<PAGE>   1
                                 UNITED STATES
                       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 January 30, 1999

    [ ] Transition report pursuant to Section 13 or 15(d) of the Securities
                              Exchange Act of 1934

                       For the transition period from to

                        Commission file number: 33-63372

                        PUEBLO XTRA INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)

              Delaware                                 65-0415593
 ------------------------------------      -----------------------------------
   (State or other jurisdiction of         (I.R.S. employer identification no.)
    incorporation or organization)

      1300 N.W. 22nd Street
     Pompano Beach, Florida                                 33069
----------------------------------------         -----------------------------
(Address of principal executive offices)                 (Zip code)

     Registrant's telephone number, including area code: (954) 977-2500

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

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

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

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

     No voting stock of the Registrant is held by non-affiliates of the
Registrant.

     Number of shares of the Registrant's Common Stock, $ .10 par value,
outstanding as of April 21, 1999 -- 200.





<PAGE>   2

                                    PART I.

ITEM 1.     BUSINESS

General

     Pueblo Xtra International, Inc. (the "Company") is a Delaware holding
company that owns all of the common stock of Pueblo International, Inc., a
Delaware company (together with its subsidiaries, "Pueblo"). Pueblo, which was
founded in 1955 with the opening of the first mainland-style supermarkets in
Puerto Rico, is the leading supermarket chain in the Commonwealth of Puerto
Rico and the Territory of the U.S. Virgin Islands. In addition, Pueblo is the
leading operator of video rental outlets in Puerto Rico and the U.S. Virgin
Islands through its franchise rights with Blockbuster Entertainment, Inc.
("BEI"). The Company currently operates 44 supermarkets in Puerto Rico and six
supermarkets in the U.S. Virgin Islands. The Company also currently operates 42
Blockbuster locations in Puerto Rico and two Blockbuster locations in the U.S.
Virgin Islands as the Blockbuster franchisee for Puerto Rico and the U.S.
Virgin Islands.

     On July 28, 1993, the Company acquired all of the outstanding shares of
common stock of Pueblo for an aggregate purchase price of $283.6 million plus
transaction costs (hereinafter referred to as the "Acquisition"). Pursuant to
the Acquisition, Pueblo became a wholly-owned subsidiary of the Company. The
shares were acquired from an investor group including affiliates of
Metropolitan Life Insurance Company, The First Boston Corporation and certain
current and former members of Pueblo management and its Board of Directors.

     The Acquisition has been accounted for under the purchase method effective
July 31, 1993 as discussed in Note (3)-- Goodwill of the notes to the Company's
consolidated financial statements referenced in Part II, Item 8 of this Form
10-K.

Business of the Company

Supermarket Industry Overview

     The top four chains in the retail grocery industry in Puerto Rico account
for approximately 69% of total industry sales, with the remainder divided among
smaller chains and numerous independent operations. Total supermarket chain
sales in calendar year 1998 were approximately $2.5 billion, a significant
portion of which was attributable to the more densely populated greater San
Juan metropolitan area, where the larger chains are concentrated. The grocery
industry in less populated parts of the island is characterized by smaller
family-run operations with limited selection and less competitive prices. No
major U.S. supermarket chains have established operations in the Puerto Rico
grocery market, although a number of national general merchandise chains have
significant Puerto Rican operations. National warehouse clubs and mass
merchandisers, which have entered the Puerto Rico and U.S. Virgin Islands
markets since 1990 offering various bulk grocery and general merchandise items,
have increased pricing pressures on grocery retailers including the Company.

Puerto Rico

     The Company operates its supermarkets under the names Pueblo, PuebloXtra,
and Xtra supermarkets with emphasis on service, variety and high quality
products at competitive prices. In Puerto Rico, the Company has a grocery
retailing market share of approximately 21%. In addition, the Company estimates
that it has a 35% market share in the greater San Juan metropolitan area, the
most densely populated region of Puerto Rico, with more than one-third of the
island's 3.8 million residents. In fiscal year 1999 in Puerto Rico, the stores
averaged approximately 39,746 gross sq. ft. and generated an average of





                                      -2-
<PAGE>   3

approximately $590 of sales per selling sq. ft. Since the Acquisition, the
Company has constructed six new supermarkets and remodeled 18 existing
supermarkets in Puerto Rico.

U.S. Virgin Islands

     In fiscal 1999, the six supermarkets in the U.S. Virgin Islands averaged
31,634 gross sq. ft. and generated an average of approximately $580 sales per
selling sq. ft. The Company has an estimated U.S. Virgin Islands grocery
retailing market share of approximately 39%. Since the Acquisition, the Company
has added one new supermarket and remodeled five existing supermarkets in the
U.S. Virgin Islands.

Video Operations

     The Company has been the franchisee of Blockbuster locations in Puerto
Rico since 1989 and in the U.S. Virgin Islands since 1993 and currently
operates 44 Blockbuster locations in Puerto Rico and the U.S. Virgin Islands.
In Puerto Rico, the Company operates 19 in-store Blockbuster outlets and 23
free-standing Blockbuster stores, most of which are adjacent to its
supermarkets. In the U.S. Virgin Islands, the Company operates two Blockbuster
stores. The Company's free-standing Blockbuster stores average approximately
5,700 gross sq. ft., while the Company's in-store Blockbuster outlets average
approximately 3,800 gross sq. ft. During fiscal 1997, the Company converted all
of the remaining video outlets which it operated in its supermarkets under the
name Pueblo Video Clubs into Blockbuster outlets. In order to increase customer
traffic in its supermarkets, the Company's typical in-store Blockbuster outlet
has a separate entrance but its principal exit leads into the supermarket. In
addition, the Company is able to take advantage of cross-marketing
opportunities with its supermarket operations, including promotional video
rental and merchandising offers.

     The Company's Blockbuster operations are currently the only major video
chain operating in Puerto Rico and the U.S. Virgin Islands. Each free-standing
Blockbuster location carries an average of approximately 9,700 tapes dedicated
to video rental whereas an in-store Blockbuster location carries approximately
6,600. Each location also offers for sale a selection of recorded and blank
video tapes, music compact discs, video game cartridges, accessories and snack
food products. For promotions of its Blockbuster operations, the Company
primarily utilizes print, television, radio, billboards and in-store signage.
BEI also provides product and support services to the Company. These include,
among other things, marketing programs and providing computer hardware and
software.

     The Company's successful development of the Blockbuster franchise has been
the result of its ability to leverage its knowledge of Puerto Rico and existing
market and retailing expertise. The Company's knowledge of real estate and its
existing portfolio of desirable supermarket locations has enabled its
Blockbuster division to obtain attractive, high traffic locations. The Company
will continue to evaluate expansion opportunities in its markets.

     The Company's Development Agreements with BEI provide for the Company's
right to open Blockbuster locations in Puerto Rico and the U.S. Virgin Islands
during the term of such agreements. The Development Agreements contain
development quotas which the Company has fulfilled requiring the Company to
open a certain number of Blockbuster locations in Puerto Rico and in the U.S.
Virgin Islands. Each Blockbuster location is subject to a Franchise Agreement
with BEI that provides the right for such location to conduct Blockbuster
operations for a 20-year period.

Disposal of Florida Retail Operations

     On January 16, 1996, the Company announced its decision to discontinue its
retail 




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operations in Florida (the "Florida Disposal"). The announcement was made as
part of the Company's restructuring plans whereby the Company would exit the
under-performing Florida retail market and place more emphasis on the strength
of its operations in Puerto Rico and the U.S. Virgin Islands. The Florida
Disposal,which included the disposal of all eight supermarkets and one
warehouse and distribution center, by sale or abandonment, was completed in the
first quarter of fiscal year 1997. As of the date of this filing, all property
related to the discontinued Florida operations has been disposed of. For
further details of the Florida Disposal, see Note (2)-- Division Closure Costs
of the notes to the Company's consolidated financial statements referenced in
Part II, Item 8 of this Form 10-K.

Store Composition

         Since the Acquisition, the Company has made capital expenditures of
approximately $73.5 million in its supermarket operations in Puerto Rico and
the U.S. Virgin Islands, including the opening of six new supermarkets, the
acquisition of one new supermarket and the remodeling of 18 existing stores. In
the same period, the Company has made capital expenditures totaling
approximately $10.6 million in its Blockbuster operations. The history of store
openings, closings and remodelings, beginning with fiscal 1995, is set forth in
the table below:

<TABLE>
<CAPTION>

                                                       Fiscal Year
                                       ----------------------------------------
                                       1999     1998     1997     1996     1995
                                       ----     ----     ----     ----     ----
<S>                                   <C>      <C>      <C>      <C>      <C>
Stores in Operation:
  At beginning of year............      94       77       82       79       76
  Stores opened:
     Supermarkets.................       1       --       --        4        2
     Blockbuster video stores.....       1       17**      5       --        1

  Stores closed:
     Puerto Rico - Supermarket....       1*      --        2        1       --
     Puerto Rico - Blockbuster....       1*      --       --       --       --
     Florida......................      --       --        8       --       --
                                      ----     ----     ----     ----     ----
  At end of year..................      94       94       77       82       79
                                      ====     ====     ====     ====     ====
Remodels and/or conversions.......       2       16        9        1        6
                                      ====     ====     ====     ====     ====

  Store Composition at Year-End:
     By division:
        Supermarkets..............      50       50       50       60       57
        Blockbuster video stores..      44       44       27       22       22
                                      ----     ----     ----     ----     ----
  Total                                 94       94       77       82       79
                                      ====     ====     ====     ====     ====
     By location:
       Puerto Rico................      86       86       70       67       65
       Florida....................      --       --       --        8        8
       U.S. Virgin Islands........       8        8        7        7        6
                                      ----     ----     ----     ----     ----
  Total                                 94       94       77       82       79
                                      ====     ====     ====     ====     ====
</TABLE>





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<PAGE>   5

 *   Closed as a result of hurricane Georges; will not be reopened.
**   Includes conversion of Pueblo Video Clubs into Blockbuster stores.

Supermarket Purchasing and Distribution

     The Company's buying staff actively purchases products from distributors,
as well as directly from the producer or manufacturer. The Company generally
controls shipping from the point of purchase in an effort to reduce costs and
control delivery times. The Company currently buys approximately 58% of its
total dollar volume of product purchases directly from manufacturers and is
seeking to increase this percentage to reduce costs and to obtain superior
payment terms.

     The Company owns a 300,000 square foot full-line warehouse and
distribution center in greater San Juan. The only facility of its type on the
island with both refrigerated and freezer capacity, the San Juan warehouse has
capacity to store approximately 1.5 million cases of assorted products and acts
as the Company's central distribution center for the island. The warehouse is
equipped with a computerized tracking system which is integrated with the
Company's purchasing, inventory management and shipping systems. This system
enables the Company to make rapid procurement decisions, optimize inventory
levels and increase labor productivity. In fiscal 1999, this facility provided
approximately 57% of the goods (measured by purchase cost) supplied to the
Company's stores in Puerto Rico.

Supermarket Merchandising

General

     The Company's merchandising strategies integrate one-stop shopping
convenience, premium quality products, attractive pricing and effective
advertising and promotions. The Company reinforces its merchandising strategies
with friendly and efficient service, effective promotional programs, in-store
activities, and both brand name and high quality private label product
offerings.

Product Offerings

     The Company is in the process of expanding its supermarket stock keeping
units ("SKU") from approximately 23,000 to approximately 67,000. Management
believes the Company's supermarkets offer the greatest product variety within
their market areas, as its competitors generally lack the sales volume, store
size and procurement efficiencies to stock and merchandise the wide variety of
products and services offered by the Company. The Company's management believes
that the convenience and quality of its specialty department products
contribute to customer satisfaction.





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<PAGE>   6

     The following table sets forth the mix of products sold in the Company's
supermarkets for the fiscal years indicated:

<TABLE>
<CAPTION>
                                                  Fiscal Year Ended
                                       -------------------------------------------
                                        January 30,     January 31,     January 25,
Product Category                           1999            1998            1997
                                       -----------     -----------     -----------
<S>                                    <C>             <C>             <C>
Grocery...............................    46.8%           46.7%            46.9%
Health/Beauty Care/General Merchandise     7.7             6.5              6.2
Dairy.................................    17.5            17.4             16.4
Meat/Seafood..........................    14.7            15.4             16.0
Produce...............................     9.0             9.5              9.3
Deli/Bakery...........................     4.3             4.3              4.5
Video Club............................     0.0             0.2              0.7
                                         ------          ------           ------
     Total............................   100.0%          100.0%           100.0%
                                         ======          ======           ======
</TABLE>

Pricing

     As the largest grocery operator in its markets, the Company is able to
take advantage of volume purchase discounts and shipping efficiencies in order
to offer competitive pricing at its supermarkets. Weekly circulars are used to
emphasize special offers.

Private Label

     During fiscal 1998 the Company began selling Pueblo brand private label
grocery, dairy, and frozen food items in its supermarkets. During fiscal 1999
the Company continued to introduce Pueblo brand items and as of fiscal 1999
year-end 257 such items were offered in its supermarkets. For the fiscal year
ended January 30, 1999 sales of Pueblo brand private label items amounted to
16% of the total combined sales of grocery, dairy, and frozen foods. Product
selection has been based on the ability to ensure quality that is equal to or
better than competitive national brand products and sourcing that will enhance
gross margin.

     Historically, the Company utilized only Food Club private label products
through the Company's membership with Topco Associates, Inc. Utilization of
these products has not been discontinued. Rather, product offerings among
Pueblo private label products, Food Club private label products and national
brands are evaluated on performance based on quality, costs, gross margin and
sales volume in order to offer what management believes is the best selection
and value to customers.

Category Management

    During fiscal 1998, the Company implemented a category management system
designed to combine traditional buying, reordering and pricing functions under
the leadership of corporate level category merchandisers. The system allows the
company to assign profit management to the individual responsible for a product
category. The Company believes that such a system will improve sales, optimize
inventory levels, reduce purchase costs and thereby enhance gross profit and
operating profit margins.





                                      -6-
<PAGE>   7

Advertising and Promotion

     The Company primarily utilizes newspaper, radio, television and in-store
advertising in both Puerto Rico and the U.S. Virgin Islands. The Company's
grocery operations run multi-page newspaper inserts and full-page color
shoppers.

     All advertising is created and designed through the Company's wholly-owned
advertising agency, CaribAd, Inc. ("Adteam"). Adteam, based in Puerto Rico,
develops promotional programs for all of the Company's markets, thereby
providing advertising cost advantages over the Company's competitors.

Competition

     The grocery retailing business is highly competitive. Competition is based
primarily on price, quality of goods and service, convenience and product mix.
The number and type of competitors, and the degree of competition experienced
by individual stores, vary by location.

     The Company competes with local food chains, such as Supermercados Amigo,
Supermercados Grande, Supermercados Econo, Mr. Special Supermarkets, Plaza
Gigante Supermarkets, and Supermercados Selecto in Puerto Rico, and Plaza Extra
and Cost-U-Less in the U. S. Virgin Islands, as well as numerous independent
operations throughout Puerto Rico and the U.S. Virgin Islands. In addition,
several warehouse clubs and mass merchandisers, such as Sam's Warehouse Clubs,
Wal-Mart, Kmart (including its Big K format) and Walgreens, have opened
locations in Puerto Rico and the U.S. Virgin Islands (only Big Kmart). Despite
these competitive challenges, the Company continues to maintain its position as
market share leader in each of its respective markets.

         Although the Company's Blockbuster operations constitute the only
major video chain in Puerto Rico and the U.S. Virgin Islands, they compete with
numerous local, independent video retailers. In addition, the Company's
Blockbuster video stores compete against television, cable, satellite
broadcasting, movie theaters and other forms of entertainment.

Management Information Systems

     The Company believes that high levels of automation and technology are
essential to its operations and has invested considerable resources in computer
hardware, systems applications and networking capabilities. These systems
integrate all major aspects of the Company's business, including the monitoring
of store sales, inventory control, merchandise planning, labor utilization,
distribution and financial reporting.

     All of the Company's stores are equipped with state-of-the-art point of
sale terminals with full price look-up capabilities that capture sales at the
time of transaction down to the SKU level through the use of bar-code scanners.
These scanners facilitate customer check-out and provide, by store, valuable
stock-replenishment information for buyers and financial information used by
management. To provide the best service possible, the Company has installed a
labor scheduling system that schedules the optimal staffing based on sales,
customer traffic and defined service objectives. In addition, the Company has
installed software to monitor cash register check out transactions, by cashier,
according to type and frequency in order to improve check out operations and
reduce inventory shrinkage. The Company's management information systems at its
Blockbuster operations are state-of-the art systems which are licensed to the
Company by BEI.

     In March 1998, the Company completed the planning phase of a project to
modify its information technology systems for compliance with the year 2000 and
beyond. The 




                                      -7-
<PAGE>   8

Company's plan also includes a review of the implications of the Year 2000
problem on telecommunications systems, electronic equipment and facilities
systems. The Company is now in the process of executing its plan and expects
all systems to be compliant by mid-calendar year 1999. The financial impact of
making the required system changes is not expected to be material to the
Company's consolidated financial position, results of operations or cash flows.
The Company has initiated formal communications with all of its significant
suppliers and service providers and large customers to determine the extent to
which the Company's interface systems are vulnerable to those third parties'
possible failure to remediate their own year 2000 issues. There can be no
guarantee that the systems of other companies that the Company does business
with, and in some cases with which the Company's systems interface, will be
timely converted and would not have an adverse effect on the Company's systems.

     Contingency plans are being developed to address the possibility that
critical internal and third party year 2000 issues are not resolved in the time
frame outlined in the preceding paragraph.

     As of January 30, 1999 the Company had made expenditures of $1.7 million
for consulting and professional services, software, and computer hardware to
modify its information technology systems for compliance with the year 2000 and
beyond. The Company does not expect material additional expenditures in fiscal
2000 related to the project.

     If the Company is unsuccessful or if the remediation efforts of its key
suppliers and service providers and large customers are unsuccessful with
regard to Year 2000, there may be a material adverse impact on the Company's
consolidated results of operations or financial condition. The Company is
unable to estimate the financial impact of this possible eventuality because it
cannot predict the magnitude or time length of potential Year 2000 business
interruptions.

Employees

     As of January 30, 1999, the Company had approximately 5,442 employees
(full- and part-time) of whom approximately 4,216 were employed at the
supermarket level, 524 at the administrative and financial services offices and
distribution center and 702 by the Blockbuster division. Approximately 58% of
the Company's supermarket employees are employed on a part-time basis.
Approximately 3,549 store employees are represented by a nonaffiliated
collective bargaining organization under a contract expiring in 2002. The
Company considers its relations with its employees to be good.

Trademarks, Tradenames and Service Marks

     The Company owns certain trademarks, tradenames and service marks used in
its business, which are duly registered with the U. S. Patent and Trade office,
and the appropriate governmental authorities in Florida, Puerto Rico, the U. S.
Virgin Islands, and selected foreign jurisdictions. The Company believes that
its trademarks, tradenames, and service marks, including Pueblo, PuebloXtra,
and Xtra, are valuable assets due to the fact that brand name recognition and
logos are important considerations in the Company's consumers' markets. As a
franchisee, the Company has rights to use the Blockbuster trademark in its
specified franchise territories.

Regulation

     Compliance by the Company with federal, state and local environmental
protection laws has not had, and is not expected to have, a material effect on
capital expenditures, earnings or the competitive position of the Company.





                                      -8-
<PAGE>   9

ITEM 2.  PROPERTIES

         The following table sets forth information as of January 30, 1999 with
respect to the owned and leased stores and support facilities used by Pueblo in
its business:

<TABLE>
<CAPTION> 
                                   Owned (1)            Leased               Total
                               -----------------   -----------------    ----------------
                               No. Gross Sq. Ft.   No. Gross Sq. Ft.    No. Gross Sq. Ft

                               --- -------------   --- -------------    --- ------------
<S>                            <C>                 <C>                  <C>
Supermarkets . . . . . . . .   12    546,000       38    1,392,000      50    1,938,000
Blockbuster video stores . .    8     47,000       36      166,000      44      213,000
Warehouse and distribution .    1    300,000        1       13,000       2      313,000
</TABLE>

---------- 
(1)      Four of the owned stores include land leases: three in Puerto Rico,
         and one in the U.S. Virgin Islands.

         The Company also owns the shopping centers at three of its store
locations in Puerto Rico and two in the U.S. Virgin Islands.

         The majority of the Company's supermarket operations are conducted on
leased premises which have initial terms generally ranging from 20 to 25 years.
The lease terms typically contain renewal options allowing the Company to
extend the lease term in five to ten year increments. The leases provide for
fixed monthly rental payments subject to various periodic adjustments. The
leases often require the Company to pay percentage annual rent and certain
expenses related to the premises such as insurance, taxes and maintenance. See
Note (6)-- Leases and Leasehold Interests of the notes to the Company's
consolidated financial statements referenced in Part II, Item 8 of this Form
10-K. The Company does not anticipate any difficulties in renewing its leases
as they expire.

         The construction of owned facilities is financed principally with
internally generated funds. All owned properties of Pueblo are pledged as
collateral (by a pledge of the assets of the Company's subsidiaries) under the
Company's existing bank credit agreement dated as of April 29, 1997 (the "New
Bank Credit Agreement") with a syndicate of banks (see Note (5)-- Debt of the
notes to the Company's consolidated financial statements referenced in Part II,
Item 8 of this Form 10-K).

         The Company discontinued its supermarket operations in Florida, as
described more fully in Note (2)-- Division Closure Costs of the notes to the
Company's consolidated financial statements referenced in Part II, Item 8 of
this Form 10-K, and closed all eight of its supermarkets located in Florida
during fiscal 1997. As of the date of filing, the Company has disposed of all
property related to the discontinued Florida operations.

         The Company owns its headquarters that includes the supermarket and
Blockbuster offices and the Distribution Center located in Carolina, Puerto
Rico (near San Juan) and leases its administrative offices located in Pompano
Beach, Florida.

         The Company's management believes that its properties are adequately
maintained and sufficient for its business needs.

ITEM 3. LEGAL PROCEEDINGS

         The Company is a party to a number of legal proceedings involving
claims for money damages arising in the ordinary course of conducting its
business which are either covered 




                                      -9-
<PAGE>   10

by insurance or are within the Company's self-insurance program, and in a
number of other proceedings which are not deemed material. The Company's
management does not believe that the ultimate resolution of any of these
matters could have a material adverse effect on the Company's results of
operations or financial condition.

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

         There were no matters submitted to a vote of security holders during
the quarter ended January 30, 1999.

                                   PART II.

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

Market Information

         There is no established public trading market for the Company's common
equity.

Holders

         The Company is a wholly-owned subsidiary of PXC&M Holdings, Inc. a
Delaware Corporation ("Holdings"). Holdings is beneficially owned by a trust
for the benefit of the family of Gustavo Cisneros, and a trust for the benefit
of the family of Ricardo Cisneros, with each trust having an approximate 50%
indirect beneficial interest in Holdings. These trusts are referred to herein
as the "Principal Shareholders." Messrs. Gustavo and Ricardo Cisneros disclaim
beneficial ownership of such shares.

Dividends

         No cash dividends have been declared on the common stock since the
Company's inception. Certain restrictive covenants in the New Bank Credit
Agreement impose limitations on the declaration or payment of dividends by the
Company. Additionally, dividend payments by Pueblo to the Company are
restricted under the terms of the New Bank Credit Agreement. The New Bank
Credit Agreement, however, provides that so long as no default or event of
default (as defined in the New Bank Credit Agreement) exists, or would exist as
a result, Pueblo is permitted to pay cash dividends to the Company in an
aggregate amount necessary to pay interest on the Company's 9 1/2% Senior
Notes due 2003 (the "Notes") and the Company's 9 1/2% Series C Notes due 2003
(the "Series C Senior Notes") then due and payable in accordance with the terms
thereof (see Note (5)-- Notes to Consolidated Financial Statements).






                                     -10-
<PAGE>   11

ITEM 6.  SELECTED FINANCIAL DATA


         (Dollars in thousands, except average sales per selling square foot
amounts)

<TABLE>
<CAPTION>

                                              Fiscal Year Ended
                            --------------------------------------------------------------
                            January 30,  January 31,  January 25,  January 27,  January 28,
                                1999         1998         1997         1996         1995
                            -----------  -----------  -----------  -----------  ----------
<S>                          <C>          <C>          <C>          <C>          <C>

Operating Statement Data

Net sales                    $784,774     $938,506     $1,020,056   $1,145,370   $1,166,955
Cost of goods sold            528,395      667,043        760,329      848,490      871,136
                             --------     --------     ----------   ----------   ----------
   Gross profit               256,379      271,463        259,727      296,880      295,819
Selling, general and admin-
    istrative expenses (1)    172,964      204,185        213,485      240,219      229,197
Depreciation and amortization  36,529       40,175         41,128       43,669       43,865
Division closure costs (2)         --           --          4,160       28,012           --
                             --------     --------     ----------   ----------   ----------
   Operating profit (loss)     46,886       27,103            954      (15,020)      22,757
Sundry, net                        --          (36)           122          (52)         (35)
Interest expense-debt and
   capital lease obligations  (29,556)     (30,527)       (30,458)     (34,221)     (32,809)
Interest and investment
   income, net                  1,379          910            276          875          656
Income tax (expense) benefit   (9,832)        (583)         9,535       18,615        4,790
                             --------     --------     ----------   ----------   ----------
Income (loss) before
   extraordinary item           8,877       (3,133)       (19,571)     (29,803)      (4,641)
Extraordinary item (3)             --       (2,444)            --           --           --
                             --------     --------     ----------   ----------   ----------
Net income (loss)            $  8,877     $ (5,577)    $  (19,571)  $  (29,803)  $   (4,641)
                             ========     ========     ==========   ==========   ==========
</TABLE>

          See notes to Selected Financial Data at the end of Item 6.






                                      -11-
<PAGE>   12

<TABLE>
<CAPTION>

                                                             As of
                              -------------------------------------------------------------------
                              January 30,   January 31,   January 25,   January 27,   January 28,
                                 1999          1998          1997          1996          1995
                              -----------   -----------   -----------   -----------   -----------
<S>                           <C>           <C>           <C>           <C>           <C>
Balance Sheet Data

Cash and cash equivalents (4)  $55,500       $28,770       $12,148       $6,998        $15,680
Working capital (deficit)        1,578       (23,535)      (56,217)     (28,571)       (11,534)
Property and equipment, net    129,860       135,844       150,915      166,283        207,935
Total assets                   507,002       502,176       522,641      571,788        602,695
Total debt and capital
   lease obligations           276,032       275,576       295,204      308,497        329,855
Stockholder's equity            36,182        27,305        32,882       47,453         77,256
</TABLE>

<TABLE>
<CAPTION>

                                                      Fiscal Year Ended
                              -------------------------------------------------------------------
                              January 30,   January 31,   January 25,   January 27,   January 28,
                                 1999          1998          1997          1996          1995
                              -----------   -----------   -----------   -----------   -----------
<S>                           <C>           <C>           <C>           <C>           <C>
Certain Financial Ratios
   and Other Data
EBITDA (as defined) (5)        $83,415       $67,278       $42,082       $28,649       $66,622
Cash flow provided by (used
   in) investing activities     (8,209)          187        (1,364)      (21,832)      (15,707)
Cash flow used in
   financing activities           (591)      (20,343)       (8,298)      (10,915)       (1,877)
Cash flow provided by
   operating activities         35,530        36,778        14,812        24,065        27,793
Capital expenditures            15,271        10,938        14,455        22,334        16,401
EBITDA (as defined) margin (5)   10.6%          7.2%          4.1%          2.5%          5.7%
Debt to EBITDA  (as defined)      3.30          4.10          7.01         10.77          4.95

</TABLE>

          See notes to Selected Financial Data at the end of Item 6.




                                      -12-
<PAGE>   13

<TABLE>
<CAPTION>

                                                                     Fiscal Year
                                               ------------------------------------------------------
                                                 1999        1998        1997       1996       1995
                                               ---------   --------   ---------   --------   --------
<S>                                             <C>        <C>         <C>        <C>        <C>
Retail Food Division Data
Puerto Rico
 Number of stores (at fiscal year-end)               44          44          44         46         44
 Average sales per store (6)                   $ 14,804    $ 18,221    $ 19,672   $ 19,808   $ 19,797
 Average selling square footage                  27,179      26,455      27,652     27,055     26,031
 Average sales per selling square foot (6)     $    590    $    701    $    711   $    732   $    761
 Total sales                                    650,816     801,732     886,765    877,603    874,019
 Same store sales % change                        (17.8)%     (10.2)%      (2.6)%     (2.8)%     (1.3)%

U.S. Virgin Islands
 Number of stores (at fiscal year-end)                6           6           6          6          5
 Average sales per store (6)                   $ 11,326    $ 14,777    $ 15,110   $ 14,952   $ 15,619
 Average selling square footage                  19,421      19,421      20,104     20,625     20,724
 Average sales per selling square foot (6)     $    580    $    754    $    752   $    725   $    754
 Total sales                                     67,958      88,659      90,659     76,813     78,097
 Same store sales % change                        (21.7)%      (3.9)%       7.0%      (3.3)%    (17.8)%

Blockbuster Division Data
Blockbuster Stores
 Number of stores (at fiscal year-end)               44          44          27         22         22
 Average sales per store (6)                   $  1,381     $ 1,371    $  1,588   $  1,443   $  1,254
 Average weekly sales                             1,184         683         794        608        535
 Total sales                                     60,968      48,115      35,938     31,295     26,994
 Same store sales % change                         10.8%       (4.5)%      10.5%      14.0%      10.9%

Discontinued Operations Data
Florida (7)
 Number of stores (at fiscal year-end)              --          --           --          8          8
 Average sales per store (6)                        --          --           --   $ 21,518   $ 23,481
 Average selling square footage                     --          --           --     50,398     50,398
 Average sales per selling square foot (6)          --          --           --   $    427   $    466
 Total sales                                        --          --           --    159,659    187,845
 Same store sales % change                          --          --           --         --      (11.6)%
</TABLE>

           See notes to Selected Financial Data at the end of Item 6.

NOTES TO SELECTED FINANCIAL DATA

(1)      Selling, general and administrative expenses for fiscal years 1996 and
         1997 include certain expenses and charges related to the
         implementation of the Company's strategic initiatives and other
         matters. See "Management's Discussion and Analysis of Financial
         Conditions and Results of Operations -- General".
(2)      The Company recorded charges of approximately $25.8 million in fiscal
         1996 and $4.2 million in fiscal 1997 as a result of the Company's exit
         from the Florida market and a charge of $2.2 million in fiscal 1996 as
         a result of the Company's restructuring of its Puerto Rico operations.
         Costs associated with such closings, when recognized, are included in
         selling, general and administrative expenses.
(3)      Amount relates to a loss on the early extinguishment of debt, net of
         deferred income taxes of $1,567.
(4)      Highly liquid investments purchased with a maturity of three months or
         less are considered cash equivalents.
(5)      EBITDA (as defined) represents Earnings Before Interest, Taxes,
         Depreciation and Amortization and sundry. EBITDA (as defined) is not
         intended to represent cash flow from operations as defined by
         generally accepted accounting principles and should not be considered
         as an alternative to net income (loss) as an indication of the
         Company's operating performance or to cash flows as a measure of
         liquidity. 





                                      -13-
<PAGE>   14

         EBITDA (as defined) is included as it is the basis upon which the
         Company assesses its financial performance. EBITDA (as defined) margin
         represents EBITDA (as defined) divided by net sales.
(6)      For all periods presented, average sales are weighted for the period of
         time stores are open during the year.
(7)      All supermarkets in Florida were closed in the first quarter of fiscal
         1997.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

General

         The Company was organized in 1993 to acquire Pueblo in the
Acquisition. In connection with the Acquisition, the Company incurred
significant indebtedness and recorded significant goodwill. Following the
Acquisition, the Company continued an existing operating strategy designed to
expand its supermarket penetration through new supermarket openings in Puerto
Rico and Florida and new Blockbuster locations in Puerto Rico. The number of
the Company's supermarkets in Puerto Rico and the U.S. Virgin Islands grew from
46 to 50 and the number of the Company's Blockbuster locations (including
conversions) grew from 20 to 44, in each case measured from the Acquisition
through the end of fiscal 1999. In addition, the Company added one new
supermarket in Florida after the Acquisition which was subsequently closed in
fiscal 1997, as described below. From the Acquisition through fiscal 1999, the
Company made capital expenditures totaling $93.2 million, of which $84.1
million related to Puerto Rico and the U.S. Virgin Islands.

         Throughout this time period, the Company's markets have been affected
by an increasing level of competition from local supermarket chains,
independent supermarkets, warehouse club stores, discount drug stores and
convenience stores. Warehouse club stores and mass merchandisers, which have
entered the Puerto Rico and U.S. Virgin Islands markets since 1990 offering
various grocery and general merchandise items, have increased pricing pressures
on grocery retailers including the Company. In addition, low inflation in food
prices in recent years has made it difficult for the Company and other grocery
store operators to increase prices and has intensified the competitive
environment by causing such retailers to emphasize promotional activities and
discount pricing to maintain or gain market share.

         The Company's focus from the date of Acquisition through the end of
fiscal 1997 on new supermarket development rather than supermarket operations,
as well as the effects of increased competition, resulted in declines in net
sales (from $1,199.1 million in fiscal 1994 to $1,020.1 million in fiscal
1997), same store sales (from $931.3 million in fiscal 1994 to $861.1 million
in fiscal 1997), and consolidated operating results (from $27.4 million in
fiscal 1994 to $1.0 million in fiscal 1997). The declining operating results
together with the Company's high level of interest expense resulting from its
significant indebtedness resulted in annual net losses from fiscal 1994 through
fiscal 1998.

         In October 1995, William T. Keon, III was named President and Chief
Executive Officer of the Company. Following his arrival at the Company, Mr.
Keon conducted a thorough review of the Company's operating business practices
and its financial performance. As a result of such review, the Company
determined in January 1996 to discontinue its retail operations in the
competitive Florida market in order to focus on its core markets where it has a
stronger competitive position and greater profit opportunities. In fiscal 1996,
management also began to take several other actions designed to improve the
financial performance of the Company, including the closing of two
under-performing supermarkets in Puerto Rico, an increase in the Company's
advertising expenditures in Puerto Rico, and the conversion of six Pueblo Video
Clubs into in-store Blockbuster outlets. These actions continued in fiscal 1999
with opening of one new supermarket and one new Blockbuster store, both in
Puerto Rico.





                                      -14-
<PAGE>   15

         In the summer of 1996, in conjunction with implementation of a revised
business strategy, the Company retained a retail industry consulting firm to
assist management in analyzing the Company's operating practices. One result of
such analysis was the reorganization of labor scheduling practices, which
enabled the Company to eliminate 440 store employees in January 1997 and reduce
annual labor costs in fiscal 1998 by approximately $9.0 million. It is
management's belief that the decision to exit the Florida market, together with
the actions which the Company began to take in the spring of 1996 and the
implementation of its revised business strategy, has contributed, and should
continue to contribute, toward improved operating results. Although overall
sales continued to decline in fiscal 1999, operating profit increased by $19.8
million from $27.1 million in the prior year to $46.9 million in fiscal 1999.
As a result of management's comprehensive program to refocus on repositioning
the business in terms of product mix and modernizing stores, net losses have
decreased since 1996 and in fiscal 1999 the Company reversed the trend of
losses by realizing net income of $8.9 million.

         Other strategic measures being undertaken by the Company include: (i)
continual evaluation of the supermarket formats to expand the breadth of
product and values offered to customers and to increase customer traffic and
convenience, such as adding in-store banking and fast food restaurants for
select locations and (ii) adding products (such as music departments) and event
ticket service centers to the Blockbuster stores to expand their entertainment
offerings. The Company's management believes that these strategic measures will
improve sales by increasing customer traffic in its supermarkets and
Blockbuster stores.

         In connection with the strategic initiatives begun in January 1996,
the Company has incurred a number of charges and other items that have
adversely affected the Company's operating profit, including the following
items which aggregated $31.9 million in fiscal 1996 and $12.3 million in fiscal
1997. The Company recorded charges of approximately $25.8 million in fiscal
1996 and $4.2 million in fiscal 1997 as a result of the Company's exit from the
Florida market, and a charge of $2.2 million in fiscal 1996 as a result of the
Company's restructuring of its Puerto Rico operations (see Note (2)-- Division
Closure and Corporate Restructuring Charges of the notes to the Company's
consolidated financial statements included in Part II, Item 8 of this Form
10-K). Other items which adversely affected the Company's operating profit and
were related to the implementation of the Company's strategic initiatives
included the following, which aggregated $3.9 million in fiscal 1996 and $8.1
million in fiscal 1997. In fiscal 1996, an adjustment to the net realizable
value of certain nonoperating real property in Puerto Rico caused a charge of
$3.9 million. In addition, in fiscal 1997, the elimination of 440 store
employees resulted in a charge of approximately $1.1 million in severance costs
and the closing of two Puerto Rico stores resulted in a $2.9 million charge.
Additionally, the Company established reserves totaling $5.6 million during
fiscal years 1994 through 1998, including $1.5 million in fiscal years 1997 and
1998 relating to the costs, including legal fees, of litigation settled in
fiscal year 1998. As of January 30, 1999 related reserves of $1.5 million equal
amounts due through July 2, 2000 pursuant to the settlement agreement.

         The Company has no operations of its own, and its only assets are its
equity interest in Pueblo and intercompany notes issued to the Company by its
subsidiaries in connection with its investment of the net proceeds of the 9
1/2% senior note (the "Notes") and the 9 1/2% Series C Senior Note Due 2003
(the "Series C Senior Notes"). The Company has no source of cash to meet its
obligations, including its obligations under the Notes and the Series C Senior
Notes, other than payments by its subsidiaries on such intercompany notes,
which are restricted and effectively subordinated to Pueblo's obligations under
the New Bank Credit Agreement, and dividends from its subsidiaries. The New
Bank Credit Agreement contains an exception to the restriction on the payment
of dividends which provides that so long as no default or event of default (as
defined in the New Bank Credit Agreement) exists, or would exist as a result
thereof, Pueblo is permitted to pay cash 




                                      -15-
<PAGE>   16

dividends to the Company in an aggregate amount necessary to pay interest on the
Notes then due and payable in accordance with the terms thereof.

Adjustments for Florida Closing

         In fiscal 1996, the Company determined to discontinue its retail
operations in Florida. The effective date of the Florida closing was December
30, 1995. All eight of the supermarkets in Florida were closed in the first
quarter of fiscal 1997. The following table presents selected comparative
operating data of the Company for the three fiscal years ended January 30, 1999
after excluding the Florida retail division (the Company's operations, after
such exclusion, being referred to herein as the "Continuing Business").

<TABLE>
<CAPTION>

                                                       Year Ended     Year Ended      Year Ended
                                                       January 30,    January 31,     January 25,
                                                           1999         1998             1997
                                                       -----------   ------------    ------------
<S>                                                     <C>           <C>             <C>
Selected Operating Results of the Puerto Rico and U.S.
 Virgin  Islands Operations: (dollars in millions)
Net sales                                               $   784.8     $    938.5      $  1,013.4
Gross profit                                                256.4          271.5           259.3
Selling, general and administrative expenses                173.0          204.2           208.9
EBITDA (as defined) (1)                                      83.4           67.3            50.4
Depreciation and amortization                                36.5           40.2            41.1
Operating profit                                             46.9           27.1             9.3
Selected Operating Results of the Puerto Rico and U.S.
 Virgin  Islands Operations: (as a percentage of sales)
Gross profit                                                 32.7%          28.9%           25.6%
Selling, general and administrative expenses                 22.0           21.8            20.6
EBITDA (as defined) (1)                                      10.6            7.2             5.0
Operating profit                                              6.0            2.9             0.9
</TABLE>

----------

(1)      EBITDA (as defined) represents Earnings Before Interest, income Taxes,
         sundry, Depreciation and Amortization. EBITDA (as defined) is not
         intended to represent cash flow from operations as defined by
         generally accepted accounting principles and should not be considered
         as an alternative to net income (loss) as an indication of the
         Company's operating performance or to cash flows as a measure of
         liquidity. EBITDA (as defined) is included as it is the basis upon
         which the Company assesses its financial performance.





                                      -16-
<PAGE>   17

         The table below presents the adjustments made to Selected Operating
Results, as reported, for the 1997 fiscal year to adjust for the impact of
Florida operations (dollars are in millions):

<TABLE>
<CAPTION>

                                                                Adjustment
                                                               for Impact of      Proforma
                                                     As           Florida        Continuing
                                                  Reported      Operations       Operations
                                               ------------   --------------    ------------
<S>                                            <C>            <C>               <C>
52 Weeks Ended January 25, 1997
Net sales                                       $   1,020.1    $       6.7       $   1,013.4
Gross profit                                          259.7            0.4             259.3
Selling, general and administrative expenses          213.5            4.6             208.9
EBITDA                                                 42.0           (8.4)             50.4
Depreciation and amortization                          41.1            0.0              41.1
Operating profit, (loss)                                0.9           (8.4)              9.3
</TABLE>

Hurricane Georges

         Hurricane Georges struck all of the Company's operating facilities on
September 20 and 21, 1998. All of the Company's stores, with the exception of
two, have been reopened. Since the storm, operations have been at varying
degrees of full capacity depending on the extent of damage at each location.
This situation, continuing adverse weather, limited availability of merchandise
due to storm damage at the Port of San Juan and recovery efforts continue to
inhibit operations of both the Retail Food and Blockbuster divisions.

         The Company's insurance is expected to cover losses associated with
the storm, including the retail value of lost inventory, the replacement cost
of damaged or destroyed operating assets, recovery costs and the impact of
business interruption. The company's insurance carriers have advanced $20.0
million to date. The Company does not expect to record any losses as a result
of the hurricane in the carrying value of its assets or recovery related costs.
Any gains will be recorded at such time as the proceeds are realized.

Year 2000 Compliance

         In March 1998, the Company completed the planning phase of a project
to modify its information technology systems for compliance with the year 2000
and beyond. The Company's plan also includes a review of the implications of
the Year 2000 problem on telecommunications systems, electronic equipment and
facilities systems. The Company is now in the process of executing its plan and
expects all systems to be compliant by mid-calendar year 1999. The financial
impact of making the required system changes is not expected to be material to
the Company's consolidated financial position, results of operations or cash
flows. The Company has initiated formal communications with all of its
significant suppliers and service providers and large customers to determine
the extent to which the Company's interface systems are vulnerable to those
third parties' possible failure to remediate their own year 2000 issues. There
can be no guarantee that the systems of other companies that the Company does
business with, and in some cases with which the Company's systems interface,
will be timely converted and would not have an adverse effect on the Company's
systems.

         Contingency plans are being developed to address the possibility that
critical internal and third party year 2000 issues are not resolved in the time
frame outlined in the preceding paragraph.





                                      -17-
<PAGE>   18

         As of January 30, 1999 the Company had made expenditures of $1.7
million for consulting and professional services, software, and computer
hardware to modify its information technology systems for compliance with the
year 2000 and beyond. In addition, a substantial portion of the modification
work has been performed by the Company's internal management information
systems programming staff as part of their day to day responsibilities. These
internal costs are not material and have not been segregated. The Company does
not expect material additional expenditures in fiscal 2000 related to the
project.

         If the Company is unsuccessful or if the remediation efforts of its
key suppliers and service providers and large customers are unsuccessful with
regard to Year 2000, there may be a material adverse impact on the Company's
consolidated results of operations or financial condition. The Company is
unable to estimate the financial impact of this possible eventuality because it
cannot predict the magnitude or time length of potential Year 2000 business
interruptions.

The information contained herein is a "Year 2000 Readiness Disclosure" under
the Year 2000 Information and Readiness Act of 1998.

Results of Operations

Fiscal 1999 vs. Fiscal 1998

         As of January 30, 1999, the Company operated a total of 50
supermarkets and 44 Blockbuster locations in Puerto Rico and the U. S. Virgin
Islands. In fiscal 1998, the Company converted its remaining Pueblo Video Clubs
into in-store Blockbuster outlets, 15 in Puerto Rico and one in the Virgin
Islands. In fiscal 1999, the Company opened one new supermarket and one new
Blockbuster store both of which are in Puerto Rico. One supermarket and one
Blockbuster store were closed due to hurricane damage and will not be reopened.

         Net sales decreased by $153.7 million or 16.4% in fiscal 1999 compared
to fiscal 1998. For the comparable 52 week period same store sales were $749.8
million versus $903.0 million for the prior year, a decline of 17.0%. "Same
stores" are defined as those stores that were open as of the beginning of both
periods and remained open through the end of the periods. New stores opened
during these periods and the stores closed as a result of hurricane Georges are
excluded from "same stores." Same store sales in the Retail Food Division
declined 18.3% from $863.7 million to $706.3 million. Primary factors
contributing to the decline in same stores sales in the Retail Food Division
are the aftermath of hurricane Georges, increased competition including a large
number of competitive new store openings and increase in selling square
footage, and the affects of repositioning of Pueblo's supermarkets to offer a
broader product mix while eliminating marginally profitable product lines.
Blockbuster same store sales increased 10.8% from $39.3 million to $43.5
million. The $4.2 million increase was primarily a result of increased product
sales.

         Gross profit margin in fiscal 1999, as a percentage of sales, improved
to 32.7% compared to 28.9% in the prior year, resulting in a 380 basis point
increase. Approximately two thirds of this improvement in the Company's
consolidated gross profit margin, as a percentage of sales, is a result of
increased gross profit margins in the Retail Food Division. The improvement in
the Retail Food Division margin is a result of continuing programs begun in the
prior year including implementation of new merchandising strategies,
implementation of the Pueblo private label products program, greater use of the
Company's distribution facilities and importing capabilities, and reduction of
shrink. The remainder of the improvement in the Company's consolidated gross
profit margin, as a percentage of sales, is attributed to increased sales in
the Blockbuster Division.





                                      -18-
<PAGE>   19

         Selling, general and administrative expenses decreased by $31.2
million to $173.0 million from the prior year amount of $204.2 million, or
15.3%, primarily as a result of labor scheduling practices and other cost
control programs reducing direct store selling expenses.

         Depreciation and amortization decreased $3.7 million from $40.2
million in fiscal 1998 to $36.5 million in fiscal 1999.

         Interest expense, net of interest and investment income, of $28.2
million decreased by $1.4 million, or 4.7%, as compared to fiscal 1998. The
decrease is due to a decline in the interest expense as a result of the
Refinancing Plan (see "Liquidity and Capital Resources"), and by an increase in
investment income earned from maintaining larger investment balances.

         The increase in the income tax expense of $9.2 million was primarily
the result of the tax effects of the $19.8 million increase in operating
profit.

         Results for fiscal 1999 were net income for the year of $8.9 million
compared to a $5.6 million loss for the prior year which included an
extraordinary charge for early extinguishment of debt of $2.4 million.

Improvement in net income was $14.5 million.

Fiscal 1998 vs. Fiscal 1997

         As of January 31, 1998, the Company operated a total of 50
supermarkets and 44 Blockbuster locations in Puerto Rico and the U.S. Virgin
Islands. In fiscal 1998, the Company converted its remaining Pueblo Video Clubs
into in-store Blockbuster outlets, 15 in Puerto Rico and one in the Virgin
Islands. In addition, in fiscal 1998, the Company opened one Blockbuster store
in Puerto Rico.

         The discussion below, of sales, gross profit margin, selling, general
and administrative expenses and depreciation and amortization is based on
comparing operating results from the Continuing Business for fiscal 1998 to
fiscal 1997.

         Net sales from the Continuing Business decreased by $74.9 million or
7.4% in fiscal 1998 compared to fiscal 1997. This net decrease includes a $12.1
million increase in Blockbuster sales and a $87.0 million decrease in
supermarket sales. In fiscal 1998, same store sales, or sales for stores open
in comparable 52-week periods for the Continuing Business, decreased by $93.7
million or 9.4%, as compared to a same store sales decline for the Continuing
Business of $13.3 million or 1.4% in fiscal 1997. This decline reflected a same
store sales decrease for the year of 10.2% in the Company's Puerto Rico
supermarkets and a 3.9% decrease in the U.S. Virgin Islands supermarkets.
Blockbuster operations experienced a same store sales decrease for fiscal 1998
of 4.5%. The decline in supermarket sales resulted from changes the Company has
made in its promotional activities compared to the previous year, the
disruption associated with converting the Pueblo Video Clubs to Blockbuster
stores, and the continuous adverse effects of competitors' openings and
remodelings. The basic change in the supermarket marketing efforts has been to
improve profitability by promoting both selection and value across the
merchandising mix rather than promotional items alone. The expansion of the
Blockbuster chain, including promotional activity related to the conversion of
the Company's remaining Pueblo Video Clubs to Blockbuster stores temporarily
affected the sales performance of existing Blockbuster stores. Store sales were
also impacted by a drought on the island of Puerto Rico in the summer of 1997
and the favorable impact on sales, in the prior year, of disaster relief funds
as a result of hurricanes in the area. The water shortage as a result of the
drought during the summer inhibited both the ease and sanitation aspects of
home food preparation.





                                      -19-
<PAGE>   20

         Gross profit margin in fiscal 1998, as a percentage of sales, was
28.9% compared to 25.6% in the prior year. The increase is a result of the
implementation of new merchandising strategies as well as a reduction of
shrink. Selling, general and administrative expenses decreased from the prior
year amount of $208.9 million to $204.2 million, or 2.3%, primarily as a result
of reducing direct store selling expenses due to the reorganization of labor
scheduling practices and other cost control programs. This favorable reduction
was partially offset by consulting fees incurred in connection with the
Company's project to improve supermarket operations in Puerto Rico and the
Virgin Islands. During the third quarter of fiscal 1998, the consultants'
portion of this project was completed.

         Depreciation and amortization decreased $0.9 million from $41.1
million in fiscal 1997 to $40.2 million in fiscal 1998.

         Interest expense, net of interest and investment income, of $29.6
million decreased by $0.6 million, or 1.9%, as compared to fiscal 1998. This
decrease is due to a decline in the average amount of borrowings outstanding
during the period.

         The decrease in the income tax benefit of $10.1 million was primarily
the result of the tax effects of the $26.1 million increase in operating
profit.

         Results for fiscal 1998 were a net loss of $5.6 million, as compared
to a net loss of $19.6 million for fiscal 1997.

Liquidity and Capital Resources

         Company operations have historically provided a cash flow which, along
with the available credit facility, have provided adequate liquidity for the
Company's operational needs.

         On April 29, 1997 the Company entered into a refinancing plan (the
"Refinancing Plan") in connection with which it issued $85.0 million principal
amount of Series C Senior Notes. The net proceeds from the sale of the Series C
Senior Notes of approximately $73.9 million after deducting expenses, together
with available cash of the Company, were used to repay the senior secured
indebtedness outstanding under the Old Bank Credit Agreement. In connection
with the Refinancing Plan, the Company entered into the New Bank Credit
Agreement, which provides for a $65.0 million revolving credit facility with
less restrictive covenants compared to the Old Bank Credit Agreement. After the
issuance of standby letters of credit in the amount of $14.3 million, as of
January 30, 1999, the Company had borrowing availability on a revolving basis
of $50.7 million under the New Bank Credit Agreement. At the date of this
filing, the Company had no cash borrowings outstanding under the revolver of
the New Bank Credit Agreement.

         Cash provided by operating activities was $1.3 million less than the
prior year despite a $16.1 increase in EBITDA (as defined). This is due,
primarily, to a $12.3 million increase in inventory and to the $2.2 million
gain on sale disposal of property which gain was included in EBITDA (as
defined) being included in cash flows from operating activities in the
Statement of Cash Flows. The remaining $2.9 million is attributed to changes in
working capital and long-term insurance reserves. The primary reasons for the
$22.0 million improvement in net cash provided by operating activities in
fiscal 1998 compared to fiscal 1997 were a $16.9 million increase in EBITDA (as
defined) from the Continuing Business and a $8.2 million decrease in net cash
outlays related to the closure of Florida operations.

         Net cash provided by (used in) investing activities was ($8.2)
million, $0.2 million, and ($1.4) million in fiscal years 1999, 1998, and 1997,
respectively. During fiscal year 1999, the Company invested $15.3 million in
improvements to property and equipment offset by proceeds on disposal of
assets, primarily from disposition of assets 




                                      -20-
<PAGE>   21

held for sale consisting of developed real estate. The Company received $10.0
million for its interest in two real estate properties from its closed Florida
operations during fiscal 1998 compared to $11.8 million received from the sale
of two Florida supermarkets and certain equipment during fiscal 1997. Total
capital expenditures, net of proceeds from disposals, were $8.2 million, $9.9
million, and $14.4 million during fiscal years 1999, 1998, and 1997,
respectively.

         Net cash used in financing activities was $ 0.6 million, $20.3
million, and $8.3 million in fiscal years 1999, 1998, and 1997, respectively.
During fiscal year 1999 the only financing activity was payment of a portion of
the capital lease obligations. During fiscal 1998 the Company entered into a
Refinancing Plan on April 29, 1997 (as described above) which provided net
proceeds of $73.9 million. These proceeds together with available cash were
used to repay $63.0 million in term loans and $16 million in revolving loans
under the Old Bank Credit Agreement. The Company also satisfied $10.0 million
of indebtedness payable to a related party. In addition, the Company, in
December of 1997, paid $7.5 million of indebtedness payable to a Puerto Rico
governmental agency.

         Working capital during fiscal 1999 increased by $25.1 million from a
deficit of $23.5 million at the end of fiscal 1998 to positive working capital
of $1.6 million at the end of fiscal 1999. Working capital during fiscal 1998
increased $32.7 million from a deficit of $56.2 million at the end of fiscal
1997 to a deficit of $23.5 million at the end of fiscal 1998. An increase in
cash and cash equivalents and the repayment of certain obligations associated
with the Refinancing Plan (described above) contributed to the increase in
working capital.

         Outstanding borrowings with a governmental agency of Puerto Rico from
the issuance of industrial revenue bonds were $10.0 million as of January 30,
1999. Management anticipates that the principal payments due in fiscal 2001
will be financed by operations.

         The Company's general liability and certain of its workers
compensation insurance programs are self-insured. The Company maintains
insurance coverage for claims in excess of $250,000. The current portion of the
reserve, representing amounts expected to be paid in the next fiscal year, is
$6.5 million as of January 30, 1999 and is anticipated to be funded with cash
provided by operating activities.

         Capital expenditures for fiscal 2000 are expected to be approximately
$19 million. This capital program, (which is subject to continuing change and
review) includes the remodeling of certain existing locations and updating of
equipment and software.

         The Company expects to complete a sale and leaseback of seven of its
properties in Puerto Rico and the U.S. Virgin Islands during the second quarter
of fiscal 2000. This transaction is part of the Company's efforts to maximize
its return on assets. The transaction is expected to generate approximately
$30.0 million in cash.

         The Company's management believes that the cash flows generated by its
normal business operations together with its available revolving credit
facility will be adequate for its liquidity and capital resource needs.

Impact of Inflation, Currency Fluctuations, and Market Risk

         The inflation rate for food prices continues to be lower than the
overall increase in the U.S. Consumer Price Index. The Company's primary costs,
products and labor, usually increase with inflation. Increases in inventory
costs can typically be passed on to the customer. Other cost increases must by
recovered through operating efficiencies and improved gross margins. Currency
in Puerto Rico and the U.S. Virgin Islands is the U.S. dollar. As such, the
Company has no exposure to foreign currency fluctuations.





                                      -21-
<PAGE>   22

         The Company is exposed to certain market risks from transactions that
are entered into during the normal course of business. The Company does not
trade or speculate in derivative financial instruments. The Company's primary
market risk exposure relates to interest rate risk. The Company manages its
interest rate risk in order to balance its exposure between fixed and variable
rates while attempting to minimize its interest costs. As detailed in Note 5--
Debt in the financial statements, the Company's long-term debt consists of: (i)
senior notes of $265 million at a fixed rate of 9 1/2% due in 2003 and (ii)
variable rate revenue bonds due in 2001 of $10 million upon which the weighted
average interest rate was 4.43% and 4.42% at January 30, 1999 and January 31,
1998, respectively.

Forward Looking Statements

         Statements, other than statements of historical information, under the
caption "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and elsewhere in this Form 10-K may constitute forward
looking statements within the meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. Such statements include, among others, statements concerning: (1)
Company management's belief that the cash flows generated by its normal
business operations together with its available credit facility will be
adequate for its liquidity and capital resource needs, (2) insurance recovery
expectations, (3) the extent to which future operations may be inhibited by the
hurricane, and (4) anticipated capital expenditures. These statements are based
on Company management's expectations and are subject to various risks and
uncertainties. Actual results could differ materially from those anticipated
due to a number of factors, including but not limited to the Company's
substantial indebtedness and high degree of leverage, which continue as a
result of the Refinancing Plan (including limitations on the Company's ability
to obtain additional financing and trade credit, to apply operating cash flow
for purposes in addition to debt service, to respond to price competition in
economic downturns and to dispose of assets pledged to secure such indebtedness
or to freely use proceeds of any such dispositions), the Company's limited
geographic markets and competitive conditions in the markets in which the
Company operates and buying patterns of consumers.

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See pages F-1 through F-26 and S-1 through S-4 appearing at the end of
this report.

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

         There have been no disagreements with the Company's accountants on
accounting and financial disclosure during the applicable periods.






                                      -22-
<PAGE>   23

                                  PART III.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

         The following is a list, as of the date of this filing, of the names
of the directors and executive officers of the Company, their respective ages
and their respective positions with the Company. The terms of the directors and
executive officers of the Company expire annually upon the holding of the
annual meeting of stockholders.

<TABLE>
<CAPTION>

Directors
---------
Name                                         Age   Position
----                                         ---   --------
<S>                                          <C>   <C>

Gustavo A. Cisneros..........................53    Chairman of the Board; Member of the Executive Committee

William T. Keon, III.........................52    Director; President and Chief Executive Officer; Chairman
                                                     of the Executive Committee; Chairman of the Audit and
                                                     Risk Committee; Member of the Compensation and Benefits
                                                     Committee

David L. Aston...............................52    Director; Executive Vice President; President of Retail
                                                     Food Division

Steven I. Bandel.............................45    Director; Member of the Executive Committee; Chairman of
                                                     the Compensation and Benefits Committee

Guillermo A. Cisneros .......................27    Director

Cristina Pieretti............................47    Director

Alejandro Rivera.............................56    Director; Member of the Audit and Risk Committee; Member
                                                     of the Compensation and Benefits Committee

Executive Officers
------------------
William T. Keon, III.........................52    President and Chief Executive Officer

David L. Aston...............................52    Executive Vice President; President of Retail Food
                                                     Division

Daniel J. O'Leary............................52    Executive Vice President and Chief Financial Officer,
                                                     Assistant Secretary

Fernando J. Bonilla..........................38    Vice President, General Counsel and Secretary

Alicia Echevarria............................46    Vice President of Human Resources, Assistant Secretary

</TABLE>





                                      -23-
<PAGE>   24

         Gustavo A. Cisneros has been the Chairman of the Board of the Company
since its inception (July 28, 1993). He was appointed to the Executive
Committee in October 1995. Since prior to 1992, he has been a direct or
indirect beneficial owner of interests in and a director of certain companies
that own or are engaged in a number of diverse commercial enterprises in
Venezuela, the United States, Brazil, Chile and Mexico (the "Cisneros Group"),
including the Company. He is a member of the board of directors of Univision
Communications, Inc., Evenflo & Spalding Holdings Corporation and RSL
Communications, Ltd.

         William T. Keon, III has been a Director of the Company since October
1995. He assumed the position of President and Chief Executive Officer and was
appointed Chairman of the Executive Committee and Audit and Risk Committee also
in October 1995. He is also a member of the Compensation and Benefits
Committee. Since January 1983, Mr. Keon has served in senior managerial roles
in the Cisneros Group.

         David L. Aston joined the Company in March 1997 as a Director,
Executive Vice President and President of the Puerto Rico Food Division. In
January 1998, Mr. Aston assumed responsibility for operations of the entire
Retail Food Division. From June 1993 until the time he joined the Company, Mr.
Aston served as president of Waldbaums and Superfresh Foods, units of the A&P
Company, a supermarket chain in the New York area. Prior to June 1993, he
served as Vice President of Merchandising and Operations for the Kroger
Company.

         Steven I. Bandel has been a Director of the Company since the
Acquisition. He was appointed to the Executive Committee in October 1995. Since
prior to 1992, he has been actively involved in the operations and management
of certain companies in the Cisneros Group, other than a period from February
1990 to May 1992 during which he was a partner in a Venezuelan investment
banking firm.

         Guillermo A. Cisneros was appointed a Director in April, 1998. Since
1998 he has been Program Director for a non-profit educational television
station in Caracas, Venezuela. Prior to 1998 he participated in several
internships. He is the son of Gustavo Cisneros and the nephew of Ricardo
Cisneros.

         Cristina Pieretti was appointed a Director in March 1997. During most
of the last seven years, she has been actively involved in operations of
companies in the Cisneros Group in areas related to consumer goods, retailing
and telecommunications, other than a period from March 1995 to February 1997
during which she was a partner in a consulting firm.

         Alejandro Rivera has been a Director of the Company since April 1,
1997. He was previously a Director of the Company from the Acquisition until
June 30, 1995. Since 1976, he has been actively involved in the operations and
management of certain companies in the Cisneros Group. Mr. Rivera is also an
Alternate Director of Univision Communications, Inc. Mr. Rivera is a member of
the Audit and Risk Committee and of the Compensation and Benefits Committee.

         Daniel J. O'Leary joined the Company in June 1997 as Executive Vice
President and Chief Financial Officer. From December 1992 until the time he
joined the Company, Mr. O'Leary served as Senior Vice President of Finance and
Chief Financial Officer of Phar-Mor, Inc., a deep discount drugstore chain.
Prior to that time, he served as a Director and, at various times, President
and Chief Operating Officer, Executive Vice President, Vice President of
Finance and Chief Financial Officer at Fay's, Inc., a multi-concept retailer
with drugstores and auto parts stores. From 1969 to 1987, Mr. O'Leary was a
member of the accounting firm of Touche, Ross & Co. (now known as Deloitte &
Touche LLP).





                                      -24-
<PAGE>   25

         Fernando J. Bonilla joined the Company in September 1997 as Vice
President, General Counsel and Secretary. Before joining the Company, Mr.
Bonilla served as General Counsel and Secretary to the Board of Directors of
the Puerto Rico Maritime Shipping Authority and a junior partner of Fiddler
Gonzalez and Rodriguez, a law firm in Puerto Rico.

         Alicia Echevarria joined the Company in April 1996 as Vice President of
Human Resources for the Puerto Rico Division. In March 1997 she became Assistant
Secretary to the Company. Prior to joining the Company, she was Director of
Human Resources for R.J. Reynolds Tobacco Company (Inc.) in Puerto Rico, where
she was employed for 15 years.

ITEM 11. EXECUTIVE COMPENSATION

         The following table sets forth the cash compensation paid or
distributed by the Company through January 30, 1999 to, or accrued through such
date for the account of the Chief Executive Officer as well as each of the four
most highly compensated executive officers of the Company serving at January
30, 1999.

                          SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>

                                                       Annual Compensation
                                --------------------------------------------------------------
          (a)                     (b)          (c)         (d)           (e)           (f)

                                                                        Other
          Name                                                          Annual       All Other
          and                                                           Compen-       Compen-
       Principal                 Fiscal       Salary       Bonus        sation        sation
       Position                   Year         ($)          ($)           ($)           ($)
--------------------------      --------     --------    ---------   -----------    -----------
<S>                             <C>          <C>         <C>         <C>            <C>
William T. Keon, III,             1999        360,000      715,000     22,014(2)     32,586(1)
   President and Chief            1998        340,015      328,288     21,647(2)     20,049(1)
   Executive Officer              1997        107,778       94,100         --         6,056(1)

David L. Aston

   Executive Vice President;      1999        289,279      347,515     15,461(3)     19,104(1)
   President, Puerto Rico         1998        243,270       97,308      8,636(3)      7,996(1)
   Division (Started 3/17/97)

Daniel J. O'Leary                 1999        232,452      279,231     13,920(4)         --
   Executive Vice President;      1998        138,462       55,758      5,320(4)         --
   Chief Financial Officer
   (Started 6/23/97)

Alicia Echevarria                 1999        135,000       81,075     10,105(5)         --
   Vice President of Human        1998        132,500       29,450      8,670(5)         --
   Resources (Started 4/22/96)    1997         96,154       19,230      6,000(5)         --

Filiberto Berrios                 1999        129,568       54,828     10,958(6)         --
   Senior Vice President;         1998        132,500       19,700      7,905(6)         --
   President of Blockbuster       1997        115,000       31,900      8,022(6)         --
   Division
</TABLE>

NOTES TO SUMMARY COMPENSATION TABLE

(1)      Amount represents the Company matching contribution to an elective
         non-qualified deferred compensation plan maintained by the Company.

(2)      Includes costs related to the reimbursement of executive medical
         expense of $9,976 and $10,022 and an automobile allowance in the
         amount of $12,038 and $11,625 for fiscal 1999 and 1998, respectively.





                                      -25-
<PAGE>   26

(3)      Includes costs related to the reimbursement of executive medical
         expense of $4,723 and $4,636 and an automobile allowance in the amount
         of $10,738 and $4,000 for fiscal 1999 and 1998, respectively.

(4)      Includes costs related to the reimbursement of executive medical
         expense of $3,832 and $1,570 and an automobile allowance in the amount
         of $10,088 and $3,750 for fiscal 1999 and 1998, respectively.

(5)      Includes costs related to the reimbursement of medical expenses of
         $1,630 and $720 in fiscal 1999 and 1998, respectively. Also includes
         automobile allowances in the amounts of $8,475, $7,950 and $6,000 in
         fiscal 1999, 1998 and fiscal 1997, respectively.

(6)      Includes costs related to the reimbursement of medical expenses of
         $2,345, $1,280, and $1,522 in fiscal 1999, 1998, and 1997,
         respectively. Also includes automobile allowances in the amount of
         $8,613 and $6,625 in fiscal 1999 and 1998, respectively, and $6,500
         for fiscal 1997.

                             PENSION PLAN TABLES

         The Company sponsors two defined benefit plans. The Pueblo
International, Inc. Employees' Retirement Plan (the "Retirement Plan") is
tax-qualified under the Internal Revenue Code and covers all full-time and
certain part-time employees of the Company over age 21 with one year of service.
It provides an annual benefit equal to 1% of the average annual compensation
over a five-year period per year of service. The Supplemental Executive
Retirement Plan (the "SERP") is non-qualified and covers all officers of the
Company and its subsidiaries. It provides an annual benefit equal to 3% of the
average compensation over a five-year period per year of service (up to 20
years). Full vesting for the Retirement Plan and the SERP occurs upon completion
of five years of service. The following tables give the estimated annual benefit
payable upon retirement for participants in the Retirement Plan and the SERP.
The SERP benefits are offset by the Retirement Plan benefits and by 100% of
social security benefits. These offsets are reflected in the benefits shown in
the SERP table. The Company does not sponsor any other defined benefit or
actuarial plans.





                                      -26-
<PAGE>   27

Table 1. Retirement Plan

<TABLE>
<CAPTION>

                                                   Years of Service
                      ---------------------------------------------------------------------------
Remuneration             5        10         15         20         25         30         35
                       ---------------------------------------------------------------------------
<S>                   <C>       <C>       <C>        <C>        <C>        <C>        <C>
125,000............    6,250    12,500      18,750     25,000     31,250     37,500     43,750

150,000............    7,500    15,000      22,500     30,000     37,500     45,000     52,500

175,000............    8,000    16,000      24,000     32,000     40,000     48,000     56,000
</TABLE>

Table 2. Supplemental Executive Retirement Plan

<TABLE>
<CAPTION>

                                                   Years of Service
                      ---------------------------------------------------------------------------
Remuneration             5        10         15         20         25         30         35
                      ---------------------------------------------------------------------------
<S>                   <C>       <C>       <C>        <C>        <C>        <C>        <C>
125,000..............      --      9,069    21,569     34,069     27,819     21,569     15,319
150,000..............      --     14,069    29,069     44,069     36,569     29,069     21,569
175,000..............   2,319     20,569    38,819     57,069     49,069     41,069     33,069
200,000..............   6,069     28,069    50,069     72,069     64,069     56,069     48,069
225,000..............   9,819     35,569    61,319     87,069     79,069     71,069     63,069
250,000..............  13,569     43,069    72,569    102,069     94,069     86,069     78,069
275,000..............  17,319     50,569    83,819    117,069    109,069    101,069     93,069
300,000..............  21,069     58,069    95,069    132,069    124,069    116,069    108,069
325,000..............  24,819     65,569   106,319    147,069    139,069    131,069    123,069
350,000..............  28,569     73,069   117,569    162,069    154,069    146,069    138,069
375,000..............  32,319     80,569   128,819    177,069    169,069    161,069    153,069
400,000..............  36,069     88,069   140,069    192,069    184,069    176,069    168,069
425,000..............  39,819     95,569   151,319    207,069    199,069    191,069    183,069
450,000..............  43,569    103,069   162,569    222,069    214,069    206,069    198,069
475,000..............  47,319    110,569   173,819    237,069    229,069    221,069    213,069
500,000..............  51,069    118,069   185,069    252,069    244,069    236,069    228,069
</TABLE>

         Compensation covered by the qualified Retirement Plan is equal to the
total compensation (excluding compensation attributable to the redemption of
certain stock options) paid to an employee during a plan year prior to any
reduction under a salary reduction agreement entered into by the employee
pursuant to a plan maintained by the employer which qualifies under Section
401(k) of the Internal Revenue Code of 1986, as amended (the "Code"), or
pursuant to a plan maintained by the employer which qualifies under Section 125
of the Code. Compensation in excess of $160,000 shall be disregarded, provided,
however, that such $160,000 limitation shall be adjusted at the same time and
in such manner as the maximum compensation limit is adjusted under Section
401(a)(17) of the Code.

         Compensation covered by the non-qualified Supplemental Executive
Retirement Plan is the same as the qualified Retirement Plan, except that the
$160,000 limit is not applicable.

         The estimated years of credited service and age, respectively, for
purposes of calculating benefits through January 30, 1999 for Mr. Keon is five
and 52, respectively, for Mr. Aston is two and 52, respectively, for Mr.
O'Leary is two and 52, respectively, and for Ms. Echevarria is three and 46,
respectively. The benefits provided by both the Retirement Plan and the SERP
are on a straight-life annuity basis, as are the examples in the Retirement
Plan table.





                                      -27-
<PAGE>   28

Compensation Committee Interlocks and Insider Participation

         Messrs. Keon, Bandel, and Rivera served as members of the Compensation
and Benefits Committee of the Board of Directors of the Company during all or a
portion of the fiscal years ended January 30, 1999 and January 31, 1998. Mr.
Keon also served as an officer of the Company during the fiscal year ended
January 31, 1998.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

a)       Security Ownership of Certain Beneficial Owners

         As discussed in Part II, Item 5 - Market for the Registrant's Common
Equity and Related Shareholder Matters, the Company is a wholly-owned
subsidiary of Holdings.

         The following table sets forth certain information regarding the
beneficial ownership of more than 5% of the common stock of Holdings as of the
date of this filing. By virtue of its ownership of the Holdings common stock,
the following entity may be deemed to own a corresponding percentage of the
Company's common stock.

<TABLE>
<CAPTION>

                                                         Shares
                                                   Beneficially Owned
                                     ---------------------------------------------
       Name and Address                  Number                      Percent
---------------------------------    --------------------       ------------------
<S>                                  <C>                        <C>
   Bothwell Corporation
   c/o Finser Corporation
      550 Biltmore Way, 9th Floor
      Coral Gables, FL 33134               996                         99.6%
</TABLE>

         The shares of Holdings described above are beneficially owned by the
Principal Shareholders by virtue of their indirect ownership of the entity
listed above. The principal business address of the Principal Shareholders is
Paseo Enrique Eraso, Centro Commercial Paseo Las Mercedes, Caracas, Venezuela.

(b)      Security Ownership of Management

         As of the date of this filing, the directors and executive officers of
the Company have no beneficial ownership of Holdings.

(c)      Changes in Control

         The borrowings outstanding under the New Bank Credit Agreement are
collateralized by a pledge of the assets of the Company's subsidiaries, by the
capital stock of, and intercompany notes issued by, the Company's subsidiaries
and by the capital stock of the Company.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On April 18, 1996, Holdings contributed additional capital of $5.0
million to the Company which, under the terms of the Old Bank Credit Agreement,
as amended in April 1996, was used to reduce the Company's term loans under the
Old Bank Credit Agreement. In addition, Holdings provided $10.0 million in
additional funds to the Company on October 18, 1996 in return for a
non-interest-bearing redeemable note payable to a related party (the "Holdings
Note"). Proceeds from the Holdings Note were used to reduce the Company's 




                                      -28-
<PAGE>   29

term loans under the Old Bank Credit Agreement in accordance with terms set
forth in the Old Bank Credit Agreement, as amended. The Holdings Note was
satisfied in fiscal 1998 by the Company's transfer of its interest in two real
estate properties from its closed Florida operations to Holdings.

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

<TABLE>
<CAPTION>

  (A)  Documents filed as part of this report:                             Page
<S>                                                                        <C>

     (1)  Consolidated Financial Statements:

          Independent Auditors' Report                                     F - 1

          Consolidated Balance Sheets as of January 30, 1999 and
             January 31, 1998                                              F - 2

          Fiscal years ended January 30, 1999, January 31, 1998, and January
             25, 1997:

              Consolidated Statements of Operations                        F - 4
              Consolidated Statements of Cash Flows                        F - 5
              Consolidated Statements of Stockholder's Equity              F - 6

          Notes to Consolidated Financial Statements        F - 7 through  F -26

      (2) Financial Statement Schedules:

          Schedule II - Financial Information of Registrant..... S-1 through S-3

          Schedule V - Valuation and Qualifying Accounts.................... S-4

      (3) Exhibits - None.

</TABLE>



                                      -29-
<PAGE>   30

                                INDEX TO EXHIBITS
<TABLE>
<CAPTION>

                                                                               SEQUENTIALLY
EXHIBIT NO.                            DESCRIPTION OF EXHIBIT                  NUMBERED PAGE
-------------------             -------------------------------------------    -------------
<S>                              <C>                                           <C>
        3.1                      RESTATED CERTIFICATE OF INCORPORATION OF
                                 THE COMPANY (INCORPORATED BY REFERENCE TO
                                 EXHIBIT 3.1 TO THE COMPANY'S REGISTRATION
                                 STATEMENT NO. 33-63372 ON FORM S-1)

        3.2                      AMENDED AND RESTATED BY-LAWS OF THE
                                 COMPANY (INCORPORATED BY REFERENCE TO
                                 EXHIBIT 3.2 TO THE COMPANY'S REGISTRATION
                                 STATEMENT NO. 33-63372 ON FORM S-1)

        4.1                      SPECIMEN NOTE FOR COMPANY'S 9 1/2% SENIOR
                                 NOTES DUE 2003 (INCLUDED IN EXHIBIT 4.2)*

        4.2                      INDENTURE DATED AS OF JULY 28, 1993
                                 BETWEEN THE COMPANY AND UNITED STATES
                                 TRUST COMPANY OF NEW YORK, AS TRUSTEE*

        4.3                      SPECIMEN NOTE FOR THE COMPANY'S 9 1/2%
                                 SERIES C SENIOR NOTES DUE 2003 (INCLUDED
                                 IN EXHIBIT 4.4)

        4.4                      INDENTURE, DATED AS OF APRIL 24, 1997,
                                 BETWEEEN THE COMPANY AND UNITED STATES
                                 TRUST COMPANY OF NEW YORK, AS TRUSTEE
                                 (INCORPORATED BY REFERENCE TO EXHIBIT 4.2
                                 TO THE COMPANY'S REGISTRATION STATEMENT
                                 NO. 333-27523 ON FORM S-3)

        4.5                      REGISTRATION RIGHTS AGREEMENT, DATED AS
                                 OF APRIL 29, 1997, BETWEEN THE COMPANY
                                 AND NATIONSBANC CAPITAL MARKETS, INC. AND
                                 SCOTIA CAPITAL MARKETS (USA) INC.
                                 (INCORPORATED BY REFERENCE TO EXHIBIT 4.3
                                 TO THE COMPANY'S REGISTRATION STATEMENT
                                 NO. 333-27523 ON FORM S-3)

        10.1                     CREDIT AGREEMENT AMONG THE COMPANY,
                                 PUEBLO MERGER CORPORATION, PUEBLO
                                 INTERNATIONAL, INC., XTRA SUPER FOOD
                                 CENTERS, INC., VARIOUS LENDING
                                 INSTITUTIONS, THE CHASE MANHATTAN BANK,
                                 N.A. AND SCOTIABANK DE PUERTO RICO, AS
                                 CO-MANAGING AGENTS AND SCOTIABANK DE
                                 PUERTO RICO, AS ADMINISTRATIVE AGENT (THE
                                 "OLD BANK CREDIT AGREEMENT")*

        10.2                     FIRST AMENDMENT, DATED AS OF AUGUST 2,
                                 1993, OF THE OLD BANK CREDIT AGREEMENT*

</TABLE>




                                      -30-
<PAGE>   31

<TABLE>
<CAPTION>

<S>                              <C>                                           <C>
        10.3                     SECOND AMENDMENT, DATED AS OF DECEMBER
                                 15, 1993, TO THE OLD BANK CREDIT
                                 AGREEMENT (INCORPORATED BY REFERENCE TO
                                 EXHIBIT 10.1 TO THE COMPANY'S QUARTERLY
                                 REPORT ON FORM 10-Q FOR THE QUARTER ENDED
                                 NOVEMBER 6, 1993)

        10.4                     THIRD AMENDMENT, DATED AS OF JANUARY 31,
                                 1994 (EFFECTIVE AS OF NOVEMBER 5, 1993),
                                 TO THE OLD BANK CREDIT AGREEMENT*

        10.11                    MEMBERSHIP CORRESPONDENCE CONCERNING
                                 TOPCO ASSOCIATES, INC. (INCORPORATED BY
                                 REFERENCE TO EXHIBIT 10.3 TO COMPANY'S
                                 REGISTRATION STATEMENT NO. 33-63372 ON
                                 FORM S-1)

        10.12                    MORTGAGE NOTES DATED JUNE 6, AND 10, 1986
                                 DUE FISCAL 1997 (INCORPORATED BY
                                 REFERENCE TO EXHIBIT 10.4 TO THE
                                 COMPANY'S REGISTRATION STATEMENT NO.
                                 33-63372 ON FORM S-1)


       10.13                     AGREEMENT BETWEEN THE CHASE MANHATTAN
                                 BANK (NATIONAL ASSOCIATION)(THE "BANK"),
                                 PUERTO RICO INDUSTRIAL, MEDICAL AND
                                 ENVIRONMENTAL POLLUTION CONTROL
                                 FACILITIES FINANCING AUTHORITY (THE
                                 "AUTHORITY") AND THE COMPANY; TRUST
                                 AGREEMENT BETWEEN THE AUTHORITY AND BANCO
                                 POPULAR DE PUERTO RICO, AS TRUSTEE;
                                 GUARANTEE AND CONTINGENT PURCHASE
                                 AGREEMENT BETWEEN THE REGISTRANT AND THE
                                 BANK; LOAN AGREEMENT BETWEEN THE
                                 AUTHORITY AND THE REGISTRANT; TENDER
                                 AGENT AGREEMENT AMONG THE AUTHORITY;
                                 BANCO POPULAR DE PUERTO RICO AS TRUSTEE;
                                 REMARKETING AGREEMENT BETWEEN CHASE
                                 MANHATTAN CAPITAL MARKETS CORPORATION AND
                                 THE REGISTRANT; EACH DATED OCTOBER 1,
                                 1985, RELATING TO A $5,000,000 FINANCING
                                 IN OCTOBER 1985 (SUBSTANTIALLY IDENTICAL
                                 DOCUMENTS WERE EXECUTED FOR AN ADDITIONAL
                                 $5,000,000 FINANCING IN NOVEMBER 1985 AND
                                 $7,500,000 IN DECEMBER 1985)
                                 (INCORPORATED BY REFERENCE HEREIN AS
                                 FILED WITH PUEBLO'S REGISTRATION
                                 STATEMENT NO. 1-6376 ON FORM S-2 DATED
                                 JANUARY 23, 1986)

       10.20                     EXECUTED FOURTH AMENDMENT, DATED AS OF
                                 APRIL 8, 1994, TO THE OLD BANK CREDIT
                                 AGREEMENT (INCORPORATED BY REFERENCE TO
                                 EXHIBIT 10.1 TO THE COMPANY'S QUARTERLY
                                 REPORT ON FORM 10-Q FOR THE QUARTER ENDED
                                 MAY 21, 1994)

</TABLE>






                                      -31-
<PAGE>   32

<TABLE>
<CAPTION>

<S>                              <C>                                           <C>
       10.21                     EXECUTED FIFTH AMENDMENT, DATED AS OF
                                 AUGUST 11, 1995, TO THE OLD BANK CREDIT
                                 AGREEMENT (INCORPORATED BY REFERENCE TO


                                 EXHIBIT 10.1 TO THE COMPANY'S QUARTERLY
                                 REPORT ON FORM 10-Q FOR THE QUARTER ENDED
                                 NOVEMBER 4, 1995)

       10.22                     EXECUTED SIXTH AMENDMENT, DATED AS OF
                                 NOVEMBER 3, 1995, TO THE OLD BANK CREDIT
                                 AGREEMENT (INCORPORATED BY REFERENCE TO
                                 EXHIBIT 10.2 TO THE COMPANY'S QUARTERLY
                                 REPORT ON FORM 10-Q FOR THE QUARTER ENDED
                                 NOVEMBER 4, 1995)

       10.23                     EMPLOYMENT AGREEMENT, DATED FEBRUARY 28,
                                 1996, BETWEEN PUEBLO INTERNATIONAL, INC.
                                 AND EDWIN PEREZ***

       10.24                     AGREEMENT, DATED MARCH 1, 1996, BETWEEN
                                 PUEBLO INTERNATIONAL, INC. AND HECTOR G.
                                 QUINONES***

       10.25                     EXECUTED SEVENTH AMENDMENT, DATED AS OF
                                 JANUARY 26, 1996, TO THE OLD BANK CREDIT
                                 AGREEMENT***

       10.29                     RECEIPT AND AGREEMENT BY PXC&M HOLDINGS,
                                 INC. FROM BOTHWELL CORPORATION DATED
                                 OCTOBER 18, 1996 (INCORPORATED BY
                                 REFERENCE TO EXHIBIT 10.1 TO THE
                                 COMPANY'S QUARTERLY REPORT ON FORM 10-Q
                                 FOR THE QUARTER ENDED NOVEMBER 2, 1996)

       10.30                     RECEIPT AND AGREEMENT BY PUEBLO XTRA
                                 INTERNATIONAL, INC. FROM PXC&M HOLDINGS,
                                 INC. DATED OCTOBER 18, 1996 (INCORPORATED
                                 BY REFERENCE TO EXHIBIT 10.2 TO THE
                                 COMPANY'S QUARTERLY REPORT ON FORM 10-Q
                                 FOR THE QUARTER ENDED NOVEMBER 2, 1996)

       10.31                     CONSENT EXECUTED BY SCOTIABANK DE PUERTO
                                 RICO, AS ADMINISTRATIVE AGENT, DATED
                                 OCTOBER 18, 1996 (INCORPORATED BY
                                 REFERENCE TO EXHIBIT 10.3 TO THE
                                 COMPANY'S QUARTERLY REPORT ON FORM 10-Q
                                 FOR THE QUARTER ENDED NOVEMBER 2, 1996)

       10.32                     EIGHTH AMENDMENT, DATED AS OF NOVEMBER 1,
                                 1996, TO THE OLD CREDIT AGREEMENT AMONG
                                 PUEBLO XTRA INTERNATIONAL, INC., PUEBLO
                                 INTERNATIONAL, INC., XTRA SUPER FOOD
                                 CENTERS, INC., VARIOUS LENDING
                                 INSTITUTIONS, THE CHASE MANHATTAN BANK,
                                 N.A. AND SCOTIABANK DE PUERTO RICO, AS
                                 ADMINISTRATIVE AGENT (INCORPORATED BY
                                 REFERENCE TO EXHIBIT 10.4 TO THE
                                 COMPANY'S QUARTERLY REPORT ON FORM 10-Q
                                 FOR THE QUARTER ENDED NOVEMBER 2, 1996)

</TABLE>





                                      -32-
<PAGE>   33

<TABLE>

<S>                              <C>                                                      <C>
       10.33                     NINTH AMENDMENT, DATED AS OF JANUARY 25,
                                 1997, TO THE OLD CREDIT AGREEMENT AMONG
                                 PUEBLO XTRA INTERNATIONAL, INC., PUEBLO
                                 INTERNATIONAL, INC., XTRA SUPER FOOD
                                 CENTERS, INC., VARIOUS LENDING
                                 INSTITUTIONS, THE CHASE MANHATTAN BANK,
                                 N.A. AND SCOTIABANK DE PUERTO RICO, AS
                                 ADMINISTRATIVE AGENT****

       10.34                     EMPLOYMENT AGREEMENT, DATED MARCH 20, 1997,
                                 BETWEEN PUEBLO INTERNATIONAL, INC. AND
                                 DAVID L. ASTON*****

       21.1                      SUBSIDIARIES OF THE COMPANY****

       21.2                      AMENDED AND RESTATED CREDIT AGREEMENT,
                                 DATED AS OF APRIL 29, 1997, OF THE OLD
                                 BANK CREDIT AGREEMENT (THE "NEW BANK
                                 CREDIT AGREEMENT")*****

</TABLE>

*        Previously filed and incorporated by reference to corresponding
         exhibits in the Company's Form 10-K for fiscal year ended January 29,
         1994.

**       Previously filed and incorporated by reference to corresponding
         exhibits in the Company's Form 10-K for fiscal year ended January 28,
         1995.

***      Previously filed and incorporated by reference to corresponding
         exhibits in the Company's Form 10-K for fiscal year ended January 27,
         1996.

****     Previously filed and incorporated by reference to corresponding
         exhibits in the Company's Form 10-K for fiscal year ended January 25,
         1997.

*****    Filed and incorporated by reference to corresponding exhibits in the
         Company's Form 10-K for fiscal year ended January 31, 1998.

         (B) Reports on Form 8-K

                  None

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT

         No annual report to security holders covering the Company's last
fiscal year and no proxy statement, form of proxy or other proxy soliciting
material with respect to any annual or other meeting of security holders has,
as of the date hereof, been sent to security holders by the Company. If such
report or proxy material is to be furnished to security holders subsequent to
the filing of the annual report of this Form 10-K, the Company will furnish
copies of such material to the Commission when it is sent to the security
holders.





                                      -33-
<PAGE>   34

                              SIGNATURES

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

                                               PUEBLO XTRA INTERNATIONAL, INC.

Dated:  April 21, 1999                         /s/ Daniel J. O'Leary  
                                               --------------------------------
                                               Daniel J. O'Leary,
                                               Executive Vice President
                                                 and Chief Financial Officer

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

<TABLE>
<CAPTION>

Signature                       Title                             Date
----------------                ------------------------------    ------------
<S>                             <C>                               <C>

/s/ Gustavo A. Cisneros         Chairman of the Board
-----------------------------
Gustavo A. Cisneros



/s/ William T. Keon, III        Director; President; and Chief
-----------------------------   Executive Officer
William T. Keon, III



/s/ Daniel J. O'Leary           Executive Vice President and Chief
-----------------------------   Financial Officer
Daniel J. O'Leary



/s/ Robert F. Kendall           Controller
-----------------------------
Robert F. Kendall, CPA



/s/ David L. Aston              Director
-----------------------------
David L. Aston



/s/ Steven I. Bandel            Director
-----------------------------
Steven I. Bandel



/s/ Guillermo A. Cisneros       Director
----------------------------
Guillermo A. Cisneros



/s/ Cristina Pieretti           Director
----------------------------
Cristina Pieretti



/s/ Alejandro Rivera            Director
----------------------------
Alejandro Rivera

</TABLE>




                                      -34-
<PAGE>   35



                        INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholder of
   Pueblo Xtra International, Inc.

San Juan, Puerto Rico

         We have audited the accompanying consolidated balance sheets of Pueblo
Xtra International, Inc. and subsidiaries (the "Company") as of January 30,
1999 and January 31, 1998, and the related consolidated statements of
operations, cash flows and stockholder's equity for each of the three years in
the period ended January 30, 1999. Our audits also included the financial
statement schedules listed in the Index at Item 14. These financial statements
and financial statement schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedules based on our audits.

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

         In our opinion, such consolidated financial statements present fairly,
in all material respects, the financial position of Pueblo Xtra International,
Inc. and subsidiaries as of January 30, 1999 and January 31, 1998 and the
results of their operations and their cash flows for each of the three years in
the period ended January 30, 1999 in conformity with generally accepted
accounting principles. Also, in our opinion, such financial statement
schedules, when considered in relation to the basic consolidated financial
statements taken as a whole, present fairly in all material respects the
information set forth therein.

Deloitte & Touche LLP
Certified Public Accountants

Miami, Florida
February 19, 1999



                                      F-1

<PAGE>   36

                      CONSOLIDATED BALANCE SHEETS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES
                         (Dollars in thousands)

<TABLE>
<CAPTION>

                                                        January 30,        January 31,
                                                           1999               1998
                                                      -------------      -------------
<S>                                                    <C>                <C>
ASSETS

CURRENT ASSETS
   Cash and cash equivalents                            $   55,500         $   28,770
   Accounts receivable                                       4,715              2,845
   Inventories                                              60,189             55,945
   Assets held for sale                                         --              4,711
   Prepaid expenses                                          8,163             10,461
   Deferred income taxes                                     5,338              6,993
                                                         ---------          ---------
   TOTAL CURRENT ASSETS                                    133,905            109,725
                                                         ---------          ---------

PROPERTY AND EQUIPMENT
   Land and improvements                                    16,499             16,143
   Buildings and improvements                               64,128             63,936
   Furniture, fixtures and equipment                       113,673            102,799
   Leasehold improvements                                   37,417             36,214
   Construction in progress                                  4,786              5,191
                                                         ---------          ---------
                                                           236,503            224,283
   Less accumulated depreciation and amortization          114,912             97,419
                                                         ---------          ---------
                                                           121,591            126,864
   Property under capital leases, net                        8,269              8,980
                                                         ---------          ---------
   TOTAL PROPERTY AND EQUIPMENT                            129,860            135,844

GOODWILL, net of accumulated amortization of $28,113 at
   January 30, 1999 and $23,082 at January 31, 1998        173,605            178,636
DEFERRED INCOME TAX                                          7,006             11,145
TRADE NAMES                                                 29,838             30,704
DEFERRED CHARGES AND OTHER ASSETS                           32,788             36,122
                                                         ---------          ---------
   TOTAL ASSETS                                          $ 507,002          $ 502,176
                                                         =========          =========
</TABLE>

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




                                      F-2
<PAGE>   37

                       CONSOLIDATED BALANCE SHEETS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES
                 (Dollars in thousands, except share data)

<TABLE>
<CAPTION>

                                                        January 30,        January 31,
                                                           1999               1998
                                                      -------------      -------------
<S>                                                    <C>                <C>
LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES
   Accounts payable                                    $   74,604         $   69,340
   Accrued expenses                                        43,545             51,584
   Salaries, wages and benefits payable                    13,535             11,701
   Current obligations under capital leases                   643                635
                                                       -----------        -----------
   TOTAL CURRENT LIABILITIES                              132,327            133,260

LONG-TERM DEBT                                             10,000             10,000
NOTES PAYABLE                                             258,475            257,428
CAPITAL LEASE OBLIGATIONS, net of current portion           6,914              7,513
RESERVE FOR SELF-INSURANCE CLAIMS                           9,896             11,206
DEFERRED INCOME TAXES                                      28,539             24,985
OTHER LIABILITIES AND DEFERRED CREDITS                     24,669             30,479
                                                       -----------        -----------
   TOTAL LIABILITIES                                      470,820            474,871
                                                       -----------        -----------

COMMITMENTS AND CONTINGENCIES (Note 12)

STOCKHOLDER'S EQUITY
   Common stock, $.10 par value; 200 shares
      authorized and issued                                    --                 --
   Additional paid-in capital                              91,500             91,500
   Accumulated deficit                                    (55,318)           (64,195)
                                                       -----------        -----------
   TOTAL STOCKHOLDER'S EQUITY                              36,182             27,305
                                                       -----------        -----------
   TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY          $  507,002         $  502,176
                                                       ===========        ===========
</TABLE>

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





                                      F-3
<PAGE>   38

                   CONSOLIDATED STATEMENTS OF OPERATIONS
              PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES
                          (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                Fiscal
                                               ---------------------------------------
                                                  1999          1998          1997
                                               ----------    ----------    -----------
<S>                                            <C>           <C>           <C>
Net sales                                      $ 784,774     $ 938,506     $1,020,056
Cost of goods sold                               528,395       667,043        760,329
                                               ----------    ----------    -----------
   GROSS PROFIT                                  256,379       271,463        259,727

OPERATING EXPENSES
Selling, general and administrative expenses     172,964       204,185        213,485
Depreciation and amortization                     36,529        40,175         41,128
Division closure costs                                --            --          4,160
                                               ----------    ----------    -----------
   OPERATING PROFIT, (LOSS)                       46,886        27,103            954

Sundry, net                                           --           (36)           122
                                               ----------    ----------    -----------

   INCOME, (LOSS), BEFORE INTEREST,
      INCOME TAXES AND EXTRAORDINARY ITEM         46,886        27,067          1,076

Interest expense on debt                         (28,556)      (29,367)       (29,306)
Interest expense on capital lease obligations     (1,000)       (1,160)        (1,152)
Interest and investment income, net                1,379           910            276
                                               ----------    ----------    -----------
   INCOME (LOSS) BEFORE INCOME TAXES AND
      EXTRAORDINARY ITEM                          18,709        (2,550)       (29,106)

Income tax (expense), benefit                     (9,832)         (583)         9,535
                                               ----------    ----------    -----------
   LOSS BEFORE EXTRAORDINARY ITEM                  8,877        (3,133)       (19,571)
                                               ----------    ----------    -----------
Extraordinary Item:  Loss on early
   extinguishment of debt, net of deferred
   income taxes of $1,567                             --        (2,444)            --
                                               ----------    ----------    -----------
   NET INCOME (LOSS)                           $   8,877     $  (5,577)    $  (19,571)
                                               ==========    ==========    ===========

</TABLE>

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




                                      F-4
<PAGE>   39

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES
                          (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                                    Fiscal
                                                                      -----------------------------------
                                                                         1999        1998        1997
                                                                      ----------  ----------  -----------
 <S>                                                                 <C>         <C>         <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income (loss)                                                 $  8,877    $ (5,577)   $ (19,571)
    Adjustments to reconcile net loss to net cash
       provided by operating activities, net of
       effects of disposal of Florida retail operations:
       Extraordinary loss on early extinguishment of debt                   --       2,444           --
       Division closure and corporate restructuring charges                 --          --        4,160
       Depreciation and amortization of property and equipment          20,782      23,855       25,528
       Amortization of intangible and other assets                      15,747      16,321       15,600
       Deferred income taxes                                             9,349         230       (9,259)
       (Gain) loss on disposal of property and equipment, net           (2,182)       (273)       2,395
       Amortization of bond discount                                     1,047         716           --
       (Increase) decrease in deferred charges and other assets          1,499      (1,543)       2,401
       (Decrease) increase in reserve for self-insurance claims         (1,310)       (995)         896
       (Decrease) increase in other liabilities and deferred credits    (2,221)       (500)         161
       Changes in operating assets and liabilities:
          Decrease (increase) in accounts receivable                    (1,566)      1,598        2,621
          Increase in inventories                                      (12,259)     (5,039)      (3,995)
          (Increase) decrease in prepaid expenses                        2,298         (33)         278
          Increase (decrease) in accounts payable and accrued expenses    (941)     10,300        6,427
          Decrease in income taxes payable                                  --        (110)         (20)
                                                                     ---------   ---------   ----------
                                                                        39,120      41,394       27,622
       Decrease attributable to disposal of Florida retail operations   (3,590)     (4,616)     (12,810)
                                                                     ---------   ---------   ----------
       Net cash provided by operating activities                        35,530      36,778       14,812
                                                                     ---------   ---------   ----------

 CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchases of property and equipment                                (15,271)    (10,938)     (14,455)
    Proceeds from disposal of property and equipment                     7,062       1,036           59
    Proceeds from sales of marketable securities                            --          89        1,415
    Proceeds from disposal of Florida retail operations                     --      10,000       11,840
    Purchases of marketable securities                                      --          --         (223)
                                                                     ---------   ---------   ----------
       Net cash provided by, (used in), investing activities            (8,209)        187       (1,364)
                                                                     ---------   ---------   ----------
 CASH FLOWS FROM FINANCING ACTIVITIES:

    Principal payment from notes payable to a related party                 --     (10,000)          --
    Principal payments on long-term debt                                    --     (68,727)     (29,214)
    Principal payments on short-term debt                                   --     (21,750)          --
    Principal payments on capital lease obligations                       (591)       (579)      (1,084)
    Proceeds from long-term borrowing                                       --      80,713           --
    Proceeds from notes payable to a related party                          --          --       10,000
    Net increase in note payable to bank syndicate                          --          --        7,000
    Proceeds from capital contribution                                      --          --        5,000
                                                                     ---------   ---------   ----------
       Net cash used in financing activities                              (591)    (20,343)      (8,298)
                                                                     ---------   ---------   ----------
 Net increase in cash and cash equivalents                              26,730      16,622        5,150

 Cash and cash equivalents at beginning of year                         28,770      12,148        6,998
                                                                     ---------   ---------   ----------
 Cash and cash equivalents at end of year                            $  55,500   $  28,770   $   12,148
                                                                     =========   =========   ==========
 </TABLE>

                 The accompanying notes are an integral part of
                    these consolidated financial statements





                                      F-5
<PAGE>   40

            CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
            PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES
                          (Dollars in thousands)

<TABLE>
<CAPTION>

                                              Additional                         Total
                                   Common      Paid-in       Accumulated     Stockholder's
                                   Stock       Capital         Deficit          Equity
                                  ---------  ------------   -------------   ---------------
<S>                               <C>        <C>            <C>             <C>
Balance at January 27, 1996       $     --   $   86,500     $   (39,047)    $    47,453
   Capital contribution                 --        5,000              --           5,000
   Net loss for the year                --           --         (19,571)        (19,571)
                                  ---------  -----------    -------------   -------------
Balance at January 25, 1997             --       91,500         (58,618)         32,882

   Net loss for the year                --           --          (5,577)         (5,577)
                                  ---------  -----------    -------------   -------------
Balance at January 31, 1998             --       91,500         (64,195)         27,305

   Net income for the year              --           --           8,877           8,877
                                  ---------  -----------    -------------   -------------
Balance at January 30, 1999        $    --   $   91,500     $   (55,318)    $    36,182
                                  =========  ===========    =============   =============

</TABLE>

          The accompanying notes are an integral part of these
                    consolidated financial statements







                                      F-6
<PAGE>   41

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

         The consolidated financial statements include the accounts of Pueblo
Xtra International, Inc. and its wholly-owned subsidiaries (the "Company"). The
Company operated retail supermarkets and video rental locations in Puerto Rico
and the U. S. Virgin Islands during fiscal 1999. Intercompany accounts and
transactions are eliminated in consolidation.

         The Company operates and reports financial results on a fiscal year of
52 or 53 weeks ending on the last Saturday in January. Accordingly, fiscal year
1999 ended on January 30, 1999, fiscal 1998 ended on January 31, 1998, and
fiscal 1997 ended on January 25, 1997. Fiscal 1998 comprised 53 weeks, all
other noted fiscal years comprised 52 weeks.

Cash and Cash Equivalents

         Highly liquid investments purchased with a maturity of three months or
less are considered cash equivalents.

Inventories

         Inventories held for sale are stated at the lower of cost or market.
The cost of inventories held for sale is determined, depending on the nature of
the product, either by the last-in, first-out (LIFO) method or by the first-in,
first-out (FIFO) method. Videocassette rental inventories are recorded at cost,
net of accumulated amortization. Videocassettes held for rental are amortized
over 12 months on a straight-line basis.

Property and Equipment

         Property and equipment, including expenditures for remodeling and
improvements, are carried at cost. Routine maintenance, repairs and minor
betterments are charged to operations as incurred. Depreciation and
amortization are computed on a straight-line basis over the estimated useful
lives of the assets or, in relation to leasehold improvements and property
under capital leases, over the lesser of the asset's useful life or the lease
term, not to exceed 20 years. Estimated useful lives are 20 years for buildings
and improvements, 5 to 12 years for furniture, fixtures and equipment, 4 years
for automotive equipment and 3 years for computer hardware and software.

         Upon the sale, retirement or other disposition of assets, the related
cost and accumulated depreciation or amortization are eliminated from the
accounts. Any resulting gains or losses from disposals are included in the
consolidated statements of operations.





                                      F-7
<PAGE>   42

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (Continued)

Goodwill and Other Intangibles

         Goodwill represents the excess of cost over the estimated fair value
of the net tangible and other intangible assets acquired in connection with the
transaction described in Note (3)-- Goodwill. Goodwill and other intangibles
are being amortized using the straight-line method over periods not exceeding
40 years. The Company periodically evaluates the carrying amount of goodwill
and other intangibles to recognize and measure the possible impairment of these
assets. Based on the recoverability from cash flows method (which includes
evaluating the probability that estimated undiscounted cash flows from related
operations will be less than the carrying amount of goodwill and other
long-lived assets), the Company believes there is no impairment to goodwill and
other intangibles.

Self-Insurance

         The Company's general liability, certain of its workers compensation,
and certain of its health insurance programs are self-insured. The general
liability and workers compensation reserves for self-insurance claims are based
upon an annual review by the Company and its independent actuary of claims
filed and claims incurred but not yet reported. Due to inherent uncertainties
in the estimation process, it is at least reasonably possible that the
Company's estimate of the reserve for self-insurance claims could change in the
near term. The liability for self-insurance is not discounted. Individual
self-insured losses are limited to $250,000 per occurrence for general
liability and certain workers compensation. The Company maintains insurance
coverage for claims in excess of $250,000. The current portion of the reserve
for general liability and workers compensation, representing the amount
expected to be paid in the next fiscal year, was $6.5 million at January 30,
1999 and January 31, 1998 and is included in the consolidated balance sheets as
accrued expense. The reserve for health insurance programs was $2.5 million and
$1.8 million at January 30, 1999 and January 31, 1998 and is also included in
the consolidated balance sheets as accrued expense.

Pre-Opening Expenses

         Through January 30, 1999, store pre-opening expenses are charged to
operations in the month the stores are opened.

Advertising Expenses

         Advertising expenses are charged to operations as they are incurred.
During fiscal 1999, fiscal 1998, and fiscal 1997, advertising expenses were
$11.9 million, $9.3 million, and $11.0 million, respectively.





                                      F-8
<PAGE>   43

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (Continued)

Post Employment Benefits

         The Company currently has a policy which provides severance benefits
to certain of its salaried employees. However, the Company cannot reasonably
estimate post employment benefits, including severance benefits, on an ongoing
basis, therefore these costs are charged to expense only when the probability
of payment and the amount of such payment can be reasonably determined.

Income Taxes

         The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS
109 requires deferred tax assets and liabilities to be determined based on the
difference between the financial statement and tax bases of assets and
liabilities using enacted tax rates currently in effect.

Earnings Per Common Share

         The Company is a wholly-owned subsidiary of PXC&M Holdings, Inc.
("Holdings") with a total of 200 shares of common stock issued and outstanding.
Earnings per share is not meaningful to the presentation of the consolidated
financial statements and is therefore excluded.

Use of Estimates

         The preparation of consolidated financial statements in conformity
with generally accepted accounting principles 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 consolidated financial statements and the reported amount of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.

New Accounting Pronouncements

         In June 1997, SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," was issued. SFAS No. 131 establishes
standards for the way that public companies report selected information about
operating segments in annual financial statements and require that those
companies report selected information about segments in interim financial
reports issued to shareholders. It also established standards for related
disclosures about products and services, geographic areas, and major customers
and superceded SFAS No. 14, "Financial Reporting for Segments of a Business
Enterprise." SFAS No. 131 is effective for financial statements for periods
beginning after December 15, 1997. The Company has historically reported its
information under one segment. This standard requires the Company to report
financial information consistent with how the business is




                                      F-9
<PAGE>   44

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 1 -- SIGNIFICANT ACCOUNTING POLICIES (Continued)

managed.  The Company adopted this standard in fiscal 1999 (See Note 14).

         In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use ("SOP 98-1"). SOP 98-1 provided
guidance for capitalizing and expensing the costs of computer software
developed or obtained for internal use. SOP 98-1 is effective for financial
statements for fiscal years beginning after December 15, 1998. Management does
not expect the adoption of SOP 98-1 to have a significant impact on the
Company's consolidated financial statements.

         In April 1998, the American Institute of Certified Public Accountants
issued Statements of Position 98-5, Reporting on the Costs of Start-Up
Activities ("SOP 98-5"). SOP 98-5 establishes accounting standards for the
reporting of certain costs associated with the start-up of operations, lines of
business, etc. SOP 98-5 requires that costs of start-up activities, including
organizational costs, be expenses as incurred and that in the year of adoption,
start-up costs recorded should be expensed. SOP 98-5 is effective for fiscal
years beginning subsequent to December 15, 1998. The impact of this will be
that all expenses of any future stores to be opened will be expensed as
expenses are incurred rather than in the month in which the store opens.
Management does not expect the adoption of SOP 98-5 to have a significant
impact on the Company's consolidated financial statements.

         In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities ("SFAS No. 133"). Among other provisions,
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments and for hedging activities. It also requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. SFAS No. 133 is
effective for financial statements for fiscal years beginning after June 15,
1999. The Company does not deal with derivative instruments and does not engage
in hedging activities and expects no impact from adoption of SFAS No. 133.

Reclassifications

         Certain amounts in the prior year's consolidated financial statements
and related notes have been reclassified to conform to the current year's
presentation.





                                      F-10
<PAGE>   45

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 2 -- DIVISION CLOSURE COSTS

         During January 1996, management implemented several strategic
measures. These measures included the disposal of the Company's Florida retail
operations (the "Florida Disposal") and a restructuring of certain operating
functions which significantly changed the direction of the Company. The Florida
Disposal eliminated one of three operating regions, including the complete
elimination of the business and the employees that comprised such business. The
losses related to the Florida Disposal are reflected in the Statement of
Operations as "Division Closure Costs."

         The Florida Disposal included the closing of all eight supermarkets
(three of which are owned) and a warehouse and distribution center in Florida,
whether by sale or abandonment, which was completed in the first quarter of
fiscal 1997. In fiscal 1997, the Company sold one location and the lease rights
to another location. The Company sold all related store equipment in prior
years. In fiscal 1999 the Company sold another location and in fiscal 2000 the
final location was sold.

         During fiscal 1997, the Company recorded $4.2 million in charges as a
result of a revision in the estimated fair value of the remaining properties
held for sale.

NOTE 3 -- GOODWILL

         On July 28, 1993, the Company acquired all of the outstanding shares
of the common stock of Pueblo International, Inc. and subsidiaries for an
aggregate purchase price of $283.6 million plus transaction costs. The shares
were acquired from an investor group including affiliates of Metropolitan Life
Insurance Company, The First Boston Corporation and certain current and former
members of the Company's management and its Board of Directors.

         The acquisition of shares was accounted for as a purchase effective
July 31, 1993. Accordingly, the costs of the transaction were allocated to the
assets acquired and liabilities assumed. The excess of the aggregate purchase
price over the fair market value of net assets acquired of approximately $210.2
million was recognized as goodwill and is being amortized over 40 years.

NOTE 4 -- INVENTORIES

         The cost of approximately 80% and 75% of total inventories at January
30, 1999 and January 31, 1998, respectively, is determined by the LIFO method.
The excess of current cost over inventories valued by the LIFO method was $2.2
million and $1.8 million as of January 30, 1999 and January 31, 1998,
respectively.




                                      F-11
<PAGE>   46

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 5 -- DEBT

         Total debt consists of the following (in thousands):

<TABLE>
<CAPTION>

                                              January 30,     January 31,
                                                  1999           1998
                                              -----------    -----------
<S>                                           <C>            <C>
Senior notes due 2003, net of unamortized
   discount of $ 6,525 and $7,572 in 1999
   and 1998, respectively                     $  258,475     $  257,428

Payable to a Puerto Rico governmental
   agency                                         10,000         10,000
                                              ------------   ------------
                                              $  268,475     $  267,428
                                              ============   ============
</TABLE>

         In 1993 the Company issued $180 million in 10-year, 9 1/2% senior
notes (the "Notes"). On April 29, 1997, the Company entered into a refinancing
plan (the "Refinancing Plan"), which included the issuance and sale of $85.0
million principal amount of 9 1/2% Series C Senior Notes Due 2003 (the "Series
C Senior Notes"), the terms of which are substantially identical to those of
the Series B Senior Notes. The net proceeds from the sale of the Series C
Senior Notes of approximately $73.9 million after deducting expenses, together
with available cash of the Company, were used to repay the senior secured
indebtedness outstanding under the Bank Credit Agreement dated July 31, 1993
(the "Old Bank Credit Agreement"). The weighted average interest rate on the
previous credit facility, which approximates that of short-term borrowings
under the revolving facility, was 8.52% during fiscal 1998.

         In connection with the Refinancing Plan, the Company entered into an
amended bank credit agreement (the "New Bank Credit Agreement"), which provides
for a $65.0 million revolving credit facility (the "New Credit Facility") with
less restrictive covenants compared to the Old Bank Credit Agreement. After the
issuance of standby letters of credit in the amount of $14.3 million, as of
January 30, 1999, the Company has borrowing availability on a revolving basis
of $50.7 million under the New Bank Credit Agreement. In fiscal year 1998, this
transaction resulted in an extraordinary charge of $2.4 million, net of
deferred income taxes of $1.6 million, by reason of early extinguishment of
debt. The Company pays a fee of .50% per annum on unused commitments under the
$65.0 million revolving facility. Interest on the New Credit Facility
fluctuates based on the availability of Section 936 funds in Puerto Rico,
Euroloan rates and the prime rate. As of January 30, 1999, the Company had no
borrowings outstanding under the revolver of the New Bank Credit Agreement.





                                      F-12
<PAGE>   47

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 5 -- DEBT (Continued)

         Also in connection with the Refinancing Plan, on April 29, 1997, the
Company satisfied $10.0 million of indebtedness payable to a related party by
transferring its interest in two real estate properties from its closed Florida
operations to such related party.

         The New Credit Facility is collateralized by a pledge of the assets of
the Company, by the capital stock of, and intercompany notes issued by, the
Company's subsidiaries and by the capital stock of the Company. The Company is
required, under the terms of the New Credit Facility, to meet certain financial
covenants which include minimum consolidated net worth levels, interest and
fixed charges coverage ratios and minimum EBITDA (Earnings Before Interest,
Taxes, Depreciation, and Amortization as defined in the credit agreement). The
agreement also contains certain restrictions on additional indebtedness,
capital expenditures and the declaration and payment of dividends.

         The Notes and Series C Senior Notes, which mature on August 1, 2003,
are general unsecured obligations of the Company subordinate in right of
payment to all existing and future liabilities (including, without limitation,
obligations under the New Credit Facility) of its subsidiaries. The Notes and
Series C Senior Notes may be called by the holders of the notes at 101% in the
event of a change in control of the Company (as defined in the indenture). The
Notes and Series C Senior Notes are senior to all future subordinated
indebtedness which the Company may from time to time incur. The Notes and
Series C Senior Notes bear interest at 9.50% per annum which is payable
semiannually on February 1st and August 1st. Terms of the Notes and Series C
Senior Notes include covenants which restrict the Company and its subsidiaries
from engaging in certain activities and transactions.

         Outstanding borrowings from a governmental agency of the Commonwealth
of Puerto Rico from the issuance of industrial revenue bonds were $10.0 million
as of fiscal year end 1999 and 1998. The bonds, which bear interest at variable
rates based on an index of tax-exempt borrowing, have a weighted average
interest rate of 4.43% and 4.22% at January 30, 1999 and January 31, 1998,
respectively. A principal payment of $7.5 million was made in fiscal 1998 and
another principal payment in fiscal 2001 for $10 million is due, which
correspond to the maturity dates of the bonds. Payment of the bonds is
guaranteed by standby letters of credit totaling $10.2 million, issued under
the $65.0 million revolving credit facility discussed above.





                                      F-13
<PAGE>   48

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 5 -- DEBT (Continued)

         Annual maturities of the Company's debt are as follows (in thousands):

           Fiscal Year                         Amount
          -------------                      ----------
              1999                           $      0
              2000                                  0
              2001                             10,000
              2002                                  0
              2003                                  0
              2004 and thereafter             258,475
                                             ---------
              Total                          $268,475
                                             =========

         Total interest paid on debt was $25.6 million, $14.1 million, $34.5
million for fiscal 1999, fiscal 1998, and fiscal 1997, respectively. Interest
payable as of January 30, 1999 and January 31, 1998 was $12.5 million and $12.6
million, respectively.

NOTE 6 -- LEASES AND LEASEHOLD INTERESTS

         The Company conducts the major part of its operations on leased
premises which have initial terms generally ranging from 20 to 25 years.
Substantially, all leases contain renewal options which extend the lease terms
in increments of 5 to 10 years. The Company also has certain equipment leases
which have terms of up to five years. Realty and equipment leases generally
require the Company to pay operating expenses such as insurance, taxes and
maintenance. Certain store leases provide for percentage rentals based upon
sales above specified levels.

         The Company leases retail space to tenants in certain of its owned and
leased properties. The lease terms generally range from two to five years.





                                      F-14
<PAGE>   49

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 6 -- LEASES AND LEASEHOLD INTERESTS (Continued)

         The major classes of property recorded as property and equipment under
capital leases are as follows (in thousands):


                                       January 30,         January 31,
                                          1999                1998
                                     ---------------     --------------
Real estate                            $   12,113          $   12,295
Machinery and equipment                        --                  90
                                     ---------------     --------------
                                           12,113              12,385
Less accumulated amortization               3,844               3,405
                                     ---------------     --------------
Property under capital leases, net      $   8,269           $   8,980
                                     ===============     ==============

         Amortization of assets recorded under capital leases is included with
depreciation and amortization expense in the consolidated statement of
operations. Minimum rentals under noncancelable leases at January 30, 1999 are
as follows (in thousands):

                                      Capital      Operating     Operating
                                      Leases         Leases        Leases
       Fiscal Year                  (As Lessee)   (As Lessee)   (As Lessee)
--------------------------------   ------------  ------------  ------------
2000                                 $  1,524      $ 10,647      $  1,086
2001                                    1,524         9,947           934
2002                                    1,455         9,271           756
2003                                    1,367         8,136           524
2004                                    1,337         7,416           335
2005 and thereafter                     7,033        70,798         1,255
                                   ------------  ------------  ------------
                                       14,240      $116,215      $  4,890
                                                 ============  ============
Less executory costs                       64
                                   -----------
   Net minimum lease payments          14,176
Less amount representing interest       6,619
                                   -----------
Present value of net minimum lease
   payments under capital lease       $ 7,577
                                   ===========
Total minimum sublease rentals
   to be received in the future       $   678      $  8,338
                                   ===========   ===========





                                      F-15
<PAGE>   50

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 6 -- LEASES AND LEASEHOLD INTERESTS (Continued)

         Rent expense and the related contingent rentals under operating leases
were $13.2 million and $0.3 million for fiscal 1999, respectively, $12.3
million and $0.4 million for fiscal 1998, respectively, and $11.9 million and
$0.6 million for fiscal 1997, respectively

         Contingent rentals under capital leases, which are directly related to
sales, were $0.2 million for fiscal 1999 and $0.3 million for fiscal 1998 and
fiscal 1997. Interest paid on capital lease obligations was $1.0 million for
fiscal 1999, $1.2 million for fiscal 1998, and $1.2 million for fiscal 1997.

         Sublease rental income for operating and capital leases was $ 3.1
million for fiscal 1999, $2.6 million for fiscal 1998, and $1.9 million for
fiscal 1997.

NOTE 7 -- STOCKHOLDER'S EQUITY

         Authorized common stock of the Company consists of 200 shares of $.10
par value, all of which are issued and outstanding and held by Holdings as of
January 30, 1999 and January 31, 1998.

         During April 1996, the Company received additional capital of $5.0
million from its parent company, Holdings, which it used to reduce the amounts
outstanding under its term in the Old Bank Credit Agreement.

NOTE 8 -- INCOME TAXES

         As described in Note (1)-- Significant Accounting Policies, the
Company's method of accounting for income taxes is the liability method as
required by SFAS No. 109.





                                      F-16
<PAGE>   51

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 8 -- INCOME TAXES (Continued)

         The components of income tax expense (benefit), excluding
extraordinary items, are as follows (in thousands):


                           Fiscal           Fiscal         Fiscal
                            1999             1998           1997
                         -----------     -----------    ------------
Current
   Federal                $     53        $     (40)     $    (383)
   State                         7                1           (387)
   U.S. Possessions            423              392            494
                         -----------     -----------    ------------
                               483              353           (276)
                         -----------     -----------    ------------
Deferred
   Federal                   3,083            2,608           (312)
   State                        69             (124)         1,095
   U.S. Possessions          6,197           (2,254)       (10,042)
                         -----------     -----------    ------------
                             9,349              230         (9,259)
                         -----------     -----------    ------------
     Total income tax
     expense (benefit)    $  9,832        $     583       $ (9,535)
                         ===========     ===========    ============





                                      F-17
<PAGE>   52

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 8 -- INCOME TAXES (Continued)

         The significant components of the net deferred tax liabilities are as
follows (in thousands):


                                           January 30,      January 31,
                                              1999             1998
                                         ---------------  --------------
Deferred tax assets:
   Reserve for self-insurance claims       $   6,941        $   7,699
   Employee benefit plans                      6,467            6,426
   Property and equipment                      2,704            3,578
   Reserve for closed stores                   1,113            2,312
   Accrued expenses and other liabilities
      and deferred credits                     3,928                -
   Other operating loss and tax credit
      carry forwards                           4,455           11,342
   All other                                     922            5,827
                                         ---------------  --------------
      Total deferred tax assets               26,530           37,184
                                         ---------------  --------------
Deferred tax liabilities:
   Property and equipment                    (16,440)         (17,195)
   Tradenames                                (11,927)         (12,273)
   Operating leases                           (6,495)          (7,006)
   Inventories                                (4,268)          (4,324)
   Other assets                               (2,056)          (2,137)
   Accrued expenses and other liabilities
      and deferred credits                    (1,540)          (1,096)
                                         ---------------  --------------
    Total deferred tax liabilities           (42,726)         (44,031)
                                         ---------------  --------------
      Net deferred tax liabilities         $ (16,196)       $  (6,847)
                                         ===============  ==============





                                      F-18
<PAGE>   53

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 8 -- INCOME TAXES (Continued)

         A reconciliation of the difference between actual income tax, expense
(benefit), and income taxes computed at U. S. Federal statutory tax rates is as
follows (in thousands):

                                     Fiscal        Fiscal       Fiscal
                                      1999          1998         1997
                                   -----------  -----------  -----------
U.S. Federal Statutory rate of
   35% applied to pretax loss       $   6,548     $   (892)   $ (10,187)
Effect of varying rates
   applicable in other taxing
   jurisdictions                          663         (219)        (992)
Amortization of goodwill                1,761        1,761        1,761
State and local taxes                      53         (141)         708
Alternative minimum taxes                 413           --           --

Branch taxes (possession -
   US/VI)                                  92           79           76
All others, net                           302           (5)        (901)
                                   -----------  -----------  -----------
Income tax expense (benefit)        $   9,832     $    583    $  (9,535)
                                   ===========  ===========  ===========

         The Company's operations are located in U. S. possessions where they
are subject to U. S. and local taxation.

         As of January 30, 1999, the Company has unused net operating loss
carryforwards of $ 0.9 million, $6.1 million and $0.9 million available to
offset future taxable income in Puerto Rico, the United States, and the U. S.
Virgin Islands through fiscal years 2004, 2011 and 2019 respectively.

         The Company has unused investment tax credits of approximately $0.7
million available to offset future United States income tax liabilities. Such
investment tax credits expire as follows: 2000 - $447,000; 2001 - $228,000; and
2002 - $20,000. Utilization of the investment tax credit carryforward may be
limited each year.

         The Company also has unused alternative minimum tax credits in the
amount of $0.4 million and $0.1 million to offset future income tax liabilities
in Puerto Rico and the United States, respectively. These credits are carried
forward indefinitely.

         Total income taxes paid were $0.05 million during fiscal 1999, $0.6
million for fiscal 1998, and $0.5 million for fiscal 1997.





                                      F-19
<PAGE>   54

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 9 -- RETIREMENT BENEFITS

         The Company has a noncontributory defined benefit plan (the
"Retirement Plan") covering substantially all full-time and certain part-time
associates. Retirement Plan benefits are based on years of service and a base
level of compensation. The Company funds Retirement Plan costs in accordance
with the requirements of the Employee Retirement Income Security Act of 1974.
Contributions are intended to provide not only for benefits attributed to
service to date but also for those expected to be earned in the future.
Retirement Plan assets consist primarily of stocks, bonds and U. S. Government
securities. Full vesting for the Retirement Plan occurs upon the completion of
five years of service.

         Net pension cost under the Retirement Plan includes the following
components (in thousands):

                                     Fiscal        Fiscal       Fiscal
                                      1999          1998         1997
                                   -----------  -----------  -----------
Service cost - benefits
   earned during the period         $   1,370    $   1,443    $   1,556
Interest cost on projected
   benefit obligation                   1,433        1,452        1,512
Expected return on plan
   assets                              (1,157)      (1,083)      (1,121)
Net amortization and
   deferrals                               (6)          (6)         (97)
                                   -----------  -----------  -----------
   NET PENSION COST                 $   1,640    $   1,806     $  1,850
                                   ===========  ===========  ===========

         The average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the net periodic
pension cost for the Retirement Plan are 6.75% for fiscal 1999 and 7.5% and
5.0%, respectively, for fiscal 1998 and 1997. The average expected long-term
rate of return on plan assets is 9.0% for the three-year period.





                                     F-20-
<PAGE>   55

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 9 -- RETIREMENT BENEFITS (Continued)

The funded status and amounts recognized in the Company's consolidated balance
sheets for the Retirement Plan are as follows (in thousands):

<TABLE>
<CAPTION>

                                                       January 30,      January 31,
                                                          1999             1998
                                                     ---------------  --------------
<S>                                                  <C>              <C>
Actuarial present value of benefit obligations:
   Accumulated benefit obligation, including
     vested benefits of $16,693 at January 30,
     1999 and $14,315 at January 31, 1998             $    18,117      $    15,533
                                                     ===============  ==============
Plan assets at fair value - beginning of the year     $    12,908      $    12,080
Actual return on plan assets                                1,690            2,104
Employer contributions                                      1,574            2,175
Benefits paid                                              (1,610)          (3,451)
                                                     ---------------  --------------
Plan assets at fair value - end of the year                14,562           12,908
                                                     ---------------  --------------

Projected benefit obligation for service
   rendered to date - beginning of the year               (20,190)         (20,449)
Service cost                                               (1,370)          (1,443)
Interest cost                                              (1,433)          (1,452)
Actuarial cost                                             (2,050)            (297)
Benefit paid                                                1,610            3,451
                                                     ---------------  --------------
Projected benefit obligation for service
   rendered to date - end of the year                     (23,433)         (20,190)
                                                     ---------------  --------------
      FUNDED STATUS                                        (8,871)          (7,282)

Unrecognized net gain                                        (474)          (1,991)
Unrecognized prior service cost                               (67)             (73)
                                                     ---------------  --------------
      NET PENSION LIABILITY                            $   (9,412)      $   (9,346)
                                                     ===============  ==============
</TABLE>

         The Company maintains a Supplemental Executive Retirement Plan (the
"Supplemental Plan") for its officers under which the Company will pay, from
general corporate funds, a supplemental pension equal to the difference between
the annual amount of pension calculated under the Supplemental Plan and the
amount the participant will receive under the Retirement Plan. Effective
January 1, 1992, the Board of Directors amended the Supplemental Plan in order
to conform various provisions and definitions with those of the Retirement
Plan. The pension benefit calculation under the Supplemental Plan is limited to
a total of 20 years employment and is based on a specified percentage of the
average annual compensation received for the five highest consecutive years
during a participant's last 10 years of service, reduced by the participant's
annual Retirement Plan and social security benefits. Full vesting for the
Supplemental Plan occurs upon the completion of five years of service.




                                      F-21
<PAGE>   56

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 9 -- RETIREMENT BENEFITS (Continued)

         Net pension cost under the Supplemental Plan includes the following
components (in thousands):

                                        Fiscal        Fiscal       Fiscal
                                         1999          1998         1997
                                      -----------  -----------  -----------
Service cost - benefits earned
   during the period                   $    150     $    124    $    98
Interest cost on projected
   benefit obligation                       309          317         328
Net amortization and deferrals              (94)         (83)        (68)
                                      -----------  -----------  -----------
      NET PENSION COST                 $    365     $    358     $   358
                                      ===========  ===========  ===========

         The average discount rate and rate of increase in future compensation
levels used in determining the actuarial present value of the net periodic
pension cost for the Supplemental Plan are 6.75% for fiscal 1999 and 7.5% and
5.0%, respectively, for fiscal 1998 and 1997.

The funded status and amounts recognized in the Company's consolidated balance
sheets for the Supplemental Plan are as follows (in thousands):

<TABLE>
<CAPTION>

                                                       January 30,      January 31,
                                                          1999             1998
                                                     ---------------  --------------
<S>                                                  <C>              <C>
Actuarial present value of benefit obligations:
   Accumulated benefit obligation, including
   vested benefits of $3,663 at January 30,
   1999 and $3,859 at January 31, 1998                $    3,678       $    3,872
                                                     ===============  ==============
Projected benefit obligation for service
   rendered to date                                   $   (4,179)      $   (4,306)
                                                     ---------------  --------------
      FUNDED STATUS                                       (4,179)          (4,306)
Unrecognized net gain                                     (1,347)          (1,534)
Unrecognized prior service cost                               37               44
                                                     ---------------  --------------
      NET PENSION LIABILITY                           $   (5,489)      $   (5,796)
                                                     ===============  ==============
</TABLE>





                                      F-22
<PAGE>   57

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 9 -- RETIREMENT BENEFITS (Continued)

         Change in benefit obligations was as follows (in thousands):

<TABLE>
<CAPTION>

                                                       January 30,      January 31,
                                                          1999             1998
                                                     ---------------  --------------
<S>                                                  <C>              <C>
Benefit obligation as of beginning of the year        $   4,306        $   4,384
Service costs                                               150              124
Interest costs                                              309              317
Actuarial (gain) loss                                        86             (190)
Benefits paid                                              (672)            (329)
                                                     ---------------  --------------
Benefit obligation as of end of the year              $   4,179        $   4,306
                                                     ===============  ==============
</TABLE>

         Change in plan assets were as follows (in thousands):

<TABLE>
<CAPTION>

                                                       January 30,      January 31,
                                                          1999             1998
                                                     ---------------  --------------
<S>                                                  <C>              <C>
Fair value of assets as of beginning of the year      $       0        $      0

Employer contribution                                       672             329
Benefits paid                                              (672)           (329)
                                                     ---------------  --------------
Fair value of assets as of end of the year            $       0        $      0
                                                     ===============  ==============
</TABLE>

         The Company has a noncontributory defined contribution plan covering
its eligible associates in Puerto Rico and the U. S. Virgin Islands.
Contributions to this plan are at the discretion of the Board of Directors. The
Company also has a contributory thrift savings plan in which it matches
eligible contributions made by participating eligible associates in the United
States. Expenses related to these plans, which are recognized in the year the
cost is incurred, were $758,000 for fiscal 1999, $818,000 for fiscal 1998, and
$728,000 for fiscal 1997.

NOTE 10 -- FAIR VALUE OF FINANCIAL INSTRUMENTS

         The following methods and assumptions were used to estimate the fair
value of each class of financial instruments.





                                      F-23
<PAGE>   58

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 10 -- FAIR VALUE OF FINANCIAL INSTRUMENTS (Continued)

Cash and Cash Equivalents

         The carrying amount of cash and cash equivalents approximates fair
value due to the short maturity of these instruments.

Marketable Securities

         Due to the nature and maturities of the underlying securities in the
portfolio, the carrying amount of marketable securities approximates fair
value. The carrying and fair value amounts include securities which the Company
classifies as marketable securities in the accompanying consolidated balance
sheets.

Debt

         The fair value of the Company's indebtedness, excluding the Senior
Notes, is estimated based on quoted market prices for similar instruments. The
fair value of the Senior Notes is determined based on market quotes.

         The estimated fair value of the Company's financial instruments are as
follows (in thousands):

<TABLE>
<CAPTION>

                                     January 30,             January 31,
                                        1999                    1998
                                 ----------------------  ---------------------
                                  Carrying      Fair       Carrying     Fair
                                   Amount       Value       Amount     Value
                                 ---------   ----------  ------------ --------
<S>                             <C>         <C>          <C>         <C>
Cash and cash equivalents        $  55,500   $   55,500   $ 28,770   $  28,770
Debt                              (268,475)    (253,852)  (267,428)   (259,981)

</TABLE>

NOTE 11 -- CONCENTRATIONS OF CREDIT RISK

         Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and cash equivalents.
The Company places its temporary cash investments with highly-rated financial
institutions in investment grade short-term debt instruments.

NOTE 12 -- CONTINGENCIES

         At January 30, 1999, the Company was party to various lawsuits arising
in the ordinary course of business. Management believes there were no material
contingencies as of January 30, 1999.





                                      F-24
<PAGE>   59

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 13 -- HURRICANE GEORGES

         Hurricane Georges struck all of the Company's operating facilities on
September 20 and 21, 1998. All of the Company's stores, with the exception of
two, have been reopened. Since the storm, operations have been at varying
degrees of full capacity depending on the extent of damage at each location and
the extent to which public utilities were available in lieu of the Company's
emergency power plants and water supplies at each location. These factors,
continuing adverse weather, limited availability of merchandise due to storm
damage at the Port of San Juan and recovery efforts continue to inhibit
operations of both the Retail Food and Blockbuster divisions.

         The Company's insurance is expected to cover losses associated with
the storm, including the retail value of lost inventory, the replacement cost
of damaged or destroyed operating assets, recovery costs and the impact of
business interruption. The Company does not expect to record any losses as a
result of the hurricane. Any gains will be recorded at such time as the
proceeds are realized. From the date of the storm through January 30, 1999 the
Company's insurance carriers had advanced the Company $20 million.

NOTE 14 -- DISCLOSURE ON OPERATING SEGMENTS

         The Company has two primary operating segments: retail food sales and
video tape rentals and sales. The Company's retail food division consists of 50
supermarkets, 44 of which are in Puerto Rico and 6 of which are in the Virgin
Islands. The Company also has the exclusive franchise rights to Blockbuster
video stores for Puerto Rico and the Virgin Islands operated through 44
Blockbuster stores, 42 of which are in Puerto Rico and 2 of which are in the
Virgin Islands. Most of the Blockbuster stores are adjacent to or a separate
section within a retail food supermarket. Administrative headquarters are in
Florida. Although the Company maintains data by geographic location, its
segment decision making process is based on its two product lines.





                                      F-25
<PAGE>   60

                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
             PUEBLO XTRA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTE 14 -- DISCLOSURE ON OPERATING SEGMENTS (Continued)

Reportable operating segment financial information is as follows (dollars in
thousands):

<TABLE>
<CAPTION>

                                  Retail Food          Videotape            Total
                                  -----------          ---------            -----
<S>                               <C>                  <C>                  <C>
Fiscal Year Ended 1999
Net sales                         $  723,802           $  60,972          $  784,774
Depreciation and amortization        (25,834)            (10,695)            (36,529)
Operating profit                      41,746               5,140              46,886
Total assets                         477,155              29,847             507,002
Capital expenditures                 (14,965)               (306)            (15,271)

Fiscal Year Ended 1998
Net sales                         $  890,391           $  48,115          $  938,506
Depreciation and amortization        (29,947)            (10,228)            (40,175)
Operating profit (loss)               23,711               3,392              27,103
Total assets                         469,004              33,172             502,176
Capital expenditures                  (5,807)             (5,131)            (10,938)

Fiscal Year Ended 1997
Net sales                         $  984,118           $  35,938          $ 1,020,056
Depreciation and amortization        (33,489)             (7,639)             (41,128)
Operating profit (loss)               (3,686)              4,640                  954
Capital expenditures                 (10,992)             (3,463)             (14,455)
</TABLE>

         Because the Retail Food and Videotape Divisions are not segregated by
corporate entity structure, the operating segment amounts shown above do not
represent totals for any subsidiary of the Company and do not include the
effects of intercompany eliminations. All overhead expenses including
depreciation on assets of administrative departments are allocated to
operations. Retail Food loss in fiscal 1997 includes $4,160 of Division Closure
Costs from closing Florida operations. Amounts shown in the total column above
correspond to amounts in the consolidated financial statements.





                                      F-26
<PAGE>   61

                                                                    Schedule II

                        PUEBLO XTRA INTERNATIONAL, INC.
                      BALANCE SHEETS-PARENT COMPANY ONLY
                            (Dollars in thousands)

<TABLE>
<CAPTION>

                                                        January 30,        January 31,
                                                           1999               1998
                                                      -------------      -------------
<S>                                                    <C>                <C>
ASSETS

CURRENT ASSETS

   Cash and cash equivalents                            $   12,697         $   12,588
   Interest receivables                                         --             13,792
   Prepaid expenses                                            158                158
                                                        -----------        -----------
   TOTAL CURRENT ASSETS                                     12,855             26,538
                                                        -----------        -----------

INVESTMENT IN SUBSIDIARIES                                  47,918             38,296
NOTE RECEIVABLE-MIRROR LOAN                                255,858            241,087
DEFERRED INCOME TAXES                                          726                299
DEFERRED CHARGES AND OTHER ASSETS                            3,166              3,867
                                                        -----------        -----------
  TOTAL ASSETS                                          $  320,523         $  310,087
                                                        ===========        ===========

LIABILITIES AND STOCKHOLDER'S EQUITY

CURRENT LIABILITIES

   Accrued expenses                                     $  12,520          $  12,586
   Intercompany payable, net                               13,346             12,768
                                                      -------------      -------------
  TOTAL CURRENT LIABILITIES                                25,866             25,354

NOTES PAYABLE                                             258,475            257,428
                                                      -------------      -------------
  TOTAL LIABILITIES                                       284,341            282,782
                                                      -------------      -------------
COMMITMENTS AND CONTINGENCIES                                  --                 --

STOCKHOLDER'S EQUITY

   Common stock                                                --                 --
   Additional paid-in capital                              91,500             91,500
   Retained earnings (accumulated deficit)                (55,318)           (64,195)
                                                      -------------      -------------
   TOTAL STOCKHOLDER'S EQUITY                              36,182             27,305
                                                      -------------      -------------
   TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY          $  320,523         $  310,087
                                                      =============      =============
</TABLE>

                                (Continued)





                                      S-1
<PAGE>   62

                                                                    Schedule II

                        PUEBLO XTRA INTERNATIONAL, INC.
                  STATEMENT OF OPERATIONS-PARENT COMPANY ONLY
                            (Dollars in thousands)

<TABLE>
<CAPTION>

                                                           1999         1998         1997
                                                      ----------   ----------   -----------
<S>                                                    <C>          <C>          <C>
Interest income                                        $  25,744    $  24,039    $  17,653
Interest expense on debt                                 (26,856)     (24,891)     (17,711)
Selling, general and administrative expenses                 (59)          --          (16)
                                                       ----------   ----------   -----------
   LOSS BEFORE INCOME, TAXES AND
      EQUITY LOSSES FROM SUBSIDIARIES                     (1,171)        (852)         (74)

Income tax benefit (expense)                                 427          299          (14)
                                                       ----------   ----------   -----------
   LOSS BEFORE EQUITY LOSSES FROM
      SUBSIDIARIES                                          (744)        (553)         (88)

Equity gain (loss) from subsidiaries                       9,621       (5,024)     (19,483)
                                                       ----------   ----------   -----------
         NET INCOME (LOSS)                             $   8,877    $  (5,577)   $ (19,571)
                                                       ==========   ==========   ===========
</TABLE>

                                       (Continued)





                                      S-2
<PAGE>   63

                                                                    Schedule II

                        PUEBLO XTRA INTERNATIONAL, INC.
                 STATEMENTS OF CASH FLOWS-PARENT COMPANY ONLY
                            (Dollars in thousands)

<TABLE>
<CAPTION>

                                                                         1999        1998        1997
                                                                      ----------  ----------  -----------
<S>                                                                  <C>         <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                                  $  8,877    $ (5,577)   $ (19,571)
   Adjustments to reconcile net loss to net cash used in
      operating activities:
      (Increase) decrease in deferred income taxes                        (427)       (299)          14
      Decrease in deferred charges and other assets                        701         704          703
      Amortization of bond discount                                         --         715           --
      Changes in operating assets and liabilities:
         (Increase) decrease in notes/accounts receivable                   --     (66,087)          97
         Decrease (increase) in prepaid expenses                            --         279         (279)
         (Increase) decrease in interest receivable, net                13,792      (5,160)          --
         Increase (decrease) in accounts payable and accrued expenses      (66)     12,586       (8,363)
         Increase in intercompany payable, net                             578       3,690        7,915
                                                                      ---------   ---------   ----------
      Net cash used in operating activities                             23,455     (59,149)     (19,484)
                                                                      ---------   ---------   ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
  (Increase) decrease in investment in subsidiaries                     (9,622)      5,024        4,484
                                                                      ---------   ---------   ----------
      Net cash provided by investing activities                         (9,622)      5,024        4,484
                                                                      ---------   ---------   ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Principal payment from notes payable to a related party             (14,771)    (10,000)          --
   Proceeds from long-term borrowing                                        --      76,713           --
   Proceeds from notes payable to a related party                        1,047          --       10,000
   Proceeds from capital contribution                                       --          --        5,000
                                                                      ---------   ---------   ----------
      Net cash provided by financing activities                        (13,724)     66,713       15,000
                                                                      ---------   ---------   ----------
Net increase in cash and cash equivalents                                  109      12,588           --

Cash and cash equivalents at beginning of period                        12,588          --           --
                                                                      ---------   ---------   ----------
Cash and cash equivalents at end of period                            $ 12,697    $ 12,588    $      --
                                                                      =========   =========   ==========
</TABLE>

                              (Concluded)







                                      S-3
<PAGE>   64

                Pueblo Xtra International, Inc. and Subsidiaries
                        Valuation and Qualifying Accounts
            For the fiscal years ended January 30, 1999, January 31,
                           1998, and January 25, 1997


                             (Dollars in thousands)

<TABLE>
<CAPTION>

                                    Balance at    Additions                    Balance
                                    Beginning     Charged to                   at End
                                     of Year/     Costs and                    of Year/
          Description                 Period       Expenses    Deductions (1)   Period (2)
-----------------------------      -----------   -----------  ---------------  -----------
<S>                                <C>           <C>          <C>              <C>
Fiscal 1999
Reserves not deducted
   from assets:
   Reserve for self-
      insurance claims....          $  17,687     $   4,957     $   6,267      $  16,377

Fiscal 1998
Reserves not deducted
   from assets:
   Reserve for self-
      insurance claims....          $  18,929     $   6,241     $   7,483      $  17,687

Fiscal 1997
Reserves not deducted
   from assets:
   Reserve for self-
      insurance claims....          $  20,537     $   6,934     $   8,542      $  18,929

</TABLE>

----------
(1) Amounts consist primarily of payments on claims.

(2) Amounts represent both the current and long-term portions.






                                      S-4