amount by which the carrying
amount of the asset exceeds the fair value of the asset. SFAS No. 144 requires
companies to separately report discontinued operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment, or in a distribution to owners) or is classified as held for sale.
Assets to be disposed of are reported at the lower of the carrying amount or
fair value less costs to sell. The Company is required to adopt SFAS No. 144 for
fiscal years beginning after December 15, 2001. Management is currently
evaluating the impact this statement will have on its consolidated financial
statements.

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

18

limited to, the effect of economic conditions, the impact of competitive stores
and pricing, availability and costs of inventory, employee costs and
availability, the rate of technology change, the cost and uncertain outcomes of
pending and unforeseen litigation, the availability and cost 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.

ITEM 7a: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company is exposed to certain market risks that are inherent in the
Company's financial instruments that arise from transactions entered into in the
normal course of business. Although the Company currently utilizes no derivative
financial instruments that expose the Company to significant market risk, the
Company is exposed to fair value risk due to changes in interest rates with
respect to its long-term debt borrowings.

The Company is subject to interest rate risk on its long-term fixed interest
rate debt borrowings. Loans against the Revolver do not give rise to significant
interest rate risk because of the floating interest rate charged on such loans.
The Company manages its exposure to interest rate risk by utilizing a
combination of fixed and floating rate borrowings.

The following describes information relating to the Company's instruments that
are subject to interest rate risk at February 2, 2002 (dollars in millions):

The Company recorded a discount of $2.1 million in conjunction with the
refinancing of its Senior Notes. The discount is being amortized over the term
of the Senior Notes. (See Note F of the notes to the Consolidated Financial
Statements.)

19

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. and subsidiaries as of February 2, 2002 and February 3, 2001, and
the related consolidated statements of operations, stockholders' equity and
comprehensive income, and cash flows for each of the years in the two-year
period ended February 2, 2002. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Eagle
Food Centers, Inc. and subsidiaries as of February 2, 2002 and February 3, 2001,
and the consolidated results of their operations and cash flows for each of the
years in the two-year period ended February 2, 2002 in conformity with
accounting principles generally accepted in the United States of America.

KPMG LLP

Des Moines, Iowa
April 16, 2002

20

INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of Eagle Food Centers, Inc.:

We have audited the consolidated statement of operations, equity, and cash flows
for the year ended January 29, 2000 of Eagle Food Centers, Inc. and
subsidiaries. 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 audit.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. 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 audit provides a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the results of operations of Eagle Food Centers, Inc. and
subsidiaries and their cash flows for the year ended January 29, 2000 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements for the year ended January
29, 2000 have been prepared assuming that the Company will continue as a going
concern. As discussed in Note M to the consolidated financial statements, the
Company filed for Chapter 11 Bankruptcy on February 29, 2000 in order to
reorganize the Company's operations and restructure the Company's Senior Notes.
The Company is uncertain about if or when it will emerge from Chapter 11
Bankruptcy, which raises substantial doubt about the Company's ability to
continue as a going concern. Management's plans concerning this matter are also
discussed in Note M. The financial statements do not include adjustments that
might result from the outcome of this uncertainty.

The accompanying consolidated financial statements do not purport to reflect or
provide for the consequences of the bankruptcy proceedings. In particular, such
financial statements do not purport to show (a) as to stockholder accounts, the
effect of any changes that may be made in the capitalization of the Company; or
(b) as to operations, the effect of any changes that may be made in its
business.

As discussed in Note B to the financial statements, the Company changed its
method of accounting for goodwill.

DELOITTE & TOUCHE LLP

Davenport, Iowa
April 14, 2000

21

EAGLE FOOD CENTERS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

See notes to the consolidated financial statements.

22

EAGLE FOOD CENTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
- --------------------------------------------------------------------------------

See notes to the consolidated financial statements.

23

EAGLE FOOD CENTERS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY AND COMPREHENSIVE INCOME
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------

See notes to the consolidated financial statements.

24

EAGLE FOOD CENTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------

See notes to the consolidated financial statements.

25

EAGLE FOOD CENTERS, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED FEBRUARY 2, 2002, FEBRUARY 3, 2001, AND JANUARY 29, 2000

NOTE A - ORGANIZATION - Eagle Food Centers, Inc. (the "Company"), a Delaware
corporation, is engaged in the operation of retail food stores, with 64 stores
in northern and central Illinois and eastern Iowa.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

FISCAL YEAR - The Company's fiscal year ends on the Saturday closest to January
31st. Fiscal 2001 was a 52-week year ending on February 2, 2002, fiscal 2000 was
a 53-week year ending on February 3, 2001 and fiscal 1999 was a 52-week year
ending January 29, 2000.

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.

RISKS AND UNCERTAINTIES - The preparation of the Company's Consolidated
Financial Statements in conformity with accounting principles generally accepted
in the United States of America 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 the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Nasdaq staff informed the Company, by letter dated November 13, 2000, that it
had not maintained a minimum market value of public float of $5,000,000 and a
minimum bid price of $1.00 over 30 consecutive trading days as required for
continued listing on the Nasdaq National Market. Nasdaq staff had determined
that the Company's Common Stock would be delisted from quotation on the Nasdaq
National Market at the opening of business on February 14, 2001. On February
12, 2001, the Company delivered a request for an appeal to the Nasdaq Listing
Qualifications Panel. The delisting process was suspended pending resolution of
the appeal.

The Company presented a plan to the Nasdaq Listing Qualifications Panel for
achieving compliance with the listing requirements of the Nasdaq National Market
at a hearing held March 28, 2001. No decision was made at the hearing regarding
the continued listing of our shares. Members of the Listing Qualifications Panel
suggested that the Company consider a reverse stock split and applying for
listing on the Nasdaq SmallCap Market. The Company sent a letter to the panel on
April 2nd in which the Company modified its earlier plan by (i) consenting to
the possible change from listing on the Nasdaq National Market to listing on the
Nasdaq SmallCap Market and (ii) consenting to recommend shareholder approval of
a reverse stock split in the event other measures are not sufficient to achieve
compliance with the Nasdaq listing requirements for either the Nasdaq National
Market or the Nasdaq SmallCap Market.

The Company's common stock began trading on the Nasdaq SmallCap Market on May
15, 2001. On June 27, 2001 the Shareholders of Eagle Food Centers, Inc. approved
an amendment to the Company's Certificate of Incorporation to accomplish a
reverse stock split. This was effective on June 29, 2001 and resulted in each
four outstanding shares of the Company's common stock being automatically
reclassified and changed into one share of the Company's common stock. Prior
period common stock information has been presented on a comparative basis.

Nasdaq staff again informed the Company, by letter dated February 14, 2002, that
it had not maintained a minimum bid price of $1.00 per share over 30 consecutive
trading days as required for continued listing on the Nasdaq SmallCap Market.
Nasdaq staff has given the Company until August 13, 2002 to regain compliance
with the minimum closing bid price of $1.00 per share for ten consecutive
trading days. The Company will be granted an additional 180 days to achieve the
minimum closing bid price requirement, after August 13, 2002, if Nasdaq staff
determines the Company meets the initial listing criteria for the Nasdaq
SmallCap Market, which are stockholder's equity of $5 million, market
capitalization of $50 million or net income of $750,000 (excluding extraordinary
or non-recurring items) in the most recently completed fiscal year or in two of
the last three most recently completed fiscal years.

If the Company's common stock is not listed for trading on the Nasdaq SmallCap
Market, trading of the common stock would likely be on the OTC Bulletin Board or
similar quotation system. Inclusion of the Company's common stock on the OTC
Bulletin Board or similar quotation system could adversely affect the liquidity
of the Company's common stock and may impact the public's perception of the
Company. There can be no assurance that delisting would not have a material
adverse effect on liquidity or business operations.

26

REVENUE RECOGNITION - Revenue is recognized at the point of sale.

CASH AND CASH EQUIVALENTS-- The Company considers all highly liquid investments
with a maturity of three months or less at the time of purchase to be a cash
equivalent. Cash and cash equivalents were $4.7 million and $0.3 million as of
February 2, 2002 and February 3, 2001, respectively.

RESTRICTED ASSETS-- Restricted assets are comprised of marketable securities and
cash held in escrow by third parties. Marketable securities are restricted to
satisfy state insurance reserve requirements related to claim liabilities
recorded for workers' compensation, general liability and automobile (effective
November 1, 2001) claims; such claim liability reserves are classified as
current.

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 fair value is reported as a separate component of
shareholders' equity until gains and losses are realized. Such amount is a
component in the "Accumulated other comprehensive income" caption of
shareholders' equity. The decline in market value of any security below cost
that is deemed to be other than temporary results in a reduction in carrying
amount to fair value. The impairment is charged to earnings and a new cost basis
for the security is established.

ACCOUNTS RECEIVABLE - Accounts receivable are recorded at cost, less the related
allowance for doubtful accounts. The allowance is based on management's
evaluation of accounts receivable considering current information and events
regarding the debtors' ability to repay. The activity in the allowance for
doubtful accounts for the years ended February 2, 2002, February 3, 2001 and
January 29, 2000 follows:

INVENTORIES- Inventories are stated at the lower of cost or market. Cost is
determined through use of the last-in, first-out ("LIFO") method, for
substantially all inventories, applied to inventory values determined primarily
by the retail inventory method ("RIM") for store inventories and the weighted
average inventory method for warehouse inventories.

Under RIM the valuation of inventories are at cost and the resulting gross
margins are calculated by applying a cost-to-retail ratio to sales. Inherent in
the RIM calculations are certain management judgments and estimates, including
shrinkage, which could impact the ending inventory valuation at cost, as well as
the resulting gross margins. RIM is an averaging method that has been widely
used in the retail industry due to its practicality.

The current cost of the inventories was greater than the LIFO value by
$8.4 million at February 2, 2002 and February 3, 2001. During fiscal 2000 and
fiscal 1999, inventory quantities were reduced primarily due to store closures,
which resulted in a liquidation of certain LIFO layers carried at lower costs
than prevailed in prior years. The effect of the layer liquidation for fiscal
2000 and fiscal 1999 was to decrease cost of goods sold by $2.1 million and
$0.9 million, respectively, below the amounts that would have resulted from
liquidating inventory at February 3, 2001 and January 29, 2000.

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 original lease term, whichever is shorter.
Leasehold interests are generally amortized over the lease term plus

27

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 estimated useful life of the property or the original lease term.

LONG-LIVED ASSETS-- The Company continually monitors under-performing stores and
under-utilized facilities for an indication that the carrying amount of assets
may not be recoverable. If the sum of the expected future undiscounted cash
flows is less than the carrying amount of the asset, including goodwill where
applicable, an impairment loss is recognized. Impairment is measured based on
the estimated fair value of the asset. Fair value is based on management's
estimate of the amount that could be realized from the sale of assets in a
current transaction between willing parties based on professional appraisals,
offers, actual sale or disposition of assets subsequent to year end and other
indications of fair value. In determining whether an asset is impaired, assets
are 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.

During fiscal 2000 and fiscal 1999, the Company recognized charges of
$821 thousand and $4.6 million, respectively, for asset revaluations on
underperforming stores. Impairment charges are included in the caption "Store
closing, asset revaluation and lease termination" in the Consolidated Statements
of Operations.

DEBT ISSUANCE COSTS - Debt issuance costs are amortized over the terms of the
related debt agreements using the interest method.

EXCESS OF COST OVER FAIR VALUE OF NET ASSETS ACQUIRED ("GOODWILL")-- During the
fourth quarter of fiscal 1999, the Company changed its method of measuring
impairment of enterprise level goodwill from an undiscounted cash flow method to
a market value method. A market value method compares the enterprise's net book
value to the value indicated by the market price of its equity securities; if
net book value exceeds the market capitalization, the excess carrying amount of
goodwill is written off. The Company believes that the market value method is
preferable since it provides a more current and realistic valuation than the
undiscounted cash flows method and more closely matches the Company's fair
value. In connection with the change in accounting policy with respect to the
measurement of goodwill impairment described above, the entire unamortized
goodwill balance of $2.1 million was written off during the fourth quarter of
fiscal 1999. Such charge is included in the caption "Store closing, asset
revaluation, and lease termination" of the Consolidated Statement of Operations.

The Company compared the aggregate value of its outstanding common stock to book
value during the period from January 31, 1999 through February 29, 2000; the
date trading was suspended, due to the Bankruptcy Case. The market value of the
Company's common stock was not less than book value for any significant period
prior to September 2, 1999. The market value remained below book value from the
period of September 2, 1999 through February 29, 2000. The Company believes the
temporary decline in market value below book value was not other than temporary
until the fourth quarter of fiscal 1999. As market value was less than book
value reduced by goodwill for almost all of the approximately six month period
ending February 29, 2000, the entire amount of the unamortized goodwill was
considered impaired.

PROPERTY HELD FOR RESALE-- Property in this classification includes a closed
store and undeveloped lots.

DEFERRED SOFTWARE COSTS--Software costs are generally amortized over five years
beginning when the software is placed in service. Deferred software balances
were $6.7 million and $10.0 million as of February 2, 2002 and February 3, 2001,
respectively; net of accumulated amortization of $14.4 million and
$10.4 million, respectively.

SELF-INSURANCE-- The Company is primarily self-insured, through its captive
insurance subsidiary, for workers' compensation, general liability and
automobile (effective November 1, 2001) claims. The self-insurance claim
liability is determined actuarially based on claims filed and an estimate of
claims incurred but not yet reported. Actuarial projections of the losses are
employed due to the high degree of variability in the liability estimates. Some
factors affecting the uncertainty of claims include the timeframe of
development, settlement patterns, litigation and adjudication direction and
medical treatment and cost trends. The liability is not discounted.

A single parent captive is used to fund the self-insurance liabilities. The
captive allows greater flexibility and management control over the claims
activities while earning income on the reserves.

Self-insurance claim liabilities of $6.1 million as of February 2, 2002 and
$6.6 million as of February 3, 2001 are included in the "Accrued liabilities"
caption of the balance sheet.

STORE CLOSING AND ASSET REVALUATION-- In the event the performance or
utilization of underperforming stores and underutilized facilities cannot be
improved, management may decide to close, sell or otherwise dispose of such
stores

28

or facilities. A charge for store closing and asset revaluation is
provided when management has reached the decision to close, sell or otherwise
dispose of such stores within one year and the costs can be reasonably
estimated. The charge for store closing arises primarily from (a) the discounted
value of future lease commitments in excess of the discounted value of estimated
sublease revenues, (b) store closing costs, (c) elimination of any goodwill
identified with such stores to be closed and (d) revaluing fixed assets to
estimated fair values when assets are impaired, or to net realizable value for
assets to be disposed of (see Long-Lived Assets above). Discount rates have been
determined at the time a store was added to the closed store reserve and have
not been changed to reflect subsequent changes in rates. The Company's policy is
to use a risk-free rate of return for a duration equal to the remaining lease
term at the time the reserve was established. The average discount rate used for
reserves established in fiscal 2000 and 1999 was 6.3% and 5.2%, respectively.

The provision for store closing and asset revaluation includes the charges
discussed in Note D of notes to Consolidated Financial Statements for the year
ended January 29, 2000, asset impairment charges for underperforming stores that
are not being closed, sold or otherwise disposed of (see LONG-LIVED ASSETS
above), goodwill impairment charges (see EXCESS OF COST OVER FAIR VALUE OF NET
ASSETS ACQUIRED ("GOODWILL") above). The components of the provision for the
years ended February 2, 2002, February 3, 2001, and January 29, 2000 were as
follows:

REORGANIZATION ITEMS, NET - A summary of costs recognized during the fiscal
years ended February 2, 2002 and February 3, 2001 is as follows:

INCOME TAXES - Income taxes are accounted for under the asset and liability
method. Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax law is recognized in the period that includes the enactment date.
Valuation allowances are recorded to reduce deferred tax assets when there is
uncertainty of future recoverability.

LOSS PER SHARE - Basic net loss per common share is based on the weighted
average number of common shares outstanding in each year. Diluted net loss per
common share assumes that outstanding common shares were increased by shares
issuable upon exercise of those stock option shares for which market price
exceeds exercise price, if any, less shares which could have been purchased by
the Company with the related proceeds. Shares resulting in an antidilutive
effect are excluded in accordance with SFAS No. 128, EARNINGS PER SHARE.

RECLASSIFICATIONS - Certain reclassifications were made to prior years' balances
to conform to current year presentation.

NEW ACCOUNTING STANDARDS -

Existing accounting principles generally accepted in the United States of
America do not provide specific guidance on the accounting for sales incentives
that many companies offer to their customers. The Financial Accounting Standards
Board ("FASB") Emerging Issues Task Force (EITF), a group responsible for
promulgating changes to accounting policies and procedures, has issued an
accounting pronouncement, EITF Issue Number 00-14, "Accounting for Certain Sales
Incentives," which addresses the recognition, measurement and income statement
classification for certain sales incentives offered by companies in the form of
discounts, coupons or rebates. The implementation of this accounting
pronouncement will require the Company to make certain reclassifications between
Total Sales, Cost of Goods Sold and Selling, General and Administrative Expenses
in the Company's Consolidated Statements of Operations. The effective date for
EITF 00-14 is for fiscal quarters beginning after December 15, 2001. The Company
will implement EITF 00-14 in the first quarter of fiscal 2002. The
implementation of EITF 00-14 will not have an effect on reported Operating
Income (Loss) or Net Earnings (Loss). In accordance with such implementation,
the Company expects to reclassify certain prior period financial statements, for
comparability purposes, having the following impact on Sales, Cost of Goods Sold
and Selling, General and Administrative Expenses:

31

NOTE D - RESERVE FOR CLOSED STORES

An analysis of activity in the reserve for closed stores for the years ended
February 2, 2002, February 3, 2001 and January 29, 2000 is as follows:

The provision for store closing and asset revaluation is classified in the
Consolidated Statements of Operations under the caption "Reorganization items,
net" for fiscal 2001 and fiscal 2000 and the caption "Store closing and asset
revaluation" for fiscal 1999.

During fiscal 2001, the Company benefited $1.0 million from the favorable
settlement of leases included in the reserve at the end of fiscal 2000. Fourteen
of the 17 stores included in the reserve at the end of fiscal 2000 were either
terminated or expired during the year. An agreement to terminate one additional
store, included in the Reserve for Closed Stores, was reached prior to the end
of fiscal 2001, with the payment in fiscal 2002.

During fiscal 2000, the Company added 15 stores to the reserve for which $10.4
million was provided for estimated future lease costs. In addition, the Company
benefited from net favorable changes in estimates of $3.9 million for both the
18 stores in the reserve at the end of fiscal 1999 and new stores added to the
reserve in the first quarter of fiscal 2000. The leases for 16 stores terminated
or expired during fiscal 2000.

During fiscal 1999, the Company added three stores to the reserve for which $0.9
million was provided for estimated future costs and $0.8 million was provided to
write down fixed assets to estimated fair value. In addition, one store was
removed from the reserve due to a sale of assets and release of future
obligations.

The reserve at February 2, 2002 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.

At the end of fiscal year 2001, the reserve included estimated net future costs
for one closed store and sublease subsidies for two closed stores. At the end of
fiscal 2000, the reserve included estimated net future costs for 15 closed
stores and sublease subsidies for two other closed stores.

A rollforward presentation of the number of stores in the closed store reserve
for fiscal years 2001, 2000 and 1999 is as follows:

See Note B of the notes to the Consolidated Financial Statements under the
captions STORE CLOSING AND ASSET REVALUATION, and REORGANIZATION ITEMS, NET.

32

NOTE E - PROPERTY AND EQUIPMENT

The investment in property and equipment is as follows:

As of February 2, 2002, the Company owned eight operating stores and one closed
store, with the closed store classified in "Property Held for Resale." The
leased stores include 56 operating stores and two subleased stores. Of these 58
leased stores, nine are capital leases included in Property and Equipment.

Property under capital leases represents capital leases for land, buildings and
improvements. The capital leases have 22-25 year terms with up to six five-year
renewal options. The gains on the sale of these properties have been deferred
and are amortized over the life of the original lease term. The Company
eliminated one capital lease during fiscal 2001. Accumulated amortization for
property under capital leases as of February 2, 2002 was $7.5 million and as of
February 3, 2001 was $6.7 million. Amortization of the capital lease assets are
included in the caption "Depreciation and amortization" in the Consolidated
Statements of Operations.

Depreciation and amortization are computed using the straight-line method over
the estimated useful lives of the assets. Depreciation expense was $14.2
million, $14.8 million and $17.3 million for fiscal years 2001, 2000 and 1999
respectively. The useful lives of the various classes of assets are as follows:

Buildings 20-25 years

Fixtures and Equipment 2-12 years

Leasehold Costs & Improvements 5-23 years

Leasehold interests 12-25 years

Property under capital lease Shorter of economic life or lease term

In fiscal year 2000, the Company reclassed one store with a book value of $6.7
million from "Property Held for Resale" to "Property and Equipment (Net).

33

NOTE F - LONG-TERM DEBT

Long-term debt consists of the following:

The maturities of long-term debt, including capital lease obligations are:
fiscal year 2002 - $0.8 million, fiscal year 2003 - $0.9 million, fiscal year
2004 - $24.3 million, fiscal year 2005 - $65.7 million and fiscal year
2006 - $1.0 million.

The Senior Notes have the following material terms and conditions; (i) maturity
date of April 15, 2005, (ii) an interest rate of 11%, (iii) a $15 million
repayment of outstanding principal by the Company on August 7, 2000, and (iv)
the Company may, at its option and with no prepayment penalty, redeem the Senior
Notes at any time at 100% of the principal amount outstanding at the time of
redemption.

In addition, under the Plan, the Company agreed to issue 15% of fully-diluted
common stock of the Company (482,605 shares) to the holders of the Senior Notes,
of which 10% would have been returned to the Company if the Company was sold or
the debt was retired prior to October 15, 2001. If the Company is sold or the
debt is retired prior to October 15, 2002, 5% of the common stock will be
returned to the Company. None of the common stock will be returned to the
Company if the Company is not sold or the debt retired prior to
October 15, 2002. The shares were recorded at fair value in the amount of
$2.1 million with the offsetting amount recorded as a discount against the
Senior Notes. The indenture relating to the 11% Senior Notes contains provisions
as well as certain restrictions relating to certain asset dispositions,
sale/leaseback transactions, payment of dividends, repurchase of equity
interests, incurrence of additional indebtedness and liens, and certain other
restricted payments.

The Company repurchased $6.2 million of its Senior Notes during fiscal 2001 at a
cost of $3.7 million, recording an extraordinary gain of $2.5 million. The
balance of the Senior Notes on February 2, 2002 was $65.8 million less
unamortized discount of $1.1 million. The Company repurchased $13.0 million of
its Senior Notes during fiscal 2000 at a cost of $7.7 million, recording an
extraordinary gain of $5.3 million. The balance of the Senior Notes on February
3, 2001 was $72.0 million less unamortized discount of $1.6 million. The
effective interest rate on the Senior Notes is 11.5%. The repurchase of the
Senior Notes was primarily funded with cash on hand, cash from Company
operations and loans against the Revolver.

The Company entered into a Second Amended and Restated Loan and Security
Agreement ("Revolver") with Congress Financial Corporation (Central) on August
24, 2001, which amends and restates the Amended and Restated Loan and Security
Agreement dated August 7, 2000 and extends the term of the facility to August
24, 2004. The Revolver is a $50 million facility that provides for revolving
credit loans and letters of credit. No more than an aggregate of $20 million of
the total commitment may be drawn by the Company as letters of credit. Total
availability under the Revolver is based on percentages of allowable inventory
and selected real estate up to a maximum of $50 million. The terms of the
Revolver provide for capital expenditures up to a maximum of $75 million per
year and purchase money security interests and purchase money mortgage amounts
to a combined maximum outstanding amount of $75 million. The Revolver is secured
by a first priority security interest in selected real estate with a book value
of $22.7 million and in all inventories of the Company located in its stores and
distribution center in Milan, Illinois. Loans made pursuant to the Revolver bear
interest at a fluctuating interest rate based, at the Company's option, on a
margin over the Prime Rate or a margin over the London Interbank Offered Rate
(LIBOR). The Revolver has one financial covenant relating to minimum net worth
as defined by the Revolver. At February 2, 2002, the defined net worth of the
Company exceeded the minimum amount by approximately $10.5 million. The Revolver
also has as an event of default for the actual or likely occurrence or existence
of any event or circumstance which, in the lender's reasonable judgement, has a
material adverse effect on the Company or the lender, as defined in the
Revolver.

34

At February 2, 2002, the Company had $23.3 million in loans against the Revolver
and no letters of credit outstanding, resulting in $21.0 million of availability
under the Revolver. Of the $23.3 million, $15.0 million was at an average rate
of 4.28% using the LIBOR option. The remaining $8.3 million was at a rate of
5.25%. At February 3, 2001, the Company had $4.4 million in loans against the
Revolver and no letters of credit outstanding, resulting in $28.2 million of
availability under the Revolver. The interest rate as of February 3, 2001 was
9.50%.

The Company was in compliance with all covenants in its debt agreements on
February 2, 2002 and expects to be in compliance with all covenants for fiscal
2002 based on management's estimates of fiscal 2002 operating results, cash
flows and capital expenditures.

NOTE G - TREASURY STOCK

The following summarizes the treasury stock activity for the three years in the
period ended February 2, 2002:

During fiscal 1995 the Company sold 31,250 shares of treasury stock to its Chief
Executive Officer Robert J. Kelly for $9.00 per share (market value at date of
sale adjusted for reverse stock split) in exchange for a note receivable, which
was recorded in the "Other" caption of shareholders' equity and deducted from
equity until the remaining balance of $140,625 was forgiven in fiscal 1999. The
fiscal 1999 forgiveness of the note was recorded as compensation expense and is
included in the caption "Selling, general and administrative" in the Company's
Consolidated Statements of Operations.

The difference between the average share price of treasury stock and exercise of
stock options is charged or credited to accumulated deficit.

35

NOTE H - LEASES AND LONG-TERM CONTRACTS

Fifty-six operating stores and two subleased stores were leased at February 2,
2002, many of which have renewal options for periods ranging from five to 30
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, common area maintenance and
insurance on the leased property. The Company also leases its central
distribution facility under a lease expiring February 28, 2007. Rent expense
consists of:

Future minimum lease payments under non-cancelable operating and capital leases
as of February 2, 2002 are as follows:

The operating and capital lease future minimum lease payments do not include
gross minimum commitments of $1.9 million for closed stores, the present value
of which (net of estimated sublease payments) is included in the Consolidated
Balance Sheet caption "Reserve for closed stores."

The Company outsources its Information Systems function to EDS to assume
complete responsibility for the Company's information systems. The Company
signed a new Services Agreement with EDS on July 1, 2000 with a term of five
years. The agreement has provisions for inflationary increases. The obligation
based on current rates is: fiscal year 2002 - $3.4 million, fiscal year 2003 -
$3.4 million, fiscal year 2004 - $3.4 million, and fiscal year 2005 - $1.4
million. Either party may terminate the Services Agreement at any time after the
first three contract years by giving the other party at least ninety days
written notice designating the termination date.

36

NOTE I - INCOME TAXES

The provision for income taxes for the years ended February 2, 2002, February 3,
2001 and January 29, 2000 were $0.

The differences between income tax benefit at the statutory Federal income tax
rate and income tax benefit before extraordinary item reported in the
Consolidated Statements of Operations are as follows:

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

Valuation allowances have been established for the entire amount of the net
deferred tax assets as of February 2, 2002 and February 3, 2001, due to the
uncertainty of future recoverability.

The tax credit carryforwards of $0.9 million expire at various dates from 2002
through the year 2010; alternative minimum tax credit carryforwards of $5.7
million have no expiration date. Net operating loss carryforwards totaled $68.6
million at February 2, 2002 and expire at various dates from 2009 through the
year 2021.

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 2, 2002, February 3, 2001, and January 29, 2000, pension costs under
the plans totaled $16 thousand, $646 thousand and $714 thousand, 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 2, 2002, February 3, 2001 and January 29, 2000:

The amounts included within other comprehensive income arising from a change in
the additional minimum pension liability are a loss of $1.8 million at February
2, 2002, a loss of $129 thousand at February 3, 2001 and income of $176 thousand
at January 29, 2000.

During 2000, the Eagle Plan provided an early retirement window and was frozen
as of December 31, 2000. No future benefits will accrue after that date. This
action resulted in a curtailment gain of $780 thousand offset by unrecognized
prior service costs and unrecognized net loss on plan assets of $387 thousand
and additional termination benefits of $89 thousand.

38

The changes in benefit obligation and plan assets, 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, 2001 and 2000 and
reflected in the financial statements at February 2, 2002 and February 3, 2001,
respectively, are as follows:

Plan assets are held in a trust and primarily include corporate and U.S.
government debt securities and common stocks.

Actuarial assumptions used to develop net periodic pension cost and related
pension obligations for the fiscal years 2001, 2000 and 1999 were as follows:

The rate of increase in compensation levels related to the Eagle Plan is not
applicable since the Eagle Plan was frozen as of December 31, 2000. The rate of
increase related to the Milan Plan is based on years of service and not
compensation levels.

39

The Company has a defined contribution plan pursuant to Section 401K of the
Internal Revenue Code ("401K Plan"), which covers salaried and non-union hourly
associates. The Company matches employee contributions, up to specified
percentages of those contributions, as approved by the Board of Directors.
During fiscal 2001, 2000, and 1999 the Company recognized expense relating to
matching contributions under the 401K Plan of $428.6 thousand, $425.3 thousand,
and $437.5 thousand, respectively. Effective January 1, 2001, the 401K Plan was
amended to include a 3% contribution to replace the Eagle Plan. The Company
recognized expense of $411.8 thousand in fiscal 2001 relating to the 3%
contribution.

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 2, 2002,
February 3, 2001, and January 29, 2000 totaled $5.2 million, $5.9 million and
$6.6 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 and certain
other management personnel. Incentive plans included approximately 160
associates. Provisions for payments to be made under the plans are based
primarily on achievement of sales and earnings in excess of specific performance
targets.

Non-qualified stock option plans were ratified by stockholders and implemented
in 2000, 1995 and 1990 for key management associates. Stock options generally
have a ten-year life beginning at the grant date. For the options granted under
the 2000 and 1995 Stock Option Plans, vesting provisions generally provide for
1/3 of the shares vesting at each of the first three anniversaries following the
date of the grant. Options granted under the 1990 plan were generally vested at
12 months following the grant date. All options under the 1990 plan have either
been issued or expired. Certain specific employment agreements provide for
different vesting schedules. As of February 2, 2002, there were 340,317 shares
available for future grants under the plans. The Company recognized no
compensation expense for fiscal years 2001, 2000 or 1999 because the exercise
price was at or above the market value at the date of grant.

The Company cancelled stock option grants and issued replacement stock option
grants for certain individuals during fiscal 2000. The new stock option grants
were issued at a price of $5.00, with a market price of $4.12 at the time of
issuance. In addition, the term of the new stock option grants was shortened by
two years compared with the cancelled grants. Stock option grants for a total of
56,875 shares were cancelled, with the same number of shares issued in
replacement grants. As such, these stock option grants are variable. The Company
did not recognize compensation expense for these replacement stock option grants
since the market value was below the exercise price on the measurement dates.

40

The following table sets forth the stock option activity for the three years in
the period ended February 2, 2002:

Stock options exercisable are as follows:

The following table summarizes stock option information on outstanding and
exercisable shares as of February 2, 2002:

41

NOTE K - STOCK BASED COMPENSATION

The Company accounts for stock option grants and awards under its stock based
compensation plans in accordance with Accounting Principles Board Opinion No.
25. If compensation cost for stock option grants and awards had been determined
based on fair value at the grant dates for fiscal 2001, 2000 and 1999 consistent
with the method prescribed by SFAS No. 123, "Accounting for Stock Based
Compensation", the Company's net loss and net loss per share would have been
adjusted to the pro forma amounts indicated below:

The Company's calculations were made using the Black-Scholes option pricing
model with the following weighted average assumptions: expected option life of
ten years; stock volatility of 73% to 76% in 2001, 64% to 76% in 2000, 58% to
62% in 1999; risk-free interest rate of 4.50% in 2001, 6.63% to 6.82% in 2000,
6.66% in 1999; and no dividends during the expected term. Based on this model,
the weighted average fair values of stock options awarded were $1.28, $3.16 and
$5.48 for fiscal years 2001, 2000, and 1999, respectively. During the initial
phase-in period, as required by SFAS No. 123, the pro forma amounts were
determined based on stock option grants and awards in fiscal 2001, 2000 and 1999
only. The full impact of calculating compensation cost for stock options under
SFAS No. 123 is not reflected in the preceding pro forma net loss amounts
because compensation cost is reflected over the options' expected life and
compensation cost for options granted prior to February 1999 is not considered.
The pro forma amounts for compensation cost may not be indicative of the effects
on net earnings (loss) and net earnings (loss) per share for future years.

42

NOTE L - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts and fair values of the Company's financial instruments as
of February 2, 2002 and February 3, 2001 are as follows:

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 and the Senior Notes is based on quoted market prices.

The amortized cost, gross unrealized gains and losses, and estimated fair values
of the Company's marketable securities at February 2, 2002 and February 3, 2001
are as follows:

The U.S. Treasury Notes, as of February 2, 2002, mature within one year.

NOTE M - LITIGATION

BANKRUPTCY CASE

On February 29, 2000 (the "Petition Date"), the Company filed a voluntary
petition under Chapter 11 of Title 11 of the United States Code. The petition
was filed in the United States Bankruptcy Court for the District of Delaware
under case number 00-01311 (the "Bankruptcy Case"). The Company continued to
manage its affairs and operate its business as a debtor-in-possession while the
Bankruptcy Case was pending. The Bankruptcy Case, which proceeded before the
United States District Court for the District of Delaware, was commenced in
order to implement a financial restructuring of the Company that had been
pre-negotiated with holders of approximately 29% of the principal amount of the
Company's Senior Notes due April 15, 2000. On March 10, 2000, the Company filed
a Plan to implement the financial restructuring, which Plan was subsequently
amended on April 17, 2000. The Plan was confirmed on July 7, 2000 and
consummated on August 7, 2000. On January 28, 2002, the United States Bankruptcy
Court for the District of Delaware entered a final decree and order closing the
Chapter 11 case.

43

OTHER CASES

The Company is subject to various other unresolved legal actions that arise in
the normal course of its business. Although it is not possible to predict with
certainty, and no assurances can be given with respect to such matters, the
Company believes the outcome of these unresolved legal actions will not have a
materially adverse effect on its results of operations, liquidity or financial
position.

NOTE N - LOSS PER SHARE

Loss per share disclosures for the three years ended February 2, 2002 are as
follows:

44

NOTE O - QUARTERLY FINANCIAL DATA (UNAUDITED)

(1) Net loss attributable primarily to reorganization costs of $11.3 million in
the first quarter of fiscal 2000.
(2) Net earnings include an asset revaluation charge of $821 thousand.
(3) Net loss attributable to a $1.7 million store closing and asset revaluation
charge in the first quarter of fiscal 1999 and a $6.7 million asset
revaluation charge in the fourth quarter of fiscal 1999.

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

There have been no disagreements on accounting principles or practices or
financial statement disclosures between the Company and its independent
certified public accountants during the two fiscal years ended February 2, 2002.
The shareholders, as part of the annual shareholders' meeting, upon
recommendation by the Company's Board of Directors, on September 13, 2000,
ratified the selection of KPMG LLP as the independent certified public
accountants for the 2000 fiscal year.

45

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 Form 10-K.

Information required by this item concerning Section 16(a) of the Securities
Exchange Act of 1934 is set forth under "Security Ownership of Principal
Shareholders and Management" 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.

The following table sets forth certain information with respect to the persons
who are executive officers of the Company as of February 2, 2002. Mr. Jeffrey
Little left the Company on March 18, 2002.

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

Mr. Kelly returned to the position of Chief Executive Officer and President on
March 18, 2002. Mr. Kelly was named Chairman of the Board of Directors for the
Company on March 30, 1998. Mr. Kelly also held the titles of Chief Executive
Officer and President from May 10, 1995 through January 31, 2000. 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 39 years of
experience in the supermarket industry.

Mr. Little left the Company on March 18, 2002. Mr. Little was named Chief
Executive Officer and President on January 31, 2000 and became a director in
September 2000. Mr. Little was Vice President, Marketing for Fleming Companies
and President of ABCO Foods (a division of Fleming) from January 1998 to January
2000. From August 1989 to December 1997, Mr. Little was with Haggen, Inc.
serving in various capacities as Senior Vice President Operations, Vice
President Sales/Marketing and Vice President Perishables. Mr. Little has 34
years of experience in the supermarket industry.

Mr. Plumley, who was named Director in September 2000, was named Senior Vice
President - Chief Financial Officer and Secretary on March 1, 1999, served the
Company as Vice President - Chief Financial Officer and Secretary from March 30,
1998 and Vice President and Corporate Controller from September 15, 1997 until
his promotions. Prior to September 1997, Mr. Plumley served as Senior Vice
President of American Stores' Super Saver Division from 1994 to 1997 and Senior
Vice President of Lucky Stores, Inc. from 1990 to 1994. Mr. Plumley has 29 years
of experience in the supermarket industry.

Mr. Jordan was named Sr. Vice President of Operations in September 2001 and
served the Company as Vice President of Operations since joining the Company
in May 2000. Prior to May 2000, Mr. Jordan held the position of regional Vice
President of Operations with Brown & Cole stores in Bellingham, Washington.
From 1988 to 1998, Mr. Jordan was District Manager for Haggen/Top Foods in
Bellingham, Washington. Mr. Jordan has 29 years of experience in the grocery
industry.

Ms. Cirivello was named Vice President of Human Resources/General Counsel in
March of 2001. Ms. Cirivello joined the company as Senior Counsel in October of
1998. Prior to October 1998, Ms. Cirivello was employed by the law firm of
Wessels & Pautsch, Davenport, Iowa, as a Labor and Employment Law Attorney.

Mr. Klun joined the Company as Vice President - Support Services in February
1998. Prior to February 1998, Mr. Klun was employed by Bruno's, Birmingham,
Alabama as Assistant Distribution Manager. For the period from December 1968 to
December 1997, Mr. Klun held various positions with Jewel Food Stores, Chicago,
Illinois. Mr. Klun has over 34 years of experience in the supermarket industry.

46

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 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 "Security Ownership of Principal Shareholders and Management" 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
"Certain Transactions" 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.

47

PART IV

ITEM 14: EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 10-K

48

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
Chairman, Chief Executive Officer
and President

DATED: May 3, 2002

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:

49

EXHIBIT NO. -- DESCRIPTION

2.1-- First Amended Reorganization Plan of Eagle Food Centers, Inc., dated
April 17, 2000 (filed as Exhibit 2.1 to Form 8-K dated July 7, 2000
and incorporated herein by reference).

2.2-- Order Pursuant to 11 U.S.C. Sections 105 and 1127 (b) Allowing
Non-Material, Technical Modification to First Amended Reorganization
Plan of Eagle Food Centers, Inc. (filed as Exhibit 2.1 to Form 8-K
dated August 7, 2000 and incorporated herein by reference).

3.1-- Restated By-laws of the Company (filed as Exhibit 3.2 to the Form 8-K
dated July 7, 2000 and incorporated herein by reference).

3.2-- Amended and Restated Certificate of Incorporation of the Company
(filed as Exhibit 3(i) to the Form 8-K dated July 5, 2001 and
incorporated herein by reference).

4.1-- Form of Note (filed as Exhibit 4.2 to the Form 8-K dated August 7,
2000 and incorporated herein by reference).

4.2-- Form of Indenture, dated as of August 7, 2000, between the Company and
U.S. Bank Trust National Association, as trustee (filed as Exhibit 4.1
to the Form 8-K dated August 7, 2000 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 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).

10.5-- 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).

10.6-- 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).

10.7-- Employment agreement dated May 10, 1995 between the Company and Robert
J. Kelly, its President and Chief Executive Officer (filed as Exhibit
19 to the Company's Form 10-Q for the quarter ended July 29, 1995 and
incorporated herein by reference).

50

10.8-- 1995 Stock Incentive Plan as approved on June 21, 1995 (filed as
Exhibit 18 to the Company's Form 10-Q for the quarter ended July 29,
1995 and incorporated herein by reference).

10.9-- Employment Contract dated December 13, 1999 between the Company and
Jeff Little, its Chief Executive Officer and President effective
January 31, 2000 (filed as Exhibit 10.21 to the Company's Annual
Report on Form 10-K for the year ended January 29, 2000 and
incorporated herein by reference).

10.10-- Escrow Agreement between Eagle Food Centers, Inc. and U.S. Bank Trust
National Association (filed as Exhibit 10.1 to Form 8-K dated August
7, 2000 and incorporated herein by reference).

10.11-- Eagle Food Centers, Inc. 2000 Stock Incentive Plan, dated and approved
September 13, 2000 (filed as Exhibit 10.19 to the Company's Annual
Report on Form 10K for the year ended February 3, 2001 and
incorporated herein by reference).

10.12-- Employment Contract correction for contract dated December 13, 1999
between the Company and Jeff Little, its Chief Executive Officer and
President effective January 31, 2000 (filed as Exhibit 10.19 to the
Company's Annual Report on Form 10K for the year ended February 3,
2001 and incorporated herein by reference).

10.13-- Second Amended and Restated Loan and Security Agreement with Congress
Financial Corporation (Central) date August 24, 2001 (filed as Exhibit
10.21 to the Company's Form 10Q for the quarter ended November 3, 2001
and incorporated herein by reference).

10.14--* Amended Employment Agreement dated January 24, 2002 between the
Company and Robert J. Kelly, Chairman of the Board, President and
Chief Executive Officer.

16.1-- Letter from Deloitte & Touche LLP on change of certifying accountant
(filed as Exhibit 16 to Form 8-K dated July 28, 2000 and incorporated
herein by reference).

18.1-- Preferability Letter from Deloitte and Touche dated April 14, 2000
(filed as Exhibit 18.1 to the Form 10-K dated April 28, 2000 and
incorporated herein by reference).

21--* Subsidiaries of the Registrant.

99.1-- Form of Noteholder agreements to vote for Plan of Reorganization
(filed as Exhibit 99.2 to Form 8-K dated February 29, 2000 and
incorporated herein by reference).

99.2-- Disclosure Statement with Respect to First Amended Reorganization Plan
of Eagle Food Centers, Inc. dated April 17, 2000 (filed as Exhibit
99.1 to Form 8-K dated July 7, 2000 and incorporated herein by
reference).

99.3-- Findings of Fact, Conclusion of Law, and Order Under 11
U.S.C.ss.ss.1129(a) and (b) and Fed. R. Bankr. P. 3020 Confirming
First Amended Reorganization Plan of Eagle Food Centers, Inc. (filed
as Exhibit 99.2 to Form 8-K dated July 7, 2000 and incorporated herein
by reference).

51

99.4--* Order and Final Decree closing the Chapter 11 Case as of January 28,
2002.

*Filed herewith.

52