SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                                    FORM 10-K

              Annual Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

                   For the fiscal year ended February 2, 1997
                         Commission File Number 1-10619

                           PAMIDA HOLDINGS CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                 Delaware                           47-0696125
     (State or other jurisdiction of       (IRS Employer Identification
      incorporation or organization)        Number)

         8800 "F" Street, Omaha, Nebraska                    68127
     (Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code: (402) 339-2400

Securities Registered Pursuant to Section 12(b) of the Act:

          Title of Each                   Name of Each Exchange
              Class                        on Which Registered
          -------------                  -----------------------
          Common Stock                   American Stock Exchange

 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. [ ]

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  registrant  as of April 15, 1997,  was  $10,899,162  based upon the closing
price for such stock on the American Stock Exchange on such date.

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of the latest practicable date:

                                                 Outstanding at
             Class of Stock                      April 15, 1997
             --------------                     ----------------
              Common Stock                      5,004,942 shares

     Documents  Incorporated by Reference:  Portions of the  registrant's  proxy
statement  dated  March 26,  1997,  for the annual  meeting of the  registrant's
stockholders to be held on May 22, 1997, are incorporated by reference into Part
III.
                                     PART I

Item 1. BUSINESS.

      FORWARD-LOOKING STATEMENTS

     This 10-K contains certain forward-looking statements within the meaning of
the Private  Securities  Litigation  Reform Act of 1995 (the "1995  Act").  Such
statements  are made in good faith by the Company  pursuant  to the  safe-harbor
provisions of the 1995 Act. In  connection  with these  safe-harbor  provisions,
this 10-K contains certain forward-looking statements which reflect management's
current  views  and  estimates  of  future  economic   circumstances,   industry
conditions,  Company performance and financial results. The statements are based
on many  assumptions  and  factors  including  sales  results,  expense  levels,
competition and interest rates as well as other risks and uncertainties inherent
in the Company's business, capital structure and the retail industry in general.
Any changes in these factors could result in  significantly  different  results.
The Company  further  cautions that the  forward-looking  information  contained
herein is not exhaustive or exclusive.  The Company does not undertake to update
any  forward-looking  statements  which  may be made  from time to time by or on
behalf of the Company.

      GENERAL.

     Pamida Holdings  Corporation  conducts its mass merchandise retail business
through its wholly  owned  subsidiary,  Pamida,  Inc.,  a Delaware  corporation.
Unless the context indicates  otherwise,  the terms "Pamida" and "Company" refer
collectively   to  Pamida   Holdings   Corporation,   its  direct  and  indirect
subsidiaries  and  their  predecessors,  and  "Holdings"  refers  only to Pamida
Holdings Corporation.

     Holdings is a Delaware  corporation  incorporated in 1986 to acquire all of
the  capital  stock of Pamida,  Inc.  which,  directly  since 1981 and through a
predecessor  prior to 1981,  had been  engaged  in the mass  merchandise  retail
business since 1963. The capital stock of Pamida,  Inc. is the only  significant
asset of Holdings, and Holdings has no material operations of its own.

     On January 19, 1996, the Company announced its intention to close 40 stores
located in unprofitable or highly competitive markets. Store closing sales began
on January 29, 1996, and the Company completed all of such store closings during
the second quarter of the fiscal year ended February 2, 1997. References in this
Form 10-K to the "40 Closed Stores" mean such 40 stores.


      STORES.

     At February 2, 1997,  Pamida  operated 148 mass  merchandise  retail stores
located in 148 small towns (having an average population of approximately 5,500)
in 15 Midwestern,  North Central and Rocky Mountain states.  Pamida's  strategic
objective is to be the dominant mass merchandise  retailer in the communities it
serves.  The Company  believes that it holds the leading market position in over
80% of the communities in which its stores are located.

     Pamida stores generally are located in small towns,  normally county seats,
where  there  often  is  little  or  no  competition  from  another  major  mass
merchandise  retailer and which the Company  considers to be either too small to
support  more than one major  mass  merchandise  retailer  (thereby  creating  a
potential  barrier  to  entry by a major  competitor)  or too  small to  attract
competitors whose stores generally are designed to serve larger populations.  At
February  2,  1997,  119 of the  Company's  148  stores  faced no  direct  local
competition from other major mass merchandise retailers.

     The Company's stores average approximately 29,000 square feet of sales area
and range in size from approximately  6,000 to 51,000 square feet of sales area.
At  February  2,  1997,   Pamida's   stores  had  an  aggregate  sales  area  of
approximately 4,348,000 square feet.

     The  following  table  indicates the states in which  Pamida's  stores were
located as of February 2, 1997:

     STATE                                                        TOTAL
     -----                                                        -----
     Minnesota.....................................................  29
     Iowa..........................................................  26
     Nebraska......................................................  15
     Wisconsin.....................................................  14
     Michigan.....................................................   12
     Ohio.........................................................   10
     Wyoming.......................................................   9
     North Dakota..................................................   7
     South Dakota..................................................   7
     Montana.......................................................   7
     Indiana.......................................................   4
     Kansas........................................................   3
     Kentucky .....................................................   2
     Illinois......................................................   2
     Missouri .....................................................   1
                                                                    ---
                                                                    148
                                                                    ===

     The  following  tables  show the number of the  Company's  store  openings,
relocations  and closings and the aggregate  year-end store sales area by fiscal
year since fiscal 1993:

                                   Fiscal Year Ended
                        1997    1996    1995    1994    1993

Beginning of year ...    144     184     173     178     178
  Stores opened in
    new markets .....      6       7      17       8       9
  Stores relocated in
    existing markets       2       3      --      --      --
  Stores closed .....     (4)    (10)     (6)    (13)     (9)
                         ---     ---     ---     ---     ---
End of year .........    148     184     184     173     178
Less 40 Closed Stores    ===     (40)    ===     ===     ===
                                 ---
                                 144
                                 ===

                                  Fiscal Year Ended
                        1997    1996    1995    1994    1993

Square feet of
  store sales area
  at year-end (in
  millions)             4.35    5.22    5.09    4.68    4.75
Less 40 Closed Stores          (1.09)
                               ------
                                4.13

     Pamida  regularly  evaluates all of its stores and from time to time closes
stores which no longer meet its standards for sales, profitability, selling area
or other applicable criteria.

      STORE EXPANSION PROGRAM.

     Pamida's  store  expansion  program is subject to the Company's  ability to
negotiate satisfactory leases, to the ability of prospective landlords to obtain
financing  for new store  buildings  and to various  zoning,  site  acquisition,
environmental,  traffic, construction and other contingencies. Three new stores,
two of which are replacement  stores,  are expected to commence  operations this
year.

     Pamida has identified  numerous  communities  which are potential sites for
the  Company's  prototype  stores and in which Pamida  believes it can achieve a
leading  market  position,  although there is no assurance that Pamida will open
stores in such communities or on any particular time schedule.

     In October  1996 the  Company  agreed to lease a new  200,000  square  foot
distribution  facility to be located in Lebanon,  Indiana.  Construction of this
new  facility is  underway,  and the  facility is expected to be  completed  and
operational during the second quarter of the current year.


     Pamida believes that its existing  distribution  facilities  (including the
new Lebanon, Indiana facility), senior and middle management staff and corporate
infrastructure are sufficient to accommodate the Company's anticipated growth.

     The Company typically invests  approximately  $1,450,000 to $1,750,000 in a
new  prototype  store.  Such  expenditures  consist  primarily of  approximately
$1,000,000 to $1,200,000 for the initial store inventory,  a portion of which is
financed by vendor  trade  credit,  and  approximately  $450,000 to $550,000 for
store fixtures and equipment.  Because of the redeployment of store fixtures and
equipment  from the 40 Closed  Stores to new stores,  the Company  expects store
fixture and equipment  expense to be limited to  approximately  $250,000 per new
store for fiscal 1998. In most cases,  building and land costs of  approximately
$1,450,000 to $1,750,000 per store are financed by  unaffiliated  developers who
lease the real estate to Pamida.  To expedite the construction  process,  Pamida
occasionally  may  construct  stores  on  sites  which  it  acquires,  with  the
expectation  that it subsequently  will enter into  sale-leaseback  transactions
with respect to such stores with unaffiliated investors.

      SALES AND MERCHANDISING.

     Pamida's  merchandising policy is to provide customers with one-stop family
shopping convenience and to feature nationally advertised brand-name products as
well as some private-label merchandise at attractive prices. Pamida operates its
stores  on a  self-service,  primarily  cash-and-carry  basis  and  runs  weekly
advertised  promotions  throughout the year. All of Pamida's  stores accept bank
credit cards,  which  accounted for 14.2% of total store sales during the fiscal
year ended February 2, 1997.

     Pamida's typical customers are  price-conscious  families across the income
spectrum.  To effectively  serve such customers,  the Company's  stores are open
seven days a week for an average of at least 75 hours per week.

     Pamida's two basic merchandise  divisions are softlines and hardlines.  The
softlines  division includes men's,  women's,  children's and infants' clothing,
footwear,  accessories and jewelry.  The hardlines division includes  categories
such as health and beauty aids,  automotive  accessories,  housewares,  cleaning
supplies,  hardware,  paint, sporting goods, toys, stationery,  small appliances
and electronic items, videos, compact discs and tapes, lawn and garden supplies,
linens and other domestics,  cameras and accessories, pet supplies and some food
and candy items.

     The Company  currently  owns and  operates  pharmacies  in 41 of its larger
stores,  and eight of Pamida's  other  stores  contain  prescription  pharmacies
leased to and operated by independent pharmacists. The pharmacies have proved to
be effective  in building  customer  loyalty and  attracting  customers  who are
likely to  purchase  other  items in  addition  to  prescription  drugs.  Pamida
intends,  whenever feasible in light of regulatory and personnel  considerations
and where  space  permits,  to include a pharmacy  in each of its new  prototype
stores and to add pharmacies to existing stores.

     During the fiscal  year ended  February  2, 1997,  the  hardlines  division
accounted  for  approximately  72% of Pamida's  total  sales,  while the apparel
division and the pharmacies accounted for 23% and 5%, respectively,  of Pamida's
total sales.

     Among the methods that the Company  employs to build  customer  loyalty and
satisfaction are weekly  advertised  specials,  competitive  pricing,  clean and
orderly stores,  friendly well-trained  personnel, a liberal return policy and a
wide variety of special  customer  services (such as wheelchairs for the elderly
and  handicapped,  restroom  facilities and water  fountains,  seating  benches,
speedy  check-out  lanes and  expedited  check cashing and raincheck and layaway
processing) offered under various customer-oriented themes such as "We Care" and
"We're  Listening".  Pamida  places  special  emphasis on  maintaining  a strong
in-stock  position in all merchandise  categories,  particularly with respect to
sale items.

     Pamida's business,  like that of most other mass merchandise retailers,  is
seasonal.  First quarter  sales  (February  through  April) are lower than sales
during the other three fiscal  quarters,  while fourth  quarter sales  (November
through January) in recent years have increased to approximately 30% of the full
year's  sales  and  normally  involve  a greater  proportion  of  higher  margin
merchandise.


      ADVERTISING AND PROMOTION.

     The Company's  extensive  advertising  primarily  utilizes  colorful weekly
circulars  developed  by  a  centralized   advertising  department  at  Pamida's
headquarters.  Such  circulars  advertise  brand-name  and other  merchandise at
significant  price  reductions and are inserted into local  newspapers or mailed
directly to customers.  Pamida also uses local shoppers  publications and coupon
books.  During  fiscal 1997,  Pamida  spent  approximately  $11,618,000  (net of
promotional  allowances  provided by vendors) on advertising,  which represented
approximately 1.8% of fiscal 1997 sales.


      PURCHASING AND DISTRIBUTION.

     Pamida  maintains a centralized  buying,  merchandising  and store planning
staff at its  executive  offices.  The  merchandising  department  includes  two
general merchandise managers, five hardlines divisional merchandise managers and
three  apparel  divisional   merchandise   managers.   Each  of  the  divisional
merchandise  managers  supervises  from  five to seven  buyers.  Members  of the
Company's  experienced  buying staff regularly  attend major trade shows,  visit
both domestic and overseas markets and meet with vendor  representatives  at the
Company's headquarters.

     The  merchandise  in the  Company's  stores is  purchased  from over  3,000
primary  manufacturers  and suppliers and numerous  other  vendors.  Centralized
purchasing enables Pamida to more effectively control inventory shrinkage and to
take advantage of promotional  programs and volume discounts  offered by certain
vendors. The Company continuously seeks to optimize merchandise costs, including
promotional allowances offered by its suppliers. Pamida also has centralized the
management  of  returned   merchandise,   which  enables  the  Company  to  most
effectively secure vendor credits and refunds with respect to such merchandise.

     The Company's  point-of-sale  data capture  equipment located in its stores
provides  current  information  to  Pamida's  buyers to assist  them in managing
inventories,   effecting   prompt   reorders  of  popular   items,   eliminating
slow-selling merchandise and reducing markdowns.

     Seaway  Importing  Company,  a wholly  owned  subsidiary  of Pamida,  Inc.,
imports a wide variety of merchandise,  including  sporting goods, pet supplies,
toys, electronic items, apparel, hair care items, painting supplies,  automotive
items and hardware, for sale in Pamida's stores.

     During fiscal 1997,  approximately 76% of Pamida's merchandise was supplied
to the stores through  Pamida's own  distribution  centers,  while the remaining
merchandise   was  supplied   directly  to  the  stores  by   manufacturers   or
distributors.

      COMPETITION.

     The mass merchandise retail business is highly  competitive.  The Company's
stores generally  compete with  supermarkets,  drug and specialty  stores,  mail
order and catalog  merchants  and, in some  communities,  department  stores and
other mass merchandise retailers. Competitors consist both of independent stores
and of regional and national chains,  some of which have  substantially  greater
resources than the Company. The type and degree of competition and the number of
competitors which Pamida's stores face vary significantly by market.

     Pamida  believes  that  the  principal  areas  of  competition  in the mass
merchandise retail industry are store location,  price,  merchandise variety and
quality and customer  service,  although  numerous other factors also affect the
competitive position of any particular store. Among the methods that the Company
employs  to build  customer  loyalty  and  satisfaction  are  weekly  advertised
specials,  competitive pricing, clean and orderly stores,  friendly well-trained
personnel,  a liberal  return  policy and a wide  variety  of  special  customer
services offered under themes such as "We Care" and "We're Listening".

     Pamida stores generally are located in small towns,  normally county seats,
where  there  often  is  little  or  no  competition  from  another  major  mass
merchandise  retailer and which may be either too small to support more than one
major mass merchandise  retailer  (thereby creating a potential barrier to entry
by a  major  competitor)  or too  small  to  attract  competitors  whose  stores
generally are designed to serve larger  populations.  The Company believes that,
in terms of sales,  it is the leading mass  merchandise  retailer in over 80% of
the communities in which its stores are located.

     At February 2, 1997, 119 of Pamida's 148 stores were located in communities
in which there was no direct local competition from other major mass merchandise
retailers. As of that date, Kmart, Alco, Wal-Mart,  Target and ShopKo had stores
in 16,  11,  6, 2 and 1  communities,  respectively,  where  Pamida  stores  are
located;  however,  because some of these communities have more than one of such
competitors,  only 29 Pamida  stores face  direct  local  competition  from such
retail chains. In recent years the Company's business strategy has been to focus
its store expansion  program on communities with less likelihood of the entry of
a new major  competitor,  but there can be no assurance that in the future major
competitors will not open additional stores in the Company's markets.

     Merchandise  prices  generally are  established on a zone basis at Pamida's
executive offices, although store managers are given discretion to adjust prices
of key items to meet local  competition  and to match a competitor's  advertised
prices.  Zone pricing allows the Company to establish prices at different levels
in different trade territories, based primarily on competitive conditions within
such territories,  rather than having a uniform pricing structure throughout the
entire  chain.   Pamida  conducts  a  continuous  program  of  competitor  price
comparisons that enables the Company to make merchandise price adjustments, when
necessary, to assure that the Company maintains a competitive position.

      EMPLOYEES.

     As of February 2, 1997, Pamida had approximately  5,700 employees,  of whom
approximately  2,800  were  full-time  and 2,900 were  part-time.  The number of
employees varies on a seasonal basis. None of Pamida's employees are represented
by a labor union, and the Company believes that its relations with its employees
are good.

     At  February  2, 1997,  the  average  length of  service  of the  Company's
management staff was as follows:

                                                         Average
                                                          Years
                                             Number     of Service
                                             ------     ----------
Top Management                                  2          15.3
Senior Vice Presidents and Vice Presidents     16           5.7
District Managers                              12          20.3
Pharmacy District Supervisors                   3           4.9
Store Managers                                148          10.7
Pharmacy Managers                              41           3.1


     Pamida's human resources  department is responsible for company-wide salary
and wage administration,  as well as all benefit-plan administration.  The human
resources  department works closely with store operations in the development and
administration of Pamida's store-level employee training programs.  In addition,
Pamida has an ongoing  program for the  development  of management  personnel to
fill  positions in all facets of the Company's  operations and makes a concerted
effort to identify and train potential  successors for all of its key middle and
senior managers.

Item 2.  PROPERTIES.

     At February 2, 1997, the Company owned 20 of its 148 store buildings, while
its remaining 128 stores operated in leased premises.  A substantial majority of
the Company's leases have renewal options,  with approximately 49% of the leases
having  unexpired  current  terms of five  years or more.  The  following  table
provides  information  relating to the  remaining  lease terms for the Company's
leased stores at February 2, 1997:


          Lease Expiring             Number of Leased Stores
       During the Period (1)                 2/02/97


          1/97 to 12/98                         5
          1/99 to 12/00                         5
          1/01 to 12/02                        10
          1/03 to 12/04                         8
            After 12/04                       100
                                              ---
               Total                          128
                                              ===
---------------
(1) Includes renewal options.


     Pamida's  management  believes that the physical condition of the Company's
stores  generally is very good.  All of the  Company's  stores are  continuously
updated to conform to Pamida's operating and merchandising standards.

     The Company's  general offices and one of its two distribution  centers are
located in a 215,000  square  foot  building  in Omaha,  Nebraska,  owned by the
Company.  This facility contains  approximately 135,000 square feet of warehouse
space and approximately 80,000 square feet of office space.

     Pamida's   primary   distribution   center   is  a  336,000   square   foot
"flow-through"   facility   situated  on  a  22-acre  tract  of  land  in  Omaha
approximately  one mile  from the  distribution  center  described  above.  This
facility,  which is owned by Pamida, serves primarily as a redistribution center
for bulk  shipments  and  promotional  merchandise  on which cost savings can be
realized through  quantity  purchasing.  Pamida also owns an additional  10-acre
tract of land  adjacent to such  distribution  center  which  would  permit that
facility to be further expanded by almost 60%.

     In October  1996,  the Company  agreed to lease a new  200,000  square foot
distribution  facility to be located in Lebanon,  Indiana.  Construction of this
new  facility,  currently  is  underway,  and the  facility  is  expected  to be
operational  during the second  quarter of the current year.  This  distribution
facility  will replace the 100,000  square foot  warehouse  facility  previously
operated by the Company in the Milwaukee,  Wisconsin area,  which was closed and
the lease  terminated in December 1996 due to eminent  domain action by the City
of Glendale,  Wisconsin.  Under the Wisconsin administrative code, Pamida has up
to two years to file a claim for  "Actual and  Reasonable  Moving  Expenses"  in
connection  with the  Company's  relocation  to  Lebanon,  Indiana.  The Lebanon
facility  also will be used as a  redistribution  center for bulk  shipments and
promotional merchandise.

     Pamida also has a warehouse facility in Omaha which contains  approximately
41,000 square feet of space and is located immediately adjacent to the Company's
general  offices.  This  warehouse,  which is owned by  Pamida,  is used for the
processing  of  merchandise  to be returned  to vendors  and by the  advertising
department in connection with its printing operations.

     In  addition  to its retail  stores,  distribution  centers  and  warehouse
facility,  Pamida's  tangible  assets include  inventories,  warehouse and store
fixtures  and  equipment,   merchandise  handling  equipment,  office  and  data
processing equipment, motor vehicles and an airplane.

Item 3.  LEGAL PROCEEDINGS.

     Pamida is a party to a number of lawsuits  incidental to its business,  the
outcome of which,  both  individually  and in the aggregate,  is not expected to
have  a  material  adverse  effect  on the  Company's  operations  or  financial
condition.

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

         None.

                                      * * *

EXECUTIVE OFFICERS OF THE REGISTRANT.

     The present executive  officers of Holdings are Steven S. Fishman (Chairman
of  the  Board,  President  and  Chief  Executive  Officer)  Frank  A.  Washburn
(Executive Vice President, Chief Operating Officer and Secretary), and George R.
Mihalko (Senior Vice President, Chief Financial Officer, Treasurer and Assistant
Secretary).  Information  concerning  such  executive  officers  appears  in the
following paragraphs:

     Mr. Fishman, age 46, has served as President and Chief Executive Officer of
Holdings  and  Pamida,  Inc.  since  April 1993 and as  Chairman of the Board of
Holdings  and Pamida,  Inc.  since  August  1993.  From 1988 to March 1993,  Mr.
Fishman was  employed  by Caldor,  Inc.  as Senior  Vice  President  and General
Merchandise Manager-Homelines. Mr. Fishman has been a director of Holdings since
1993 and also is a director of Pamida, Inc.

     Mr. Washburn, age 48, has served as Chief Operating Officer of Holdings and
Pamida,  Inc.  since March 1997,  Executive  Vice  President  of Holdings  since
September 1995 and Executive Vice President of Pamida, Inc. since February 1995.
Mr.  Washburn  previously  served as Senior Vice President - Human  Resources of
Pamida,  Inc.  from  1993 to 1995 and as Vice  President  - Human  Resources  of
Pamida,  Inc.  from 1987 to 1993.  Mr.  Washburn  also  serves as  Secretary  of
Holdings and Pamida Inc. Mr. Washburn  joined Pamida's  predecessor in 1965. Mr.
Washburn  has been a director of  Holdings  since 1995 and also is a director of
Pamida, Inc.

     Mr. Mihalko,  age 42, has served as Senior Vice President,  Chief Financial
Officer,  Treasurer and Assistant  Secretary of Holdings and Pamida,  Inc. since
September 1995.  From February 1993 to September 1995,  Mr. Mihalko was employed
by Pier 1 Imports,  Inc.  as Vice  President  and  Treasurer.  From July 1990 to
February  1993,  Mr.  Mihalko was employed by  Burlington  Northern  Railroad as
Assistant Treasurer.

     The  executive  officers of Holdings may be removed  from their  respective
positions  as such  officers at any time by the Board of  Directors of Holdings,
subject to any rights which they may have under  employment  agreements with the
Company.

                                     PART II

Item  5.  MARKET  FOR  REGISTRANT'S  COMMON  EQUITY  AND  RELATED
            STOCKHOLDER MATTERS.

     The Common  Stock of Holdings  has been  listed and traded on the  American
Stock Exchange since  September 18, 1990.  Prior to that date, no market existed
for such Common Stock.

     The high and low sales  prices  for the  Common  Stock of  Holdings  on the
American Stock Exchange for fiscal 1997 and fiscal 1996 are as follows:

      Fiscal 1997:                  High          Low

     4th Quarter                  2 5/16        1 1/2
     3rd Quarter                  2 3/8         1 5/8
     2nd Quarter                  3 1/4         2 1/8
     1st Quarter                  3 1/4         2 1/8


      Fiscal 1996:                  High          Low

      4th Quarter                 4 3/16        2 1/2
      3rd Quarter                 4 5/8         2 1/4
      2nd Quarter                 6             4
      1st Quarter                 7 3/4         6

     As of March 24, 1997 there were 297 record  holders of the Common  Stock of
Holdings.

     Holdings has never  declared or paid any cash dividends on its Common Stock
and does not intend to pay any such  dividends in the  foreseeable  future.  The
obligations  of Pamida,  Inc.  under certain of its financing  arrangements  are
guaranteed  by Holdings.  Such  financing  arrangements  presently  prohibit the
payment of  dividends  by  Holdings on its Common  Stock and also  significantly
restrict  the  ability  of  Pamida,   Inc.  to  pay   dividends  or  make  other
distributions to Holdings.

Item 6.  SELECTED FINANCIAL DATA.

                   PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
                      SELECTED CONSOLIDATED FINANCIAL DATA
         (Dollar amounts in thousands - except per share and other data)

<TABLE>
<CAPTION>
                                                                 Fiscal Years Ended
                                            ----------------------------------------------------------------
                                            February 2,   January 28,   January 29,  January 30,  January 31,
                                               1997 (1)     1996          1995         1994         1993
                                            -----------   -----------   -----------  -----------  -----------
<S>                                         <C>           <C>           <C>          <C>          <C>
INCOME STATEMENT DATA:
Sales ...................................   $ 633,189     $ 736,315     $ 711,019    $ 656,910    $ 622,941

Gross profit ............................     154,090       177,688       177,367      158,906      154,695
Selling, general and
   administrative expenses ..............     125,105       151,096       143,585      133,921      124,225
                                            ---------     ---------     ---------    ---------    ---------
Operating income ........................      28,985        26,592        33,782       24,985       30,470
Interest expense ........................      29,781        29,526        27,367       26,588       25,147
Long-lived asset write-off ..............          --        78,551            --           --           --
Store closing costs .....................          --        21,397            --           --           --
                                            ---------     ---------     ---------    ---------    ---------
(Loss) income before provision for income
   taxes and extraordinary item .........        (796)     (102,882)        6,415       (1,603)       5,323
Income tax (benefit) provision ..........          --        (7,863)        3,500          427        3,061
                                            ---------     ---------     ---------    ---------    ---------

(Loss) income before extraordinary item .        (796)      (95,019)        2,915       (2,030)       2,262
Extraordinary item ......................          --           371            --       (4,943)          --
                                            ---------     ---------     ---------    ---------    ---------

Net (loss) income .......................        (796)      (94,648)        2,915       (6,973)       2,262
Less preferred dividends
   and discount amortization ............         391           362           361          359          357
                                            ---------     ---------     ---------    ---------    ---------

Net (loss) income available
   for common shares ....................   $  (1,187)    $ (95,010)    $   2,554    $  (7,332)   $   1,905
                                            =========     =========     =========    =========    =========

Weighted average number of common and
   common equivalent shares outstanding     5,004,942     5,034,536     5,024,745    4,999,984    4,999,984
                                            =========     =========     =========    =========    =========

Net (loss) earnings per common share:
   (Loss) earnings before extraordinary
     item .............................     $    (.24)    $  (18.94)    $     .51    $    (.48)   $     .38
   Extraordinary item .................            --     $     .07            --         (.99)          --
                                            ---------     ---------     ---------    ---------    ---------

   Net (loss) earnings per common share     $    (.24)    $  (18.87)    $     .51    $   (1.47)   $     .38
                                            =========     =========     =========    =========    =========

BALANCE SHEET DATA:
    Working capital .....................   $  28,673     $  34,082     $  46,725    $  41,323    $  16,515
    Total assets ........................     269,188       258,525       354,367      314,621      309,629
    Long-term debt ......................     168,000       163,746       162,505      160,315      132,006
    Obligations under capital leases ....      33,999        36,559        43,050       35,618       37,164
    Redeemable preferred stock ..........       1,875         1,826         1,779        1,734        1,690
    Common shareholders' (deficit) equity     (87,303)      (86,116)        8,876        6,322       13,654

OTHER DATA:
    Team Members ........................       5,700         7,200         7,200        6,100        5,900
    Number of stores ....................         148           184           184          173          178
    Retail square feet (in millions) ....        4.35          5.22          5.09         4.68         4.75

(1)  Represents a 53 week year.

</TABLE>

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


                   PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                          (Dollar amounts in thousands)


       YEAR ENDED FEBRUARY 2, 1997 COMPARED TO YEAR ENDED JANUARY 28, 1996

     SALES - As discussed  in Note O to the  financial  statements,  the Company
closed  forty  stores  at the end of  fiscal  1996  in  unprofitable  or  highly
competitive  markets  which did not fit the  Company's  niche  market  strategy.
Consequently,  the  Company  experienced  a planned  decrease in total sales for
fiscal 1997 of $103,126 or 14.0%  compared to fiscal 1996 due  primarily  to the
reduced  number of stores.  During  fiscal  1997 the  Company  opened  eight new
prototype  stores,  of  which  six are  located  in new  markets  and  two  were
relocations;  the Company also closed two stores, resulting in a net increase in
selling area during the fiscal year of  approximately  216,000  square feet (not
including  changes  relating  to the forty  stores  closed as of fiscal year end
1996) to a total of 4,348,000 square feet. As of February 2, 1997, the Company's
store base  included 35 of the  Company's  most recent  store  prototype,  which
represented 28.7% of the Company's total selling square feet.

     Comparable  store sales during the 53-week fiscal 1997 period  decreased by
$8,893 or 1.5% from the 52-week fiscal 1996 period.  Comparable store sales on a
53-week to 53-week basis  decreased by 2.6%.  Sales were  affected  primarily by
slowed warehouse  distributions to stores as a result of the implementation of a
new  warehouse  inventory  management  system  initiated in the first quarter of
fiscal 1997.  The slowed  distributions  caused a  deterioration  of merchandise
in-stock  positions in most of the  Company's  stores,  resulting in lost sales.
While  implementation  of the warehouse  system was largely  completed by August
1996, and in-stock positions at the stores improved  thereafter,  sales remained
below management  expectations due to reduced customer traffic continuing in the
third and fourth  quarters.  Comparable  sales also were affected during much of
the year by low-margin  clearance  sales in fiscal 1996 which were not necessary
at the  same  level in  fiscal  1997.  However,  beginning  late in the  holiday
shopping  season and  continuing  through fiscal year end, sales improved as the
Company  demonstrated to customers its improved in-stock position in all product
categories.

     The Company  experienced  substantial  comparable  store sales increases in
fiscal 1997 in several merchandise  categories,  the most dramatic of which were
in the pharmacy prescription,  junior apparel,  grocery and ready-to-wear areas.
Comparable  store sales gains also were  generated in the hosiery,  team sports,
camera,  stationery,  health aids and bath categories.  The Company  experienced
comparable  store sales  decreases  in several  categories.  The largest  dollar
decreases  on a  comparable  store  basis were in the  electronics,  automotive,
misses bottoms, men's shoes, electrical and appliance areas. Management believes
that subtle  adjustments made to the Company's  softlines strategy at the end of
fiscal 1996 to meet customer demand for a deeper  selection of basic apparel had
a positive impact on sales and margins in softlines during fiscal 1997.

     GROSS PROFIT - Gross profit  dollars were affected by the reduced number of
stores in operation during fiscal 1997 as compared to fiscal 1996. The Company's
merchandise  gross profit as a percentage  of sales  improved to 27.8% in fiscal
1997 from  26.8% in fiscal  1996.  However,  this  improvement  was  diluted  by
additional costs related to the  implementation  of the new warehouse  inventory
management  system  discussed  above.  Warehouse costs increased to $13,457 from
$11,066  last year and  increased  as a percent  of sales to 2.1% from 1.5% last
year.  Delivery  costs  decreased to $7,637 in fiscal 1997 from $8,845 last year
and amounted to 1.2% of sales in both years. Accordingly, gross profit decreased
by $23,598,  or 13.3%,  to $154,090 in fiscal 1997 from  $177,688 in fiscal 1996
but, as a percentage  of sales,  increased to 24.3% in fiscal 1997 from 24.1% in
fiscal 1996.

     SELLING, GENERAL AND ADMINISTRATIVE expense decreased $25,991, or 17.2%, to
$125,105 in fiscal 1997 from  $151,096 in fiscal 1996. As a percentage of sales,
selling,  general and administrative  expense decreased to 19.8% from 20.5% last
year.  This  reduction  was largely  attributable  to  reductions in store level
expenses. Store payroll, controllable and occupancy expenses accounted for 64.2%
of the total  decrease  in  selling,  general  and  administrative  expense  and
decreased  by  14.5%,  17.5%  and  13.9%,  respectively.  Selling,  general  and
administrative  expense  also was  positively  impacted by a 28.9%  reduction in
advertising  costs which  accounted for 18.2% of the gross  decrease in selling,
general and administrative  expense. All of these areas of expense were impacted
by the  elimination of costs related to the forty stores which were closed as of
the end of fiscal 1996.  Selling,  general and  administrative  expense also was
impacted by an 11.0%  decrease in  corporate  general and  administrative  costs
which  accounted  for 11.3% of the  gross  decreases  in  selling,  general  and
administrative  expense. The major components of this decrease were decreases in
the net costs of insurance,  professional  fees,  management bonuses and related
fringe benefits.

     Selling, general and administrative expense also was positively impacted by
the elimination of amortization  of goodwill and favorable  leasehold  interests
resulting  from the  write-off  of these  items in the fourth  quarter of fiscal
1996. The decreases in selling,  general and administrative  expense were offset
by a $1,246 reduction in other income which was attributable largely to one-time
gains realized in fiscal 1996,  primarily  from the sale of idle  transportation
company assets.

     The Company is  continuing  to focus on  controlling  selling,  general and
administrative  expenses.  Store  operating  expenses  as a percent of sales are
anticipated  to remain  relatively  constant  in fiscal  1998.  Certain  expense
categories  are  anticipated  to increase  somewhat as a percent of sales due to
more normal  clearance  activity  and expected  increases  in interest  expense,
information  systems costs,  store payroll  expenses (due to federally  mandated
minimum wage increases) and incentive compensation. The Company expects to begin
to realize operating efficiencies from systems enhancements in the warehouse and
distribution  areas in fiscal 1998 and in the  merchandising  areas beginning in
the second half of fiscal 1999. Further expense leveraging is expected in future
years through internal growth as well as the addition of new stores.

     INTEREST  expense  increased  marginally  by $255 or 0.9% for  fiscal  1997
compared to fiscal 1996.  The  increase in interest  expense for fiscal 1997 was
attributable  primarily to higher usage of the  revolving  line of credit and to
the  outstanding  promissory  notes  of  the  Company  which  require  quarterly
compounding  interest  payments to be paid in kind. These increases were largely
offset by decreased  interest related to lower average  outstanding  capitalized
lease obligations in fiscal 1997 compared to fiscal 1996.

     INCOME TAX PROVISION - No income tax benefit on losses for fiscal 1997 will
be  recorded  until  the  Company  can  establish  with a  reasonable  degree of
certainty  the  potential  utilization  of certain tax loss carry  forwards from
prior year store closing charges. The effective tax rate in fiscal 1996 was 7.6%
and was impacted by the  non-deductible  amortization  and write-off of goodwill
and the reserves recorded to offset the deferred tax assets.


      YEAR ENDED JANUARY 28, 1996 COMPARED TO YEAR ENDED JANUARY 29, 1995


WRITE-OFF OF LONG-LIVED ASSETS AND STORE CLOSING CHARGE.

     During  fiscal  1996,  weak  trends in the retail  industry  combined  with
increasing  competition  lowered the  operating  results of the  Company.  While
operating  results in the first three  quarters  of the year were  behind  plan,
management focused on strategies to achieve its plan during the important fourth
quarter season.

     During the fourth quarter,  management  reviewed its expectations for near-
and long-term  performance of the Company,  revised its earnings projections and
reassessed the recoverability of the Company's long-lived assets.

     As explained in Note N to the financial  statements,  in the fourth quarter
of fiscal 1996, the Company adopted Statement of Financial  Accounting Standards
No.121 "Accounting For the Impairment of Long-Lived Assets and Long-Lived Assets
to Be Disposed Of" (SFAS 121). This financial  accounting  standard requires the
Company to perform an  analysis of the  recoverability  of the net book value of
long-lived  assets. The Company analyzed cash flows on an individual store basis
to assess  recoverability of store level long-lived  assets including  allocated
goodwill. As a result of this analysis, impairment totaling $27,228 on a pre-tax
basis was indicated at certain stores.

     The Company also analyzed the value of its remaining goodwill and favorable
leasehold  interests not impaired under the store-level  SFAS 121 analysis using
its historical method under Accounting  Principles Board Opinion No. 17 (APB 17)
and  determined  that such  remaining  amounts  also were  impaired.  The APB 17
analysis  projected  a  fifteen-year  forecast  period  and  produced  $5,186 of
aggregate  undiscounted  adjusted net income,  including  projected adjusted net
losses for fiscal 1997 of $4,522,  which  included  interest  expense of $26,242
paid in cash and interest payable `in kind' (PIK) of $4,453, and for fiscal 1998
of $2,863,  which included cash interest  expense of $26,581 and PIK interest of
$5,121.   For  fiscal  1999,  the  Company  projected  adjusted  net  income  of
approximately  $967,  which  included  cash  interest  expense of  approximately
$26,581 and PIK interest of $5,889. Due to the uncertainty of projections beyond
1999,  this level of adjusted net income was assumed to continue for each of the
remaining fiscal years in the projection period. Accordingly, a non-cash pre-tax
charge  totaling  $51,323 was recorded as  indicated in Note N to the  financial
statements.

     Also,  management's  fourth quarter review of individual stores' operations
and  cash  flows  resulted  in  the  identification  of  forty  unprofitable  or
competitive market stores which did not fit the Company's niche market strategy.
Consequently, a pre-tax charge totaling $21,397 was recorded at January 28, 1996
to cover the costs necessary to close these stores as indicated in Note O to the
financial statements.

     SALES for fiscal 1996  increased  $25,300 or 3.6%  compared to fiscal 1995.
Comparable  store sales  decreased  $4,160 or 0.7%.  Excluding  the forty stores
closed as of the end of fiscal 1996,  comparable  store sales increased by 0.1%.
During fiscal 1996 the Company  opened ten new  prototype  stores of which seven
were located in new markets and three were relocations.  The Company also closed
ten stores (excluding the 40 stores identified to be closed as discussed above),
resulting  in a net  increase in selling area of  approximately  126,000  square
feet.  The  openings  and  closings of stores over the last two fiscal years has
resulted in a net increase in sales of $33,662.

     The modest overall sales  increases  were affected by weak consumer  demand
which was  generally  experienced  throughout  the retail  industry.  Management
believes that the Company's  geographical niche market positioning combined with
its ability to distribute  quality  merchandise  on a more timely basis tempered
these generally weak retail trends.  The Company  experienced  substantial sales
increases in several merchandise categories,  the most dramatic of which were in
the  housewares,  prescriptions,  junior  apparel  and  bath  and  floor  areas.
Substantial  sales gains also were  generated  in paper,  cleaning  and seasonal
categories.   The  Company  experienced  sales  declines  in  several  softlines
categories, primarily women's apparel.

     The initial  operating  results of the seven new prototype stores and three
relocated  prototype  stores  opened  during  fiscal 1996 exceeded the Company's
original  sales  projections  and reflected  the success of the Company's  niche
market  positioning  and  merchandising  strategies.  At  fiscal  year end 1996,
twenty-seven  new format  stores were in  operation,  representing  14.7% of all
stores and 18.3% of total Company selling square feet.

     GROSS PROFIT  increased $321 or 0.2% in fiscal 1996 compared to fiscal 1995
and, as a percentage of sales,  decreased  from 24.9% in fiscal 1995 to 24.1% in
fiscal  1996.  The decline in gross  profit  percent in fiscal 1996  compared to
fiscal 1995 was attributable  primarily to the increased markdown activity which
was necessary to counter sluggish customer demand during most of the year and to
meet customers' pricing expectations during this difficult period for the retail
industry.  Markdown expense increased by 23.8% over such expense in fiscal 1995.
During  fiscal 1996,  the Company  experienced  margin  dollar  increases due to
higher  sales  in  several  merchandise  categories,  most  notably  stationery,
prescriptions, bath and floor and seasonal. While the Company experienced margin
dollar  decreases  in  several  softlines  categories,  they  were  concentrated
primarily in the women's apparel and fashion areas.

     SELLING,  GENERAL AND ADMINISTRATIVE  expense increased $7,511 or 5.2% from
fiscal  1995.  As a percentage  of sales,  selling,  general and  administrative
expense   increased  from  20.2%  in  fiscal  1995  to  20.5%  in  fiscal  1996.
Approximately  40%  of  the  total  gross  increase  in  selling,   general  and
administrative  expense was  attributable  to  increases  in  corporate  general
administrative   costs.   Payroll  and  fringe   benefits  costs   increased  by
approximately   13%  due  to  the  effect  of  a  full  year's  salary  for  the
merchandising, real estate and other corporate personnel added in fiscal 1995 as
well as the costs related to information  systems  personnel added during fiscal
1996 to support  the new  systems  implementations  to enhance  efficiencies  in
warehouse,  distribution  and  merchandising.  In  addition,  professional  fees
increased  approximately 54% due primarily to information  systems and strategic
planning  consulting  costs as well as  increases  in legal fees  related to new
store construction and financing.

     In  addition to the  corporate  general and  administrative  cost  changes,
advertising  expenses as a percent of sales  increased  from 2.0% to 2.2% due to
increases in the costs of paper and postage.  This  accounted for  approximately
25% of the gross increase in selling,  general and administrative expense. Store
controllable  expenses  increased by 8%, which also accounted for  approximately
25% of the gross increase in selling,  general and administrative  expense.  The
change in store controllable expense was due primarily to increases in the costs
of security  equipment  rentals,  charge card  processing fees (due to increased
credit card sales  volume),  utilities  and  inventory  counting (as a result of
changes  in  procedures  to  allow  for  detailed  SKU  level   counts).   Store
controllable  costs were partially reduced by decreases in supplies,  travel and
entertainment costs. Store fixed costs as a percent of sales increased from 2.8%
to 3.0% due primarily to increases in rent expense.  These increases in selling,
general and  administrative  expense were offset in part by an increase in other
income resulting primarily from the sale of idle transportation assets.

     INTEREST  expense  increased  $2,159 or 7.9% for fiscal  1996  compared  to
fiscal 1995. The increase in interest  expense for fiscal 1996 was  attributable
primarily to higher usage of the revolving  line of credit in fiscal 1996 and to
the  outstanding  promissory  notes  of  the  Company  which  require  quarterly
compounding  interest  payments to be paid in kind.  The Company also had higher
average  outstanding  capitalized  lease  obligations in fiscal 1996 compared to
fiscal 1995.

     INCOME  TAX  PROVISION  - The  effective  tax rate was 7.6% in fiscal  1996
compared to 54.6% in fiscal  1995.  The  effective  tax rate for fiscal 1996 was
impacted by the  non-deductible  amortization  and write-off of goodwill and the
reserve  recorded  to offset  the  deferred  tax  assets.  In fiscal  1995,  the
effective  tax rate was higher than the normal  statutory  rates  primarily as a
result of non-deductible goodwill amortization.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  business is seasonal  with first  quarter  sales  (February
through  April)  being lower than sales during the other three  quarters,  while
fourth quarter sales (November  through January) have represented  approximately
30% of the full  year's  retail  sales in recent  years and  normally  involve a
greater proportion of higher margin sales.

     The Company has satisfied  its seasonal  liquidity  requirements  primarily
through a combination  of funds  provided from  operations  and from a revolving
credit facility.  Funds used by operating  activities  totaled $11,577 in fiscal
1997,  and funds  provided  from  operations  totaled  $4,967 in fiscal 1996 and
$3,816 in fiscal 1995.  The change in cash flow from operating  activities  from
fiscal 1996 to fiscal 1997 was  primarily the result of planned net increases in
inventory and other operating assets and decreases in accounts payable and other
operating  liabilities.  These  decreases  in cash flow  were  offset in part by
changes  in  deferred  income  taxes.  The  positive  change  in cash  flow from
operating activities from fiscal 1995 to fiscal 1996 was primarily the result of
net decreases in inventory and accounts  payable.  These  increases in cash flow
were offset in part by current and deferred tax payable changes,  principally as
a result of the store  closing  charge,  the  changes  in  profitability  of the
continuing operations and changes in other operating assets and liabilities.

     Effective  March 17, 1997, the term of Pamida,  Inc.'s  (Pamida)  committed
Loan and Security  Agreement (the  Agreement) was extended to March 2000 and the
maximum  borrowing  limit of the facility was increased to $95,000 from $70,000,
which had been the  limit  throughout  fiscal  1997.  Prior to March  17,  1997,
borrowings under the Agreement bore interest at a rate which was 0.75% per annum
greater than the applicable  prime rate.  Effective  March 17, 1997,  borrowings
under the  Agreement  bear  interest  at a rate which is tied to the  applicable
prime rate or the London Interbank  Offered Rate (LIBOR),  generally at Pamida's
discretion.  The  amounts  Pamida is  permitted  to borrow are  determined  by a
formula based upon the amount of Pamida's eligible  inventory from time to time.
Such  borrowings are secured by security  interests in all of the current assets
(including  inventory)  of Pamida and by liens on certain real estate  interests
and other property of Pamida.  The Company and two  subsidiaries  of Pamida have
guaranteed the payment and  performance of Pamida's  obligations  under the Loan
and Security  Agreement and have pledged some or all of their respective assets,
including the stock of Pamida owned by the Company, to secure such guarantees.

     The  Agreement  contains   provisions   imposing  operating  and  financial
restrictions  on the Company.  Certain  provisions of the Agreement  require the
maintenance of specified  amounts of tangible net worth (as defined) and working
capital (as defined) and the  achievement of specified  minimum  amounts of cash
flow (as defined).  Other restrictions in the Agreement and those provided under
the Indenture relating to the Senior Subordinated Notes will affect, among other
things, the ability of Pamida to incur additional  indebtedness,  pay dividends,
repay  indebtedness  prior to its  stated  maturity,  create  liens,  enter into
leases,  sell  assets  or  engage  in  mergers  or  acquisitions,  make  capital
expenditures  and make  investments.  These covenants  currently have not had an
impact on the Company's  ability to fully utilize the revolving credit facility.
However,  certain of the covenants,  such as those which restrict the ability of
the Company to incur  indebtedness  or  encumber  its  property or which  impose
restrictions  on  or  otherwise  limit  the  Company's   ability  to  engage  in
sale-leaseback  transactions,  may at some future time  prevent the Company from
pursuing its store expansion program at the rate that the Company desires.

     Obligations  under the  Agreement  were  $57,115  at  February  2, 1997 and
$31,588 at January 28, 1996.  As noted  above,  this  facility  expires in March
2000, and the Company intends to refinance any outstanding balance by such date.
Borrowings  under the Agreement are senior to the Senior  Subordinated  Notes of
the Company. The Company had long-term debt and obligations under capital leases
of $201,999 at February 2, 1997 and $200,305 at January 28, 1996.  The Company's
ability  to  satisfy  scheduled  principal  and  interest  payments  under  such
obligations in the ordinary  course of business is dependent  primarily upon the
sufficiency  of the  Company's  operating  cash flow.  At February 2, 1997,  the
Company was in compliance with all covenants  contained in its various financing
agreements.

     On December  18,  1992,  the  promissory  notes of the Company were amended
effective  as of  December 1, 1992 to provide  that,  until the  obligations  of
Pamida and the Company under  certain of Pamida's  credit  agreements  have been
repaid,  the quarterly  interest payments on the promissory notes of the Company
will be paid in kind.  Pamida  paid the  Company  $315 in  fiscal  1996  under a
tax-sharing  agreement to enable the Company to pay  quarterly  dividends to its
preferred  stockholders.  During  fiscal 1996,  the Company  received  $967 from
Pamida under a tax-sharing agreement as a reimbursement for certain tax benefits
derived by Pamida. Such remittance,  along with $18 from the exercise of certain
stock options,  was used by the Company to redeem Subordinated  Promissory Notes
as  described  in Note L to the  financial  statements,  to  repay  intercompany
balances totaling $29, and to pay quarterly  dividends on preferred stock. Since
the Company  conducts no operations of its own, the only cash requirement of the
Company relates to preferred  stock dividends in the aggregate  annual amount of
approximately  $316; and Pamida is expressly permitted under its existing credit
facilities  to pay  dividends  to the  Company  to  fund  such  preferred  stock
dividends.  However, the General Corporation Law of the State of Delaware, under
which the Company and Pamida are  incorporated,  allows a corporation to declare
or pay a dividend  only from its surplus or from the current or the prior year's
earnings.  Due to the  accumulated  deficit  resulting  primarily from the store
closings and the write-off of goodwill and other long-lived assets recognized in
the fourth quarter of fiscal 1996, the Company and Pamida did not declare or pay
any cash  dividends in fiscal 1997 and may pay cash  dividends in ensuing  years
only to the extent that the Company and Pamida satisfy the applicable  statutory
standards  which include the Company's  having a net worth equal to at least the
aggregate par value of the preferred  stock which amounts to $2. The  cumulative
dividend  rate on the  preferred  stock  increases  by 0.5% per quarter  (with a
maximum  aggregate  increase of 5%) on each quarterly  dividend  payment date on
which the  preferred  stock  dividends  are not paid  currently  on a cumulative
basis.  Any unpaid  dividends are added to the  liquidation  value until paid in
cash.  Such  nonpayment of preferred  stock  dividends  does not  accelerate the
redemption rights of the preferred stockholders.

     The Company made capital  expenditures of $4,947 in fiscal 1997 compared to
$9,265 during fiscal 1996.  The Company plans to open three new stores in fiscal
1998 and will consider additional  opportunities for new store locations as they
arise.  Total capital  expenditures are expected to be  approximately  $9,500 in
fiscal 1998. The Company expects to fund these  expenditures from cash flow from
its  operations.  The costs of buildings  and land for new store  locations  are
expected  to be  financed  by  operating  or capital  leases  with  unaffiliated
landlords.  The  Company's  expansion  program  also will  require  inventory of
approximately  $1,000 to $1,200 for each new  market  store,  which the  Company
expects to finance through trade credit, borrowings under the Agreement and cash
flow from operations.

     The recent changes to the Agreement,  along with expected  improvements  in
the Company's cash flow from operations,  should provide  adequate  resources to
meet the Company's near term liquidity  requirements.  On a long-term basis, the
Company's  expansion  will require  continued  investments  in store  locations,
working capital and distribution and  infrastructure  enhancements.  The Company
expects to continue to finance  some of these  investments  through  leases from
unaffiliated  landlords,  trade credit,  borrowings under the Agreement and cash
flow from operations but ultimately will need to explore  additional  sources of
funds which may include capital structure changes. Currently, it is not possible
for the  Company  to  predict  with  any  certainty  either  the  timing  or the
availability of such additional financing.

INFLATION

     The Company  uses the LIFO method of inventory  valuation in its  financial
statements;  as a result,  the cost of  merchandise  sold  approximates  current
costs.  The Company's  rental expense is generally  fixed and,  except for small
amounts of percentage  rents and rentals  adjusted by  cost-of-living  increases
tied to the Consumer  Price Index or interest  rates,  has not been  affected by
inflation.

FORWARD-LOOKING STATEMENTS

     This management's  discussion and analysis contains certain forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 (the "1995  Act").  Such  statements  are made in good faith by the Company
pursuant to the safe-harbor provisions of the 1995 Act. In connection with these
safe-harbor  provisions,  this  management's  discussion  and analysis  contains
certain forward-looking  statements which reflect management's current views and
estimates  of  future  economic  circumstances,   industry  conditions,  company
performance and financial results.  The statements are based on many assumptions
and factors  including sales results,  expense levels,  competition and interest
rates  as well as  other  risks  and  uncertainties  inherent  in the  Company's
business,  capital structure and the retail industry in general.  Any changes in
these  factors  could result in  significantly  different  results.  The Company
further cautions that the  forward-looking  information  contained herein is not
exhaustive  or  exclusive.   The  Company  does  not  undertake  to  update  any
forward-looking  statements  which may be made from time to time by or on behalf
of the Company.

Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


                  PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
                         INDEPENDENT AUDITORS' REPORT





INDEPENDENT AUDITORS' REPORT
Board of Directors
Pamida Holdings Corporation
Omaha, Nebraska



     We  have  audited  the  consolidated   balance  sheet  of  Pamida  Holdings
Corporation and subsidiary as of February 2, 1997, and the related  consolidated
statements of operations, common stockholders' equity and cash flows for each of
the  years  ended  February  2,  1997 and  January  29,  1995.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.  The consolidated  balance sheet of Pamida Holdings  Corporation and
subsidiary as of January 28, 1996,  and the related  consolidated  statements of
operations,  common  stockholders'  equity  and cash  flows  for the year  ended
January 28, 1996, were audited by other auditors,  whose report, dated March 26,
1996,  expressed  an  unqualified  opinion on those  statements  and included an
explanatory  paragraph  that  described  the  adoption of Statement of Financial
Accounting  Standards  No. 121,  "Accounting  for the  Impairment  of Long-Lived
Assets and for Long-Lived Assets to Be Disposed Of."

     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,  the consolidated  financial  statements  referred to above
present  fairly,  in all material  respects,  the  financial  position of Pamida
Holdings  Corporation  and subsidiary as of February 2, 1997, and the results of
their  operations  and their cash flows for each of the years ended  February 2,
1997 and January 29,  1995 in  conformity  with  generally  accepted  accounting
principles.





/s/ DELOITTE & TOUCHE LLP

    Omaha, Nebraska
    March 7, 1997
    (March 17, 1997 as to Note E)

                                       16
<PAGE>

                       REPORT OF INDENPENDENT ACCOUNTANTS



Board of Directors
Pamida Holdings Corporation
Omaha, Nebraska

We have audited the accompanying  consolidated  balance sheet of Pamida Holdings
Corporation and Subsidiary as of January 28, 1996, and the related  consolidated
statements of  operations,  common  stockholders'  equity and cash flows for the
year then  ended.  These  financial  statements  are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all material  respects,  the  financial  position of Pamida Holdings
Corporation  and  Subsidiary  as of January 28,  1996,  and the results of their
operations  and their cash flows for the year then  ended,  in  conformity  with
generally accepted accounting principles.

As discussed in Note N to the  consolidated  financial  statements,  the Company
adopted Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of."



/s/ Coopers & Lybrand L.L.P.

Chicago, Illinois
March 26, 1996



                   PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              (Dollar amounts in thousands, except per share data)
<TABLE>
<CAPTION>
                                                                Years Ended
                                                  -----------------------------------------
                                                  February 2,    January 28,    January 29,
                                                     1997            1996           1995
                                                  (53 Weeks)      (52 Weeks)     (52 Weeks)
                                                  -----------    -----------    -----------

<S>                                               <C>            <C>            <C>
Sales .........................................   $   633,189    $   736,315    $   711,019
Cost of goods sold ............................       479,099        558,627        533,652
                                                  -----------    -----------    -----------
Gross profit ..................................       154,090        177,688        177,367
                                                  -----------    -----------    -----------
Expenses:
    Selling, general and administrative .......       125,105        151,096        143,585
    Interest ..................................        29,781         29,526         27,367
    Long-lived asset write-off ................            --         78,551             --
    Store closing costs .......................            --         21,397             --
                                                  -----------    -----------    -----------
                                                      154,886        280,570        170,952
                                                  -----------    -----------    -----------
(Loss) income before provision for income
    taxes and extraordinary item ..............          (796)      (102,882)         6,415
Income tax (benefit) provision ................            --         (7,863)         3,500
                                                  -----------    -----------    -----------
(Loss) income before extraordinary item .......          (796)       (95,019)         2,915
Extraordinary item ............................            --            371             --
                                                  -----------    -----------    -----------
Net (loss) income .............................          (796)       (94,648)         2,915
Less provision for preferred dividends and
    discount amortization .....................           391            362            361
                                                  -----------    -----------    -----------
Net (loss) income available for
    common shares .............................   $    (1,187)   $   (95,010)   $     2,554
                                                  ===========    ===========    ===========
Net (loss) earnings per common share:
    (Loss) earnings before extraordinary item.    $      (.24)   $    (18.94)   $      0.51
    Extraordinary item.........................            --            .07             --
                                                  -----------    -----------    -----------
    Net (loss) earnings per common share.......   $      (.24)   $    (18.87)   $      0.51
                                                  -----------    -----------    -----------

</TABLE>

                                       17
<PAGE>

                   PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
              (Dollar amounts in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                                     February 2,    January 28,
ASSETS                                                                                 1997            1996
                                                                                     ----------     -----------
<S>                                                                                  <C>            <C>
Current assets:
    Cash .........................................................................   $     6,973    $     7,298
    Accounts receivable, less allowance for doubtful accounts of $50 in both years         6,919          9,049
    Merchandise inventories ......................................................       157,490        150,837
    Prepaid expenses .............................................................         2,993          2,953
    Property held for sale .......................................................         1,748          2,218
                                                                                     -----------    -----------
       Total current assets ......................................................   $   176,123    $   172,355

Property, buildings and equipment, (net) .........................................        42,403         44,153
Leased property under capital leases, less accumulated
    amortization of $14,604 and $13,496, respectively ............................        27,713         30,977
Deferred financing costs .........................................................         3,176          3,809
Other assets .....................................................................        19,773          7,231
                                                                                     -----------    -----------
                                                                                     $   269,188    $   258,525
                                                                                     ===========    ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
    Accounts payable .............................................................   $    54,245    $    63,087
    Loan and security agreement ..................................................        57,115         31,588
    Accrued compensation .........................................................         3,860          5,923
    Accrued interest .............................................................         7,668          6,992
    Store closing reserve ........................................................         4,521          7,818
    Other accrued expenses .......................................................        10,112         10,823
    Income taxes - deferred and current payable ..................................         8,101          8,861
    Current maturities of long-term debt .........................................            47          1,334
    Current obligations under capital leases .....................................         1,781          1,847
                                                                                     -----------    -----------
       Total current liabilities .................................................       147,450        138,273

Long-term debt, less current maturities ..........................................       168,000        163,746
Obligations under capital leases, less current obligations .......................        33,999         36,559
Reserve for dividends ............................................................           342             --
Other long-term liabilities ......................................................         4,825          4,237
Commitments and contingencies ....................................................            --             --
Preferred stock subject to mandatory redemption:
    16-1/4% senior cumulative preferred stock, $1 par value;
       514 shares authorized, issued and outstanding .............................           514            514
    14-1/4% junior cumulative preferred stock, $1 par value;
       6,986 shares authorized; 1,627 shares issued and outstanding;
       redemption amount of $1,627, less unamortized discount ....................         1,361          1,312
Common shareholders' equity:
    Common stock, $.01 par value; 10,000,000 shares authorized; 5,004,942
       shares issued and outstanding in both years ...............................            50             50
    Additional paid-in capital ...................................................           968            968
    Accumulated deficit ..........................................................       (88,321)       (87,134)
                                                                                     -----------    -----------
       Total common shareholders' deficit ........................................       (87,303)       (86,116)
                                                                                     -----------    -----------
                                                                                     $   269,188    $   258,525
                                                                                     ===========    ===========

</TABLE>

                                       18
<PAGE>

                   PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
             CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                            Retained
                                                                Nonvoting    Additional     Earnings
                                                    Common       Common       Paid-in     (Accumulated
                                                    Shares        Stock       Capital       Deficit)
                                                   ----------   ----------   ----------    ----------
<S>                                                <C>          <C>          <C>           <C>
Balance at January 30, 1994 ...........            $       41   $        9   $      950    $   15,322
    Net income ........................                    --           --           --         2,915
    Amortization of discount on 14-1/4%
       junior cumulative preferred ....                    --           --           --           (45)
    Cash dividends to preferred
       stockholders ...................                    --           --           --          (316)
    Conversion of nonvoting common
       stock to common shares .........                     9           (9)          --            --
                                                   ----------   ----------   ----------    ----------

Balance at January 29, 1995 ...........                    50           --          950         7,876
    Net loss ..........................                    --           --           --       (94,648)
    Amortization of discount on 14-1/4%
       junior cumulative preferred ....                    --           --           --           (47)
    Cash dividends to preferred
       stockholders ...................                    --           --           --          (315)
    Stock sold under incentive stock
       option plan ....................                    --           --           18            --
                                                   ----------   -----------   ---------    ----------

Balance at January 28, 1996 ...........                    50           --          968       (87,134)
    Net loss ..........................                    --           --           --          (796)
    Amortization of discount on 14-1/4%
       junior cumulative preferred ....                    --           --           --           (49)
    Accrued dividends for preferred
       stockholders ...................                    --           --           --          (342)
                                                   ----------   ----------   ----------    ----------

Balance at February 2, 1997 ...........            $       50   $       --   $      968    $  (88,321)
                                                   ==========   ==========   ==========    ==========

</TABLE>

                                       19
<PAGE>

                   PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>

                                                                                     Years Ended
                                                                      -----------------------------------------
                                                                      February 2,    January 28,    January 29,
                                                                         1997            1996           1995
                                                                      (53 Weeks)      (52 Weeks)     (52 Weeks)
                                                                      -----------    -----------    -----------
<S>                                                                   <C>            <C>            <C>
Cash flows from operating activities:
Net (loss) income .................................................   $      (796)   $   (94,648)   $     2,915
       Adjustments to  reconcile  net (loss)  income to net cash 
         from operating activities:
           Depreciation and amortization ..........................        11,658         15,345         14,962
           Provision (credit) for LIFO inventory valuation ........           874           (585)          (675)
           Provision (credit) for deferred income taxes ...........         3,305         (6,647)        (1,555)
           Noncash interest expense ...............................         4,313          3,756          3,315
           Accretion of original issue debt discount ..............           160            154            149
           Gain on disposal of assets .............................           (56)          (982)           (58)
           Stock incentive benefits ...............................            --             --             84
           Deferred retirement benefits ...........................          (125)            13             37
           Extraordinary item .....................................            --           (371)            --
           Long-lived assets write-off ............................            --         78,551             --
           Store closing costs ....................................        (3,726)        21,397             --
           (Increase) decrease in merchandise inventories .........        (7,527)         4,532        (30,951)
           Increase in other operating assets .....................        (5,622)        (3,847)          (486)
           Increase (decrease) in accounts payable ................        (8,842)        (6,749)         8,153
           Increase (decrease) in income taxes payable ............        (3,250)        (4,607)         3,942
           Increase (decrease) in other operating liabilities......        (1,943)          (345)         3,984
                                                                      -----------    -----------    -----------
       Total adjustments ..........................................       (10,781)        99,615            901
                                                                      -----------    -----------    -----------
       Net cash from operating activities .........................       (11,577)         4,967          3,816

Cash flows from investing activities:
    Proceeds from disposal of assets ..............................           917          1,163            980
    Principal payments received on notes receivable ...............            16             15             14
    Assets acquired for sale ......................................          (391)            --             --
    Capital expenditures ..........................................        (4,947)        (9,265)       (12,888)
    Construction notes receivable .................................        (5,845)        (4,412)            --
                                                                      -----------    -----------    -----------
       Net cash from investing activities .........................       (10,250)       (12,499)       (11,894)
                                                                      -----------    -----------    -----------
Cash flows from financing activities:
    Borrowings under loan and security agreement net ..............        25,527         10,986         12,417
    Principal payments on other long-term debt ....................        (1,335)          (193)          (177)
    Dividends paid on preferred stock .............................            --           (315)          (316)
    Principal payments on promissory notes ........................            --           (641)        (1,029)
    Payments for deferred finance costs ...........................           (54)           (13)          (200)
    Principal payments on capital lease obligations ...............        (2,636)        (2,071)        (1,894)
    Proceeds from sale of stock ...................................            --             18             --
                                                                      -----------    -----------    -----------
           Net cash from financing activities .....................        21,502          7,771          8,801
                                                                      -----------    -----------    -----------
    Net (decrease) increase in cash ...............................          (325)           239            723
    Cash at beginning of year .....................................         7,298          7,059          6,336
                                                                      -----------    -----------    -----------
    Cash at end of year ...........................................   $     6,973    $     7,298    $     7,059
                                                                      ===========    ===========    ===========

                                       20
<PAGE>

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
    Cash paid (received) during the year for:
       Interest.....................................................  $    24,804    $    25,691    $    24,021
       Income taxes:
           Payments to taxing authorities...........................          386          3,622          1,785
           Refunds received from taxing authorities.................         (442)          (231)          (672)
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
    Capital lease obligations incurred when the Company entered
       into lease agreements for new store facilities and equipment.  $        11    $       620    $     9,721
    Capital lease obligations terminated............................           --            154             --
    Amortization of discount on junior cumulative preferred stock
       recorded as a direct charge to retained earnings.............           49             47             45
    Payment of interest in kind by increasing the
       principal amount of the notes................................        4,313          3,702          3,263
    Provision for dividends payable.................................          342             --             --
    Conversion of 919,587 shares of nonvoting common
       stock, $.01 par value, to common stock
           Common stock.............................................           --             --              9
           Nonvoting common stock...................................           --             --             (9)


</TABLE>

                                       21
<PAGE>

                   PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              (Dollar amounts in thousands - except per share data)



A.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     Pamida Holdings Corporation (the "Company") was formed for the sole purpose
of acquiring  Pamida,  Inc.  ("Pamida")  through a merger in a leveraged buy-out
transaction which was consummated on July 29, 1986.

     CONSOLIDATION - The consolidated  financial  statements include the results
of  operations,  account  balances  and  cash  flows  of  the  Company  and  its
wholly-owned subsidiary,  Pamida, and of Seaway Importing Company ("Seaway") and
Pamida Transportation Company, wholly-owned subsidiaries of Pamida. All material
intercompany accounts and transactions have been eliminated in consolidation.

     FISCAL YEAR - All references in these financial  statements to fiscal years
are to the calendar year in which the fiscal year ends.

     LINE OF BUSINESS - Through Pamida,  the Company is engaged in the operation
of retail discount stores in a fifteen-state Midwestern, North Central and Rocky
Mountain area. Seaway imports primarily seasonal merchandise for sale to Pamida.
Pamida  Transportation  Company  operated as a contract carrier for Pamida until
July 1995,  at which time  independent  contractors  were engaged to provide all
transportation  needs of the  Company.  Due to the  similarity  in nature of the
Company's  businesses,  the  Company  considers  itself to be a single  business
segment.

     CASH FLOW  REPORTING - For  purposes of the  statement  of cash flows,  the
Company  considers all temporary cash  investments  purchased with a maturity of
three months or less to be cash equivalents. There were no temporary investments
at February 2, 1997 and January 28, 1996.

     MERCHANDISE  INVENTORIES - Substantially all of the Company's  inventory is
stated at the lower of cost (last-in, first-out) or market.

     PROPERTY,  BUILDINGS AND EQUIPMENT - Property,  buildings and equipment are
stated at cost and  depreciated on the  straight-line  method over the estimated
useful lives. Buildings and building improvements are generally depreciated over
8-40 years, while store,  warehouse and office equipment,  vehicles and aircraft
equipment are generally depreciated over 3-10 years.  Leasehold improvements are
depreciated  over the  life of the  lease or the  estimated  life of the  asset,
whichever is shorter.

     LEASED PROPERTY UNDER CAPITAL LEASES - Noncancellable  financing leases are
capitalized  at the  estimated  fair  value of the  leasehold  interest  and are
amortized on the straight-line method over the terms of the leases.

     LONG-LIVED  ASSETS  - When  facts  and  circumstances  indicated  potential
impairment,  the Company evaluates the recoverability of assets carrying values,
including  goodwill,  using estimates of future cash flows over remaining assets
lives.  When  impairment is indicated,  any  impairment  loss in measured by the
excess of carrying values over fair values.

     DEFERRED  FINANCING  COSTS AND  ORIGINAL  ISSUE  DEBT  DISCOUNT  - Deferred
financing  costs are being  amortized  using the  straight-line  method over the
terms of the issues which approximates the effective  interest method.  Original
issue debt discount is being amortized using the effective  interest method over
the terms of the issues.

     PRE-OPENING  EXPENSES - Costs related to opening new stores are expensed as
incurred.

     EARNINGS PER SHARE - Earnings per share were calculated  using the weighted
average common shares and dilutive common share equivalents  outstanding  during
the year using the treasury stock method.

     MANAGEMENT'S USE OF ESTIMATES - The preparation of 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  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

     STOCK-BASED  COMPENSATION  -  The  Company  accounts  for  its  stock-based
compensation  under the  provisions of Accounting  Principles  Board Opinion 25,
"Accounting for Stock Issued to Employees" (APB 25).

     RECLASSIFICATIONS  -  Certain  reclassifications  have  been  made to prior
years' financial statements to conform to the current year presentation.

                                       22
<PAGE>

B.  MERCHANDISE INVENTORIES

     Total  inventories  would have been  higher at February 2, 1997 and January
28, 1996 by $6,574 and $5,700, respectively, had the FIFO (first-in,  first-out)
method been used to determine the cost of all inventories.  On a FIFO basis, net
income  (loss)  before  extraordinary  item would have been $78,  $(95,604)  and
$2,666, respectively, for fiscal years 1997, 1996, and 1995. During fiscal years
1997, 1996, and 1995,  certain inventory  quantities were reduced resulting in a
liquidation  of certain  LIFO layers  carried at costs which were lower than the
cost of current  purchases,  the effect of which  increased  net income by $116,
$125, and $102, respectively.

C.  PROPERTY, BUILDINGS AND EQUIPMENT

     Property, buildings and equipment consists of:

                                 Feb. 2,   Jan. 28,
                                  1997       1996
                                --------   --------
Land and land improvements ..   $  4,013   $  3,943
Buildings and building
  improvements...............     22,076     21,578
Store, warehouse and office
  equipment..................     59,668     55,638
Vehicles and aircraft
  equipment..................      1,513      1,578
Leasehold improvements ......     16,497     15,362
                                 103,767     98,099
Less accumulated depreciation
  and amortization ..........     61,364     53,946
                                --------   --------
                                $ 42,403   $ 44,153
                                ========   ========

D.  OTHER ASSETS

     Other assets consist of:
                                 Feb. 2,   Jan. 28,
                                  1997       1996
                                --------   --------
Construction notes receivable.  $ 10,257   $  2,767
Unamortized software
  costs, net .................     7,541      3,357
Other ........................     1,975      1,107
                                --------   --------
                                $ 19,773   $  7,231
                                ========   ========


E.  FINANCING AGREEMENTS

     Effective March 17, 1997, the term of Pamida's  committed Loan and Security
Agreement (the  Agreement) was extended to March 2000 and the maximum  borrowing
limit of the facility was increased to $95,000 from $70,000,  which had been the
limit  throughout  fiscal 1997.  Prior to March 17, 1997,  borrowings  under the
Agreement  bore  interest at a rate which was 0.75% per annum  greater  than the
applicable prime rate. Effective March 17, 1997,  borrowings under the Agreement
bear interest at a rate which is tied to the applicable prime rate or the London
Interbank Offered Rate (LIBOR),  generally at Pamida's  discretion.  The amounts
Pamida is permitted to borrow under the  Agreement  are  determined by a formula
based upon the amount of Pamida's  eligible  inventory  from time to time.  Such
borrowings of Pamida under the  Agreement  are secured by security  interests in
substantially all of the current assets  (including  inventory) of Pamida and by
liens on certain real estate interests and other property of Pamida. The Company
and two  subsidiaries  of Pamida  have  guaranteed  payment and  performance  of
Pamida's  obligations  under the Agreement and have pledged some or all of their
respective assets, including the stock of Pamida owned by the Company, to secure
such guarantees.

     The  Agreement  contains   provisions   imposing  operating  and  financial
restrictions  on the Company.  Certain  provisions of the Agreement  require the
maintenance of specified  amounts of tangible net worth (as defined) and working
capital (as defined) and the  achievement of specified  minimum  amounts of cash
flow (as defined).  Other restrictions in the Agreement and those provided under
the Indenture relating to the Senior Subordinated Notes will affect, among other
things, the ability of Pamida to incur additional  indebtedness,  pay dividends,
repay  indebtedness  prior to its  stated  maturity,  create  liens,  enter into
leases,  sell  assets  or  engage  in  mergers  or  acquisitions,  make  capital
expenditures and make investments.

     The maximum amount of borrowings under the Agreement during fiscal 1997 and
1996 was $69,256 and  $63,884,  respectively.  The weighted  average  amounts of
borrowings  under  the  Agreement  for  fiscal  1997 and 1996 were  $43,002  and
$35,544,  respectively;  and the weighted  average interest rates were 10.0% and
10.4%, respectively.

                                       23
<PAGE>

Long-term debt consists of:

                                   Feb. 2,   Jan. 28,
                                     1997      1996
                                   -------   --------
Senior Subordinated Notes,
  11.75%, due March 2003 ......   $140,000   $140,000
Industrial development bonds,
  8.5%, due in monthly install-
  ments through 2005 ..........        411      1,745
Senior promissory notes, 15.5%,
  due in 2003, interest paid
  in kind quarterly ...........      4,926      4,231
Subordinated promissory notes,
  16%, due in 2003, interest
  paid in kind quarterly ......     13,454     11,500
Junior subordinated  promissory
  notes,  16.25%,  net of
  unamortized  discount of $878
  and $1,038, due in 2003,
  interest paid in kind quarterly    9,256      7,604
                                  --------    -------
                                   168,047    165,080
Less current maturities .......         47      1,334
                                  --------   --------
                                  $168,000   $163,746
                                  ========   ========

     As of  February  2, 1997,  the fair value of  long-term  debt was  $153,900
compared to its recorded value of $168,000. The fair value of long-term debt was
estimated  based on quoted  market values for the same or similar debt issues or
rates currently available for debt with similar terms. The aggregate  maturities
of long-term  debt in each of the next five fiscal years are as follows:  1998 -
$47; 1999 - $47; 2000 - $47; 2001 - $47; and 2002 - $47.

     The Senior  Subordinated  Notes and the promissory  notes are unsecured and
are  subordinate  borrowings  under  the  Agreement.  Presently,  under the most
restrictive debt covenants, the Company is not permitted to pay dividends on its
common stock.

     The senior  subordinated  and junior  subordinated  promissory notes of the
Company were amended to provide  that until the  obligations  of the Company and
Pamida  under  certain loan  agreements  have been paid in full,  the  quarterly
interest  payments on the notes will be paid in kind by increasing the principal
amount of each note on the  applicable  quarterly  payment date by the amount of
accrued  interest  then being paid in kind.  Interest  on the notes paid in kind
accrues at a rate which, in each case, is two percentage  points higher than the
applicable cash interest rate.

F.  INCOME TAXES

     Components of the income tax provision (benefit) are as follows:

                          Years Ended
                  --------------------------------

                  Feb. 2,    Jan. 28,     Jan. 29,
                   1997        1996         1995
                  --------    --------    --------
Current:
   Federal ....   $ (3,155)   $   (993)   $  4,048
   State ......       (150)       (223)      1,007
                  --------    --------    --------
                    (3,305)     (1,216)      5,055
                  --------    --------    --------

Deferred:
  Federal .....      3,189      (5,865)       (679)
  State .......        116        (782)       (876)
                  --------    --------    --------
                     3,305      (6,647)     (1,555)
                  --------    --------    --------
Total (benefit)
  provision ...   $     --    $ (7,863)   $  3,500
                  ========    ========    ========

     The  differences  between  the  U.S.  Federal  statutory  tax  rate and the
Company's effective tax rate are as follows:

                                        Years Ended
                               ---------------------------
                               Feb. 2,   Jan. 28,  Jan. 29,
                                1997     1996       1995
                               --------  --------  --------
   Statutory rate .........     (34.0)%   (34.0)%     34.0%
   State income tax effect.      (2.8)     (1.3)       5.5
 Amortization of the excess
   of cost over net assets
     acquired .............        --      23.9       12.2
Valuation allowance .......      25.1       3.6        0.1
Accretion of discount on
  junior subordinated debt        6.8       0.1        0.8
Other .....................       4.9       0.1        2.0
                               --------  --------  --------
                                  0.0%    (7.6)%       54.6%
                               ========  ========  ========

                                       24
<PAGE>

     Significant  temporary  differences  between  reported and taxable earnings
that give rise to deferred tax assets and liabilities were as follows:

                                          Feb. 2,      Jan. 28,
                                            1997        1996
                                          ---------    --------
Net current deferred tax liabilities:
  Inventories .........................   $  15,302    $  13,681
  Valuation allowance .................          --        3,869
  Prepaid insurance ...................         210          514
  Other ...............................         453          366
  Supplier allowances .................         (41)          --
  Post employment health costs ........        (189)        (237)
  Accrued expenses ....................        (941)      (1,300)
  Store closing costs .................      (2,570)      (7,159)
                                          ---------    ---------
     Net current deferred
       tax liabilities ................      12,224        9,734
                                          ---------    ---------
Net long-term deferred tax liabilities:
    Property, buildings and
       equipment ......................       2,862        3,109
    Other .............................       1,436          438
    Valuation allowance ...............       4,069            5
    Capital loss carryforward .........          --           (5)
    Capital leases ....................      (3,089)      (2,602)
    Tax benefit carryforward ..........      (3,518)          --
                                          ---------    ---------
Net long-term deferred
  tax liabilities .....................       1,760          945
                                          ---------    ---------
Net total deferred tax
     liabilities ......................   $  13,984    $  10,679
                                          =========    =========

     Net long-term  deferred tax liabilities are classified with other long-term
liabilities in the consolidated balance sheets of the Company. As of February 2,
1997 the Company had net  operating  loss  carryforwards  totaling  $4,034 which
expire in 2012 and the  Company  had tax credit  carryforwards  totaling  $1,973
which expire in 2006 through 2011.

G.  LEASES

     The majority of store  facilities  are leased under  noncancelable  leases.
Substantially  all of the leases are net leases  which  require  the  payment of
property taxes,  insurance and maintenance costs in addition to rental payments.
Certain leases provide for additional rentals based on a percentage of sales and
have renewal options for one or more periods  totaling from one to twenty years.
Leases have been  categorized as capital or operating  leases in conformity with
the definition in Statement of Financial Accounting Standards No. 13, Accounting
for Leases.

     At February 2, 1997 the future  minimum  lease  payments  under capital and
operating leases with rental terms of more than one year amounted to:

     Fiscal Year Ending        Capital    Operating
                               Leases      Leases
                              ---------   ---------
1998.....................     $   5,802   $  10,010
1999.....................         5,659       8,800
2000.....................         5,442       6,879
2001.....................         5,352       5,639
2002.....................         5,267       5,103
Later years..............        41,384      46,069
                              ---------   ---------
Total minimum obligations     $  68,906   $  82,500
                              ---------   ---------
Less amount representing
  interest................       33,126
                              ---------
Present value of net minimum
  lease payments..........       35,780
 Less current portion.....        1,781
                              ---------
Long-term obligations.....    $  33,999
                              =========

     The minimum rentals under operating leases have not been reduced by minimum
sublease rentals of $191 due in the future under noncancelable subleases.

     Total rental expense related to all operating leases  (including those with
terms less than one year) is as follows:

                                  Years Ended
                        -------------------------------
                        Feb. 2,     Jan. 28,    Jan. 29,
                          1997        1996       1995
                        --------    --------    --------
Minimum rentals .....   $ 10,938    $ 11,715    $  9,585
Contingent rentals ..        258         399         477
Less sublease rentals       (735)       (852)       (918)
                        --------    --------    --------
                        $ 10,461    $ 11,262    $  9,144
                        ========    ========    ========

H.  SAVINGS AND OTHER POSTEMPLOYMENT BENEFIT PLANS

     Pamida has adopted a 401(k)  savings plan that covers all employees who are
21 years of age with one or more years of service.  Participants  can contribute
from 1% to 15% of their pre-tax  compensation.  Pamida has currently  elected to
match 50% of the participant's  contribution up to 5% of compensation.  Pamida's
savings plan  contribution  expenses for fiscal years 1997,  1996, and 1995 were
$770, $749, and $716, respectively.

     Prior to  December  1993,  the  Company  had agreed to  continue to provide
health  insurance  coverage and pay a portion of the health  insurance  premiums
until age 65 for  individuals  who  retire if the  individual  was  eligible  to
participate  in the  plan,  had  attained  age  55,  had  completed  ten or more
consecutive years of service and

                                       25
<PAGE>

elected to continue on the Company plan.  The plan is unfunded,  and the Company
had the right to modify or  terminate  these  benefits.  In December  1993,  the
Company amended the Plan to no longer offer  postretirement  health benefits for
employees retiring after February 1, 1994.

     The components of periodic  expense for  postretirement  benefits in fiscal
1997, 1996 and 1995 were as follows:

                                               Feb. 2,    Jan. 28,   Jan. 29,
                                                 1997      1996       1995
                                               --------   --------   --------
      Annual postretirement benefit expense:
        Interest cost .......................        16         32         42
     Amortization of
       unrecognized
       net obligations ......................       (44)        (6)        --
                                               --------   --------   --------
     Annual postretirement
       benefit expense ......................  $    (28)  $     26   $     42
                                               ========   ========   ========

     The accumulated postretirement benefit obligation consists of:

                                            Feb. 2,    Jan. 28,
                                             1997       1996
                                            --------   --------
          Accumulated postretirement
            benefit obligation .........    $    194   $    395
          Unrecognized gain ............         299        223
                                            --------   --------
          Accrued expense ..............    $    493   $    618
                                            ========   ========

     A 5% and a 10%  increase in the cost of covered  health care  benefits  was
assumed  for  fiscal  1997  and  1996,  respectively.  The rate of 5% used as of
February 2, 1997 is assumed to remain level after  fiscal  1997.  At January 28,
1996, the 10% was assumed to decrease  incrementally  to 5% after five years and
remain level  thereafter.  Assuming a 1% increase in the health care trend rate,
the annual postretirement  benefit expense would remain the same for fiscal 1997
and increase by $1 for fiscal 1996, and the unfunded accumulated  postretirement
benefit  obligation  would  increase  by $4 and $13 for  fiscal  1997 and  1996,
respectively.  The  weighted  average  discount  rate  used in  determining  the
accumulated  postretirement benefit obligation was 7.0% for both fiscal 1997 and
1996.

I.  PREFERRED STOCK SUBJECT TO MANDATORY REDEMPTION

     The  Company  is  obligated  to  redeem  all  outstanding  shares of senior
cumulative  and junior  cumulative  preferred  stock on December 31, 2001,  at a
price not to exceed  the  liquidation  value  which is $1,000 per share plus any
accrued dividends. Subject to certain loan restrictions, the Company may, at any
time,  redeem all or any portion of the preferred shares  outstanding at a price
of $1,000 per share plus any accrued dividends.

     Each share of senior  cumulative  and  junior  cumulative  preferred  stock
entitles  its holder to receive a  quarterly  dividend  of 16.25% and 14.25% per
annum,  respectively,  of the liquidation  value from the date of issuance until
redeemed.  Both  series  of  preferred  stock  are  non-voting,  and any  unpaid
dividends are added to the liquidation value until paid.

     The  General  Corporation  Law of the State of  Delaware,  under  which the
Company and Pamida are  incorporated,  allows a corporation  to declare or pay a
dividend only from its surplus or from the current or the prior year's earnings.
Due to the accumulated  deficit resulting  primarily from the store closings and
the write-off of goodwill and other long-lived  assets  recognized in the fourth
quarter of fiscal  1996,  the Company and Pamida did not declare or pay any cash
dividends in fiscal 1997 and may pay cash dividends in ensuing years only to the
extent that the Company and Pamida  satisfy the applicable  statutory  standards
which include the  Company's  having a net worth equal to at least the aggregate
par value of the preferred  stock which amounts to $2. A liability and provision
for preferred  stock  dividends  have been recorded in the fiscal 1997 financial
statements.  The cumulative  dividend rate on the preferred  stock  increases by
0.5% per quarter  (with a maximum  aggregate  increase of 5%) on each  quarterly
dividend  payment  date on which  the  preferred  stock  dividends  are not paid
currently on a cumulative basis.

     The difference  between the fair value of the junior  cumulative  preferred
stock at issuance and the mandatory  redemption  value is being recorded through
periodic  accretions,  using the effective interest method with a related charge
to retained earnings.

J.  STOCK OPTIONS

     On November  24, 1992,  the Board of  Directors of the Company  adopted the
Pamida  Holdings  Corporation  1992 Stock  Option Plan (the  "Plan"),  which was
approved by the Company's stockholders in May 1993. The Plan,  administered by a
Committee of the Board of

                                       26
<PAGE>

Directors,  provides for the granting of options to key employees of the Company
and its  subsidiaries to purchase up to an aggregate of 350,000 shares of Common
Stock of the Company.  Options  granted  under the Plan may be either  incentive
stock options,  within the meaning of Section 422 of the Internal  Revenue Code,
or  non-qualified  options.  Options  granted under the Plan will be exercisable
during the period fixed by the Committee for each option;  however,  in general,
no option will be exercisable earlier than one year after the date of its grant,
and no incentive stock option will be exercisable  more than ten years after the
date of its grant.  The option  exercise price must be at least 100% of the fair
market  value  of  the  Common  Stock  on  the  date  of the  option  grant.  No
compensation  expense  related to stock options was recorded during fiscal 1997,
1996 or 1995.

     The Company accounts for its stock-based  compensation under the provisions
of Accounting  Principles Board Opinion No. 25,  "Accounting for Stock Issued to
Employees" (APB Opinion No. 25), which utilizes the intrinsic value method.  The
effect on 1997 and 1996 net  income and  earnings  per share of  accounting  for
stock-based  compensation  using the fair value method  required by Statement of
Financial Accounting Standards No. 123, Accounting for Stock-Based  Compensation
(SFAS 123) is immaterial.

     The  weighted  average  fair value of options  granted  during the year was
$0.70 and $2.86 per  option  for fiscal  1997 and 1996,  respectively.  The fair
value of options granted under the Plan was estimated at the date of grant using
a binomial options pricing model with the following assumptions:

                                              Feb. 2,        Jan. 28,
                                               1997            1996
                                              --------       --------
      Risk-free interest rate...............       6.0%           7.0%
      Dividend yield........................       0.0%           0.0%
      Expected Volatility...................       8.1%           8.1%
      Expected life (years) ................       6.6 years      6.7 years

     A summary of the Company's  stock-based  compensation  activity  related to
stock options for the last three fiscal years is as follows:

<TABLE>
<CAPTION>

                                   February 2, 1997       January 28, 1996         January 29, 1995
                                 --------------------    --------------------    --------------------
                                             Weighted                Weighted               Weighted
                                             Average                 Average                 Average
                                             Exercise                Exercise                Exercise
                                 Number       Price      Number       Price      Number       Price
                                 -------     -------     -------     -------     -------     -------
<S>                              <C>         <C>         <C>         <C>         <C>         <C>
Outstanding-beginning of year    296,546     $  5.05     227,545     $  4.33     171,750     $  3.63
Granted .....................     86,800        2.37     122,205        6.80      75,000        5.75
Expired/terminated ..........    (80,530)       4.66     (48,246)       6.22     (19,205)       3.63
Exercised ...................       --            --      (4,958)       3.63          --          --
Outstanding-end of year .....    302,816     $  4.39     296,546     $  5.05     227,545     $  4.33
</TABLE>

     There were 123,616,  85,474 and 61,681  options  exercisable at February 2,
1997, January 28, 1996 and Janaury 29, 1995, respectively.

     The following table summarizes  information about stock options outstanding
as at February 2, 1997:

<TABLE>
<CAPTION>

                    Options Outstanding                                Options Exercisable
------------------------------------------------------     -------------------------------------------
                                            Weighted
                                             Average        Weighted                        Weighted
            Range of                        Remaining       Average                         Average
            Excercise       Number         Contractual      Exercise         Number         Exercise
             Prices       Outstanding         Life            Price        Exercisable        Price
           -----------    -----------      -----------     -----------     -----------     -----------
<S>        <C>            <C>              <C>             <C>             <C>             <C>
           $1.94-$2.78          83,800       9.5 Years     $      2.36              --     $        --
             3.63-5.75         171,016       7.3 Years            4.60         114,016            4.20
                  7.19          48,000       8.1 Years            7.19           9,600            7.19
           -----------     -----------     -----------     -----------     -----------     -----------
Totals     $1.94-$7.19         302,816       8.0 Years     $      4.39         123,616     $      4.43
</TABLE>

                                       27
<PAGE>

K.  CAPITAL STOCK

     In October 1994,  919,587  shares of nonvoting  common stock of the Company
were  converted  into the same number of shares of common  stock.  After  giving
effect to such conversion,  the Company had 5,004,942 shares of common stock and
no shares of nonvoting  common stock  outstanding  at the end of fiscal 1997 and
1996.

L.  EXTRAORDINARY ITEMS

     On July 31,  1995,  the Company made an offer to purchase for cash 39.5% of
the aggregate outstanding principal amount of 14% Subordinated  Promissory Notes
(Notes) of Pamida Holdings  Corporation.  The offered  purchase price was 50% of
the principal  amount to be purchased.  In the third quarter of fiscal 1996, the
Company redeemed Notes tendered in the aggregate  principal amount of $1,281 and
made cash payments of $641, resulting in an after-tax gain of $371.

M.  COMMITMENTS AND CONTINGENCIES

     Pamida has employment  agreements  with three key executive  officers which
expire in 2000 and 2001. In addition to a base salary,  the  agreements  provide
for a bonus to be paid if certain Company performance goals are achieved.  Also,
in  March  1997,  the  Board  of  Directors   approved  a  long-term   incentive
compensation  program in order to enhance  retention  of certain  key members of
management.  Payout is tied to continued  employment  and future  Company common
stock price appreciation.

     The  terms  of the  senior  and  junior  preferred  stock  and the  senior,
subordinated  and junior  subordinated  promissory  notes provide that, upon the
occurrence of an event of  noncompliance  with respect to the preferred stock or
event of default with respect to the promissory  notes,  the Company is required
to pay higher  dividend  and  interest  rates  with the  amount of the  increase
depending on the nature of the event of noncompliance or default.

     During   fiscal  1996,   the  Company   received  $967  from  Pamida  as  a
reimbursement for certain tax benefits derived by Pamida. Such remittance, along
with $18 from the exercise of certain stock options,  was used by the Company to
redeem Subordinated  Promissory Notes as described in Note L, to repay to Pamida
intercompany  balances totaling $29, and to pay quarterly dividends on preferred
stock totaling $315.

     In June 1994, the Company  received  $1,316 from Pamida as a  reimbursement
for certain tax  benefits  derived by Pamida.  Such  remittance  was used by the
Company to make a  principal  payment  on its  outstanding  promissory  notes of
$1,029 and to repay Pamida certain intercompany advances aggregating $287.

     In  connection  with the  Company's  self  insured  retention  of  worker's
compensation  liabilities and future rental payments on a warehouse, on February
2,  1997,  the  Company  had  standby  letters  of credit  outstanding  totaling
approximately $1,188.

N.  IMPAIRMENT OF LONG-LIVED ASSETS RECORDED IN FISCAL 1996

     During  fiscal  1996,  weak  trends in the retail  industry  combined  with
increasing competition lowered the operating results of the Company.

     Therefore,  during the fourth quarter of fiscal 1996,  management  reviewed
its expectations for near- and long-term  performance of the Company and revised
its earnings  projections to reflect developing and projected trends,  primarily
in comparable-store-sales growth, gross margins, operating expenses and interest
expenses.  Consequently,  the recoverability of the Company's  long-lived assets
was also reassessed.

     In the fourth  quarter of fiscal  1996,  the Company  adopted  Statement of
Financial  Accounting  Standards  No.  121  "Accounting  For the  Impairment  of
Long-Lived  Assets and  Long-Lived  Assets to Be Disposed  Of" (SFAS 121).  This
financial accounting standard requires the Company to perform an analysis of the
recoverability of the net book value of long-lived  assets. The Company analyzed
cash flows on an individual store basis to assess  recoverability of store level
long-lived assets including allocated goodwill.

     As a result of this analysis,  impairment was indicated at certain  stores,
and a noncash pre-tax charge was recorded as illustrated in the table below. The
impairment  losses  were  based  on fair  value  which  was  determined  through
discounted cash flows for the particular  stores  utilizing a rate  commensurate
with the associated  risks. The effect of this accounting change was to increase
the net loss for the year by $24,693 or $4.90 per common share.

     The Company also analyzed the value of its remaining goodwill and favorable
leasehold  interests not impaired

                                       28
<PAGE>

under the  store-level  SFAS 121  analysis  using its  historical  method  under
Accounting  Principles  Board Opinion No. 17 (APB 17) and  determined  that such
remaining  amounts  also  were  impaired.  For this  analysis  the  value of the
goodwill  and  favorable   leasehold  interests  was  determined  by  projecting
aggregate net income and adjusting it by adding back  amortization of intangible
assets.  With  respect  to  the  projections  of net  income  used  to  evaluate
intangible assets impairment,  management made several assumptions in projecting
their best estimate of the results of future operations of the Company. The most
significant  assumptions were an estimated  remaining useful life of goodwill of
fifteen years,  modest annual comparable store sales growth,  gross margin rates
consistent  with those  experienced  over the past fiscal year in the stores not
being closed,  an annual expense  escalation  consistent  with recent  inflation
trends and the ability to refinance debt maturities as they come due.

     These assumptions  resulted in aggregate  undiscounted  adjusted net income
for the  fifteen-year  forecast period of approximately  $5,186,  which reflects
aggregate pre-tax interest expense of approximately $398,000 payable in cash and
$86,000 payable "in kind" (PIK). The $5,186 of aggregate adjusted net income for
the fifteen-year  forecast period also reflected  projected  adjusted net losses
for fiscal 1997 of $4,522,  which included cash interest  expense of $26,242 and
PIK  interest of $4,453,  and for fiscal  1998 of $2,863,  which  included  cash
interest  expense of $26,581 and PIK interest of $5,121.  For fiscal  1999,  the
Company projected adjusted net income of approximately $967, which included cash
interest expense of approximately $26,581 and PIK interest of $5,889. Due to the
uncertainty  of projections  beyond 1999,  this level of adjusted net income was
assumed to continue for each of the  remaining  fiscal  years in the  projection
period. As a result of this evaluation in fiscal 1996, management concluded that
the remaining goodwill and favorable leasehold interests were fully impaired.

     Pre-Tax  Components  of  Long-Lived  Asset  Write-Off  As  Reflected in the
Statement of Operations for the year ended January 28, 1996:

                                   SFAS          APB
                                    121           17         Total
                                 --------     --------     --------
          Goodwill               $ 20,607     $ 49,406     $ 70,013
          Favorable leasehold
            interests               4,245        1,917        6,162
          Property, buildings
            and equipment           2,376           --        2,376

                                 --------     --------     --------
          Total                  $ 27,228     $ 51,323     $ 78,551
                                 ========     ========     ========

     The  goodwill  was  originally  recorded in July 1986 when Pamida  Holdings
Corporation  acquired Pamida,  Inc. through a leveraged  buy-out and represented
the excess of the purchase price over the fair value of the net assets acquired.
Goodwill had been amortized on a  straight-line  basis over a forty-year  period
but, due to the trends  cited above,  its  estimated  remaining  useful life was
adjusted to fifteen years during the fourth quarter of fiscal 1996.

                                       29
<PAGE>

O.  STORE CLOSINGS IN FISCAL 1996

     As discussed in Note N above, the Company's  operating  performance  during
fiscal  1996  was  below  plan.  Management's  analysis  of  individual  stores'
operations and cash flows resulted in the  identification of forty  unprofitable
or  competitive  market  stores  which did not fit the  Company's  niche  market
strategy.  Consequently,  a charge was recorded at January 28, 1996 as indicated
below to cover the costs necessary to close these stores.  The Company  received
positive  net cash flow from closing the stores due to cash  generated  from the
disposition  of related  inventories.  The amounts the Company  will  ultimately
realize from the disposal of assets or pay on the resolution of liabilities  may
differ from the estimated  amounts  utilized in arriving at the income statement
effect.

          Pre-Tax                                   Income
          Components of fiscal 1996               Statement
          Store Closing Costs                       Effect
                                                   --------
          Real estate exit costs and
            write-off of property,
            buildings, and equipment ...........   $ 11,455
          Inventory liquidation ................      9,080
          Professional charges .................        314
          Severance and other costs and fees ...        548
                                                   --------
          Totals ...............................   $ 21,397
                                                   ========

     The store closing reserve  balance as of January 28, 1996 included  amounts
related to real estate, inventory, severance,  professional fees and other costs
of closing the forty stores. The liquidation of the closing stores inventory was
completed in the second quarter of fiscal 1997. All known ancillary costs of the
store closings have been paid except those related to the remaining real estate.
During fiscal 1997,  the Company  negotiated  settlements on twenty closed store
properties which had been leased,  two which have been subleased,  and sold four
closed  store  properties  which had been owned.  As of  February  2, 1997,  the
Company remains liable for lease  obligations on twelve closed store  properties
and owns four  closed  store  properties.  The  Company  anticipates  that final
disposition of the remaining  obligations  and  properties  will be completed in
fiscal  1999.  There were no  adjustments  made during  fiscal 1997 to the store
closing  reserve  other  than cash  inflows  and  outflows  related to the store
closings.

     The store closing reserve is presented in the balance sheets as follows:

                                        Feb. 2,      Jan. 28,
                                          1997         1996
                                        --------     --------
          Store closing reserve
            (short-term)                $  4,521     $  7,818
          Amount included in other
            long-term liabilities          2,190        2,619
                                        --------     --------

          Total                         $  6,711     $ 10,437
                                        ========     ========

                                       30
<PAGE>

P.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

     The following is a summary of the quarterly  results of operations  for the
years ended February 2, 1997 and January 28, 1996:

<TABLE>
<CAPTION>

                                           April 28,       July 28,       October 27,     February 2,
Fiscal 1997                                  1996            1996            1996            1997            Year
                                          -----------     -----------     -----------     -----------     -----------
<S>                                       <C>             <C>             <C>             <C>             <C>
Sales .................................   $   131,786     $   155,817     $   151,980     $   193,606     $   633,189
Gross profit ..........................        31,575          37,096          36,446          48,973         154,090

Net (loss) income .....................        (4,742)         (1,294)            189           5,051            (796)
Less provision for preferred
     dividends and discount
     amortization .....................            93              97              99             102             391
                                          -----------     -----------     -----------     -----------     -----------
Net (loss) income available
     for common shares ................   $    (4,835)    $    (1,391)    $        90     $     4,949     $    (1,187)
                                          ===========     ===========     ===========     ===========     ===========

Net (loss) earnings
    per common share ..................   $      (.97)    $      (.28)    $       .02     $       .99     $      (.24)
                                          ===========     ===========     ===========     ===========     ===========
</TABLE>

<TABLE>
<CAPTION>

                                           April 30,       July 30,       October 29,     January 28,
Fiscal 1996                                   1995           1995            1995            1996           Year
                                          -----------     -----------     -----------     -----------     -----------
<S>                                       <C>             <C>             <C>             <C>             <C>
Sales...................................  $   153,961     $   186,953     $   176,206     $   219,195     $   736,315
Gross profit............................       36,813          44,638          42,802          53,435         177,688

Net (loss) income before
    Extraordinary item..................       (2,179)            608             130         (93,578)        (95,019)
Extraordinary item......................           --              --             371              --             371
                                          -----------     -----------     -----------     -----------     -----------

Net (loss) income.......................       (2,179)            608             501         (93,578)        (94,648)
Less preferred dividends and
    discount amortization...............           91              90              90              91             362
                                          -----------     -----------     -----------     -----------     -----------
Net (loss) income available
    for common shares...................  $    (2,270)    $       518     $       411     $   (93,669)    $   (95,010)
                                          ===========     ===========     ===========     ===========     ===========

Net (loss) earnings
    per common share                      $      (.45)    $       .10     $       .08     $    (18.60)    $    (18.87)
                                          ===========     ===========     ===========     ===========     ===========
</TABLE>

                   PAMIDA HOLDINGS CORPORATION AND SUBSIDIARY
                    INDEPENDENT AUDITORS' REPORT ON SCHEDULE



INDEPENDENT AUDITORS' REPORT
Board of Directors
Pamida Holdings Corporation
Omaha, Nebraska



We have audited the  consolidated  balance sheet of Pamida Holdings  Corporation
and subsidiary as of February 2, 1997, and the related  consolidated  statements
of operations,  stockholders'  equity and cash flows for each of the years ended
February 2, 1997 and January 29, 1995 and have issued our report  thereon  dated
March 7, 1997  (March 17,  1997 as to Note E).  Such  financial  statements  and
report are included in this Annual Report on Form 10-K. Our audits also included
the financial  statement schedule of Pamida Holdings  Corporation and subsidiary
as of  February 2, 1997,  and for each of the years  ended  February 2, 1997 and
January 29, 1995 listed in Item 14(a)2. This financial statement schedule is the
responsibility of the Company's management.  Our responsibility is to express an
opinion based on our audits. In our opinion,  such financial statement schedule,
when considered in relation to the basic financial  statements taken as a whole,
presents fairly in all material respects the information set forth therein.



/s/ DELOITTE & TOUCHE LLP

Omaha, Nebraska
March 7, 1997


                          PAMIDA HOLDINGS CORPORATION
                             (Parent Company Only)
                         (Dollar amounts in thousands)

           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
             BALANCE SHEETS - FEBRUARY 2, 1997 AND JANUARY 28, 1996



ASSETS                                                      1997          1996
Current assets:                                           --------     --------
  Refundable income taxes ............................    $    855     $    855
  Investment in subsidiary ...........................     (57,531)     (61,226)
  Deferred financing costs ...........................          52           63
                                                          --------     --------

                                                          $(56,624)    $(60,308)
                                                          ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable ...................................    $     --     $      8
  Accrued interest ...................................         811          639
  Payable to Pamida, Inc. ............................          16           --
                                                          --------     --------
      Total current liabilities ......................         827          647

Long-term debt .......................................      27,636       23,335
Dividends payable ....................................         342           --
Preferred stock subject to mandatory redemption:
  16-1/4% senior cumulative preferred stock, $1
    par value; 514 shares authorized, issued and
    outstanding ......................................         514          514
  14-1/4% junior cumulative preferred stock, $1
    par value; 6,986 shares authorized;
    1,627 shares issued and outstanding;
    redemption amount of $1,627 less
    unamortized discount .............................       1,360        1,312

Common stockholders' equity:
  Common stock, $.01 par value; 10,000,000 shares
    authorized; 5,004,942 shares issued and
    outstanding, in both years .......................          50           50
  Additional paid-in capital .........................         968          968
  Accumulated deficit ................................     (88,321)     (87,134)
                                                          --------     --------
      Total common stockholders' equity ..............     (87,303)     (86,116)
                                                          --------     --------
                                                          $(56,624)    $(60,308)
                                                          ========     ========


                          PAMIDA HOLDINGS CORPORATION
                             (Parent Company Only)
             (Dollar amount in thousands except for per share data)

           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
            STATEMENTS OF OPERATIONS AND RETAINED (DEFICIT) EARNINGS
      YEARS ENDED FEBRUARY 2, 1997, JANUARY 28, 1996 AND JANUARY 29, 1995


                                                 1997        1996        1995
                                               --------    --------    --------
Equity in earnings (loss) of subsidiary ....   $  3,696    $(92,527)   $  5,130
Expenses:
  General and administrative ...............         19          33          34
  Interest .................................      4,473       3,910       3,463
                                               --------    --------    --------
                                                  4,492       3,943       3,497
                                               --------    --------    --------

(Loss) income before income tax benefit
  and extraordinary item ...................       (796)    (96,470)      1,633

Extraordinary item .........................         --         371          --
                                               --------    --------    --------
(Loss) income before income tax benefit ....       (796)    (96,099)      1,633
Income tax benefit .........................         --       1,451       1,282
                                               --------    --------    --------
Net (loss) income ..........................       (796)    (94,648)      2,915
Amortization of discount on 14-1/4%
  junior cumulative preferred ..............        (49)        (47)        (45)
Cash dividends paid to preferred
  stockholders .............................         --        (315)       (316)
Accrued dividends for
   preferred stockholders ..................       (342)         --          --
Retained earnings (accumulated deficit) -
   beginning of year .......................    (87,134)      7,876       5,322
                                               --------    --------    --------
Retained earnings (accumulated deficit) -
   end of year .............................   $(88,321)   $(87,134)   $  7,876
                                               ========    ========    ========

(Loss) earnings per common share ...........   $   (.24)   $ (18.87)   $    .51
                                               ========    ========    ========

<TABLE>
<CAPTION>

                          PAMIDA HOLDINGS CORPORATION
                             (Parent Company Only)
                         (Dollar amounts in thousands)

           SCHEDULE I - CONDENSED FINANCIAL INFORMATION OF REGISTRANT
                            STATEMENTS OF CASH FLOWS
      YEARS ENDED FEBRUARY 2, 1997, JANUARY 28, 1996 AND JANUARY 29, 1995

                                                                 1997        1996        1995
Cash flows from operating activities:                          --------    --------    --------
<S>                                                            <C>         <C>         <C>
  Net (loss) income ........................................   $   (796)   $(94,648)   $  2,915
                                                               --------    --------    --------
  Adjustments to reconcile  net income  (loss) to net cash
    provided by (used in) operating activities:
      Equity in (earnings) loss of subsidiary ..............     (3,696)     92,527      (5,130)
      Noncash interest expense .............................      4,313       3,756       3,315
      Accretion of original issue debt discount ............        160         154         149
      Amortization of intangible assets ....................         11          10          11
      Extraordinary item related to retirement of debt .....         --        (371)         --
      (Increase) decrease in refundable income tax .........         --        (483)        349
      Increase (decrease) in operating liabilities .........          8          (7)       (264)
                                                               --------    --------    --------
           Total adjustments ...............................        796      95,586      (1,570)
                                                               --------    --------    --------
           Net cash provided by operating activities .......         --         938       1,345
                                                               --------    --------    --------

Cash flows from investing activities:
  Dividends received from subsidiary .......................         --          --          --

Cash flows from financing activities:
  Proceeds from sale of stock ..............................         --          18          --
  Principal payments on promissory notes ...................         --          --      (1,029)
  Payments to redeem subordinated notes ....................         --        (641)         --
  Dividends paid to preferred stockholders .................         --        (315)       (316)
                                                               --------    --------    --------
           Net cash used in financing activities ...........         --        (938)     (1,345)
                                                               --------    --------    --------

Net change in cash .........................................         --          --          --

Cash at beginning of year ..................................         --          --          --
                                                               --------    --------    --------

Cash at end of year ........................................   $     --    $     --    $     --
                                                               ========    ========    ========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW
  INFORMATION:
    Cash paid during the year for interest .................   $     --    $     --    $     --

SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING
  ACTIVITY:
    Amortization of discount on junior cumulative preferred
      stock recorded as a direct charge to retained earnings   $     49    $     47    $     45

    Payment of interest in kind by increasing the
      principal amount of the notes ........................      4,141       3,702       3,263

    Conversion on nonvoting common stock to common stock:
      Common stock .........................................         --          --           9
      Nonvoting stock ......................................         --          --          (9)
</TABLE>


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

     The information  required by this item has been previously  reported in the
Form 8-K Current Report of the registrant dated October 16, 1996.


                                    PART III

     The information required by this Part III is incorporated by reference from
the  registrant's  definitive proxy statement for the 1997 annual meeting of the
registrant's  stockholders  to be held  on May  22,  1997,  which  involves  the
election of directors.  Such  definitive  proxy statement will be filed with the
Securities and Exchange  Commission not later than 120 days after the end of the
fiscal  year  covered by this Form 10-K.  However,  information  concerning  the
registrant's executive officers will be omitted from such proxy statement and is
furnished in a separate item captioned  "Executive  Officers of the  Registrant"
included in Part I of this Form 10-K.


                                     PART IV

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

          (a) The following documents are filed as a part of this report in Item
              8 of Part II:

     1. FINANCIAL STATEMENTS.

       Pamida Holdings Corporation and Subsidiary

         -  Independent Auditors' Report

         -  Consolidated  Statements of  Operations for the Years Ended February
            2, 1997, January 28, 1996 and January 29, 1995

         -  Consolidated Balance Sheets at February 2, 1997 and January 28, 1996

         -  Consolidated  Statements  of  Common  Stockholders'  Equity  for the
            Years  Ended  February  2, 1997,  January  28, 1996 and  January 29,
            1995

         -  Consolidated  Statements of Cash Flows  for the Years Ended February
            2, 1997, January 28, 1996 and January 29, 1995

         -  Notes to  Consolidated  Financial  Statements  for  the Years  Ended
            February 2, 1997, January 28, 1996 and January 29, 1995

     2. FINANCIAL STATEMENT SCHEDULES.

         -  Independent Auditors' Report on Schedule

         -  Schedule I - Condensed Financial Information of Registrant


All  other  schedules  of the  registrant  for  which  provision  is made in the
applicable accounting  regulations of the Securities and Exchange Commission are
not  required  under the related  instructions,  are  inapplicable  or have been
disclosed in the Notes to Consolidated Financial Statements and, therefore, have
been omitted.

     3. EXHIBITS.

(1)  3.1   -   Restated   Certificate   of  Incorporation   of  Pamida  Holdings
                 Corporation, as amended.

(2)  3.2   -   Revised By-Laws of Pamida Holdings Corporation.

(1)  3.3   -   Certificate   of   Amendment   of   Certificate  of Incorporation
                 of Pamida  Holdings  Corporation (amends Exhibit 3.1).

(9)  3.4   -   Certificate   of   Amendment   of   Certificate  of Incorporation
                 of Pamida  Holdings Corporation (amends Exhibit 3.1).

(2)  4.1   -   Form  of  certificate  representing  shares  of  the Common Stock
                 of Pamida Holdings Corporation.

(6)  4.2   -   Indenture dated  as  of  March  15, 1993,  among Pamida, Inc.  as
                 Issuer, Pamida  Holdings  Corporation  as Guarantor,  and State
                 Street Bank  and Trust  Company as Trustee  relating to 11 3/4%
                 Senior  Subordinated  Notes due 2003 of Pamida, Inc.

(6)  4.3   -   Specimen form  of 11 3/4%  Senior  Subordinated  Note due 2003 of
                 Pamida, Inc.

(3)  10.1  -   Stock and  Note Purchase Agreement  dated  as  of July  29, 1986,
                 among  Pamida  Holdings  Corporation, Citicorp Venture Capital,
                 Ltd.,  Citicorp  Capital  Investors,  Ltd.,  and the individual
                 purchasers who are parties thereto.

(1)  10.2  -   Amendment  to Stock  and  Note Purchase Agreement, dated July 31,
                 1990 (amends Exhibit 10.1).


(1)  10.3  -   Second Amendment  to  Stock  and  Note  Purchase Agreement, dated
                 August 10, 1990  (amends  Exhibit 10.1).

(1)  10.4  -   Third  Amendment  to  Stock  and  Note  Purchase Agreement, dated
                 September 13, 1990 (amends Exhibit 10.1).

(1)  10.5  -   Registration Agreement dated July 29, 1986, among Pamida Holdings
                 Corporation  and  the persons  listed  on the  signature  pages
                 thereof.

(1)  10.6  -   Amendment No.1 to Registration Agreement, dated August 10,  1990,
                 among Pamida Holdings Corporation,  Citicorp  Venture  Capital,
                 Ltd. and C. Clayton Burkstrand (amends Exhibit 10.5).

(1)  10.7  -   Exchange  Agreement dated August 10, 1990, among Pamida  Holdings
                 Corporation, Citicorp Venture  Capital, Ltd. and  Court  Square
                 Capital Limited.

(1)  10.8  -   Agreement   dated  September  13,  1990,  among  Pamida  Holdings
                 Corporation,  Citicorp  Venture  Capital, Ltd. and Court Square
                 Capital Limited.

(2)  10.9  -   Agreement   dated  September  20,  1990,  among  Pamida  Holdings
                 Corporation,  Citicorp  Venture  Capital, Ltd. and Court Square
                 Capital Limited.

(4)  10.10 -   Exchange Agreement dated  as of  December 1,  1990 between Pamida
                 Holdings  Corporation,   Citicorp  Venture  Capital,  Ltd.  and
                 Court Square Capital Limited.

(4)  10.11 -   Form of 14.25% Junior  Subordinated  Promissory  Note  of  Pamida
                 Holdings Corporation.

(4)  10.12 -   Form  of  Indemnification  Agreement  between   Pamida   Holdings
                 Corporation and its officers and directors.

(5)  10.13 -   Note Amendment  Agreement  dated as of December 18, 1992, between
                 Pamida Holdings  Corporation and Court Square Capital Limited.

(5)  10.14 -   Note Amendment Agreement No. 2 dated as of March 1, 1993, between
                 Pamida  Holdings Corporation  and Citicorp Investments Inc.

(5)  10.15 -   Tax-Sharing  Agreement dated as of February 2, 1992, among Pamida
                 Holdings Corporation, Pamida,  Inc.,  Seaway Importing company,
                 and Pamida  Transportation Company.

(6)  10.16 -   Loan  and Security Agreement  dated March 30, 1993, by  and among
                 Congress Financial  Corporation (Southwest)   and  BA  Business
                 Credit,  Inc.  as  Lenders,   Congress  Financial   Corporation
                 (Southwest)as Agent  for the  Lenders,  and  Pamida,  Inc.  and
                 Seaway Importing Company as Borrowers.

(12) 10.17 -   Amendment No. 1 to Loan and Security Agreement, dated January 23,
                 1995,  among  Pamida, Inc.  and  Seaway  Importing  Company  as
                 Borrowers,  Congress  Financial  Corporation  (Southwest)  as a
                 Lender and Agent,  and BA  Business  Credit  Inc.  as a  Lender
                 (amends Exhibit 10.16).

(13) 10.18 -   Amendment No. 2 to Loan and Security Agreement, dated January 28,
                 1996,  among  Pamida,  Inc.  and Seaway  Importing  Company  as
                 Borrowers,  Congress  Financial  Corporation  (Southwest)  as a
                 Lender and Agent,  and BankAmerica  Business Credit as a Lender
                 (amends Exhibit 10.16).

(14) 10.19 -   Amendment  No. 3 to  Loan  and  Security  Agreement among Pamida,
                 Inc.  and  Seaway  Importing  Company,  as  Borrowers, Congress
                 Financial  Corporation  (Southwest)  and  BankAmerica  Business
                 Credit, Inc., as  Lenders, and Congress Financial   Corporation
                 (Southwest),  as  Agent,  dated   September  16,  1996  (amends
                 Exhibit 10.16).

     10.20 -   Amendment No. 4 to  Loan  and  Security  Agreement  among Pamida,
                 Inc.  and Seaway  Importing  Company,  as   Borrowers, Congress
                 Financial  Corporation  (Southwest)  and  BankAmerica  Business
                 Credit, Inc.,  as  Lenders, and Congress  Financial Corporation
                 (Southwest),  as   Agent,   dated   January  31,  1997  (amends
                 Exhibit 10.16).

     10.21 -   Amendment No.  5 to  Loan  and  Security  Agreement among Pamida,
                 Inc. and Seaway  Importing  Company, as   Borrowers,   Congress
                 Financial Corporation   (Southwest)  and BankAmerica   Business
                 Credit, Inc.,  as Lenders, and  Congress Financial  Corporation
                 (Southwest),   as   Agent,  dated   March   17,  1997   (amends
                 Exhibit 10.16).

(8)  10.22 -   Pamida Holdings Corporation 1992 Stock Option Plan.

(7)  10.23 -   Employment  Agreement dated April 19, 1993,  between
                 Pamida, Inc. and Steven S. Fishman.

(10) 10.24 -   Amendment  No.  1 to Employment Agreement, dated January 3, 1994,
                 between  Pamida, Inc.  and  Steven  S. Fishman  (amends Exhibit
                 10.23).

(11) 10.25 -   Amendment No. 2 to Employment Agreement, dated January  23, 1995,
                 between  Pamida,  Inc.  and Steven  S. Fishman  (amends Exhibit
                 10.23).

(12) 10.26 -   Employment   Agreement  dated  September  22,  1995, among Pamida
                 Holdings Corporation,  Pamida, Inc. and  Steven S. Fishman.

(14) 10.27 -   Amendment  No.  1 to Employment  Agreement among Pamida  Holdings
                 Corporation,  Pamida,  Inc., and  Steve S. Fishman dated August
                 29,  1996  (amends Exhibit 10.26).

     10.28 -   Amendment  No.  2 to Employment Agreement among  Pamida  Holdings
                 Corporation, Pamida, Inc., and Steven S. Fishman dated March 6,
                 1997 (amends Exhibit 10.26).

(11) 10.29 -   Pamida, Inc. 1995 Deferred Compensation Plan.

     10.30 -   Employment  Agreement  dated as  of March 6,  1997, among  Pamida
                 Holdings Corporation, Pamida, Inc., and Frank A. Washburn.

     10.31 -   Employment  Agreement  dated as  of March 6,  1997, among  Pamida
                 Holdings Corporation, Pamida, Inc., and George R. Mihalko.

     10.32 -   Long-Term  Incentive Award Agreement  dated as  of March 6, 1997,
                 between Pamida, Inc. and, Steven S. Fishman.

     10.33 -   Long-Term Incentive  Award  Agreement dated  as of March 6, 1997,
                 between Pamida, Inc., and Frank A. Washburn.

     10.34 -   Long-Term Incentive  Award  Agreement dated  as of March 6, 1997,
                 between Pamida, Inc., and George R. Mihalko.

(1)  22.1  -   Subsidiaries of Pamida Holdings Corporation.

     23.1  -   Consent of Deloitte & Touche LLP.

     23.2  -   Consent of Coopers & Lybrand L.L.P.

     24.1  -   Power of Attorney

     27.1  -   Financial Data Schedule (EDGAR filing only)

-------------------------

(1)  Previously filed as an exhibit to Registration Statement of Pamida Holdings
     Corporation on Form S-1 (Registration No. 33-35324) and incorporated herein
     by this reference.

(2)  Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings   Corporation   for  the  period  ended  October  28,  1990,   and
     incorporated herein by this reference.

(3)  Previously filed as an exhibit to Registration Statement of Pamida, Inc. on
     Form S-l  (Registration  No.  33-10980)  and  incorporated  herein  by this
     reference.

(4)  Previously  filed as an  exhibit  to Form  10-K  Annual  Report  of  Pamida
     Holdings  Corporation  for the fiscal  year  ended  February  3, 1991,  and
     incorporated herein by this reference.

(5)  Previously  filed as an exhibit to Registration  Statement of Pamida,  Inc.
     and Pamida Holdings Corporation on Form S-1 (Registration No. 33-57990) and
     incorporated herein by this reference.

(6)  Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings  Corporation  for the period ended May 2, 1993,  and  incorporated
     herein by this reference.

(7)  Previously  filed as an  exhibit to Form 10-Q  Quarterly  Report of Pamida,
     Inc.  (File  No.  33-57990)  for the  period  ended  August  1,  1993,  and
     incorporated herein by this reference.

(8)  Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings  Corporation for the period ended August 1, 1993, and incorporated
     herein by this reference.

(9)  Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings  Corporation for the period ended July 31, 1994, and  incorporated
     herein by this reference.

(10) Previously  filed as an  exhibit  to Form  10-K  Annual  Report  of  Pamida
     Holdings  Corporation  for the fiscal  year ended  January  30,  1994,  and
     incorporated herein by this reference.

(11) Previously  filed as an  exhibit  to Form  10-K  Annual  Report  of  Pamida
     Holdings  Corporation  for the fiscal  year ended  January  29,  1995,  and
     incorporated herein by this reference.

(12) Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings   Corporation   for  the  period  ended  October  29,  1995,   and
     incorporated herein by this reference.

(13) Previously  filed as an  exhibit  to Form  10-K  Annual  Report  of  Pamida
     Holdings  Corporation  for the fiscal  year ended  January  28,  1996,  and
     incorporated herein by this reference.

(14) Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings   Corporation   for  the  period  ended  October  27,  1996,   and
     incorporated herein by this reference.

                                      * * *

(b)  No reports on Form 8-K were filed by the registrant during the last quarter
     of the period covered by this report.

                                   SIGNATURES

     Pursuant  to the  requirements  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.

Date:  April 15, 1997                   PAMIDA HOLDINGS CORPORATION

                                By:/s/  Steven S. Fishman
                                        Steven S. Fishman, Chairman
                                        of the Board, President and
                                        Chief Executive 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.


    /s/ Steven S. Fishman               Chairman of the Board,    April 15, 1997
    Steven S. Fishman                   President, Chief Executive
                                        Officer and Director


    /s/ George R. Mihalko               Senior Vice President,    April 15, 1997
    George R. Mihalko                   Chief Financial Officer
                                        and Treasurer


    /s/ Todd D. Weyhrich                Principal Accounting      April 15, 1997
    Todd D. Weyhrich                    Officer


    /s/ Frank A. Washburn               Director                  April 15, 1997
    Frank A. Washburn

            *                           Director                  April 15, 1997
    L. David Callaway, III

            *                           Director                  April 15, 1997
    Stuyvesant P. Comfort

            *                           Director                  April 15, 1997
    M. Saleem Muqaddam


            *                           Director                  April 15, 1997
    Peter J. Sodini

* By:  /s/ George R. Mihalko
       George R. Mihalko,
       Attorney-in-Fact






                           PAMIDA HOLDINGS CORPORATION
                          FORM 10-K -- FEBRUARY 2, 1997
                                  EXHIBIT INDEX

 Exhibit
  Number                            Description
 --------           ------------------------------------------------
 (1)  3.1             Restated Certificate of Incorporation of
                        Pamida Holdings Corporation, as amended.

 (2)  3.2             Revised By-Laws of Pamida Holdings
                        Corporation.

 (1)  3.3             Certificate of Amendment of Certificate of
                        Incorporation of Pamida Holdings Corporation
                        (amends Exhibit 3.1).

 (9)  3.4             Certificate of Amendment of Certificate of
                        Incorporation of Pamida Holdings Corporation
                        (amends Exhibit 3.1).

 (2)  4.1             Form of certificate representing shares of
                        the Common Stock of Pamida Holdings
                        Corporation.

 (6)  4.2             Indenture dated as of March 15, 1993, among
                        Pamida, Inc. as Issuer, Pamida Holdings
                        Corporation as Guarantor, and State Street
                        Bank and Trust Company as Trustee relating
                        to 11 3/4% Senior Subordinated Notes due
                        2003 of Pamida, Inc.

 (6)  4.3             Specimen form of 11 3/4% Senior Subordinated
                        Note due 2003 of Pamida, Inc.

 (3)  10.1            Stock and Note Purchase Agreement dated as
                        of July 29, 1986, among Pamida Holdings
                        Corporation, Citicorp Venture Capital, Ltd.,
                        Citicorp Capital Investors, Ltd., and the
                        individual purchasers who are parties
                        thereto.

 (1)  10.2            Amendment to Stock and Note Purchase
                        Agreement, dated July 31, 1990 (amends
                        Exhibit 10.1).

 (1)  10.3            Second Amendment to Stock and Note Purchase
                        Agreement, dated August 10, 1990 (amends
                        Exhibit 10.1).

 (1)  10.4            Third Amendment to Stock and Note Purchase
                        Agreement, dated September 13, 1990 (amends
                        Exhibit 10.1).

 (1)  10.5            Registration Agreement dated July 29, 1986,
                        among Pamida Holdings Corporation and the
                        persons listed on the signature pages
                        thereof.

 (1)  10.6            Amendment No. 1 to Registration Agreement,
                        dated August 10, 1990, among Pamida Holdings
                        Corporation, Citicorp Venture Capital, Ltd.
                        and C. Clayton Burkstrand (amends
                        Exhibit 10.5).

 (1)  10.7            Exchange Agreement dated August 10, 1990,
                        among Pamida Holdings Corporation, Citicorp
                        Venture Capital, Ltd. and Court Square
                        Capital Limited.

 (1)  10.8            Agreement dated September 13, 1990, among
                        Pamida Holdings Corporation, Citicorp
                        Venture Capital, Ltd. and Court Square
                        Capital Limited.

 (2)  10.9            Agreement dated September 20, 1990, among
                        Pamida Holdings Corporation, Citicorp
                        Venture Capital, Ltd. and Court Square
                        Capital Limited.

 (4)  10.10           Exchange Agreement dated as of December 1,
                        1990 between Pamida Holdings Corporation,
                        Citicorp Venture Capital, Ltd. and Court
                        Square Capital Limited.

 (4)  10.11           Form of 14.25% Junior Subordinated
                        Promissory Note of Pamida Holdings
                        Corporation.

 (4)  10.12           Form of Indemnification Agreement between
                        Pamida Holdings Corporation and its officers
                        and directors.

 (5)  10.13           Note Amendment Agreement dated as of
                        December 18, 1992, between Pamida Holdings
                        Corporation and Court Square Capital Limited.

 (5)  10.14           Note Amendment Agreement No. 2 dated as of
                        March 1, 1993, between Pamida Holdings
                        Corporation and Citicorp Investments Inc.

 (5)  10.15           Tax-Sharing Agreement dated as of February
                        2, 1992, among Pamida Holdings Corporation,
                        Pamida, Inc., Seaway Importing company, and
                        Pamida Transportation Company.

 (6)  10.16           Loan and Security Agreement dated March 30,
                        1993, by and among Congress Financial
                        Corporation (Southwest) and BA Business
                        Credit, Inc. as Lenders, Congress Financial
                        Corporation (Southwest) as Agent for the
                        Lenders, and Pamida, Inc. and Seaway
                        Importing Company as Borrowers.

 (12) 10.17           Amendment No. 1 to Loan and Security
                        Agreement, dated January 23, 1995, among
                        Pamida, Inc. and Seaway Importing Company as
                        Borrowers, Congress Financial Corporation
                        (Southwest) as a Lender and Agent, and BA
                        Business Credit Inc. as a Lender (amends
                        Exhibit 10.16).

 (13) 10.18           Amendment No. 2 to Loan and Security
                        Agreement, dated January 28, 1996, among
                        Pamida, Inc. and Seaway Importing Company as
                        Borrowers, Congress Financial Corporation
                        (Southwest) as a Lender and Agent, and
                        BankAmerica Business Credit as a Lender
                        (amends Exhibit 10.16).

 (14) 10.19           Amendment No. 3 to Loan and Security
                        Agreement among Pamida, Inc. and Seaway
                        Importing Company, as Borrowers, Congress
                        Financial Corporation (Southwest) and
                        BankAmerica Business Credit, Inc., as
                        Lenders, and Congress Financial Corporation
                        (Southwest), as Agent, dated September 16,
                        1996 (amends Exhibit 10.16).

      10.20           Amendment No. 4 to Loan and Security
                        Agreement among Pamida, Inc. and Seaway
                        Importing Company, as Borrowers, Congress
                        Financial Corporation (Southwest) and
                        BankAmerica Business Credit, Inc., as
                        Lenders, and Congress Financial Corporation
                        (Southwest), as Agent, dated January 31,
                        1997 (amends Exhibit 10.16).

      10.21           Amendment No. 5 to Loan and Security
                        Agreement among Pamida, Inc. and Seaway
                        Importing Company, as Borrowers, Congress
                        Financial Corporation (Southwest) and
                        BankAmerica Business Credit, Inc., as
                        Lenders, and Congress Financial Corporation
                        (Southwest), as Agent, dated March 17, 1997
                        (amends Exhibit 10.16).

 (8)  10.22           Pamida Holdings Corporation 1992 Stock
                        Option Plan.

 (7)  10.23           Employment Agreement dated April 19, 1993,
                        between Pamida, Inc. and Steven S. Fishman.

 (10) 10.24           Amendment No. 1 to Employment Agreement,
                        dated January 3, 1994, between Pamida, Inc.
                        and Steven S. Fishman (amends Exhibit 10.23).

 (11) 10.25           Amendment No. 2 to Employment Agreement,
                        dated January 23, 1995, between Pamida, Inc.
                        and Steven S. Fishman (amends Exhibit 10.23).

 (12) 10.26           Employment Agreement dated September 22,
                        1995, among Pamida Holdings Corporation,
                        Pamida, Inc. and Steven S. Fishman.

 (14) 10.27           Amendment No. 1 to Employment Agreement
                        among Pamida Holdings Corporation, Pamida,
                        Inc., and Steven S. Fishman dated August 29,
                        1996 (amends Exhibit 10.26).

      10.28           Amendment No. 2 to Employment Agreement
                        among Pamida Holdings Corporation, Pamida,
                        Inc., and Steven S. Fishman dated March 6,
                        1997 (amends Exhibit 10.26).

 (11) 10.29           Pamida, Inc. 1995 Deferred Compensation
                        Plan.

      10.30           Employment Agreement dated as of March 6,
                        1997, among Pamida Holdings Corporation,
                        Pamida, Inc., and Frank A. Washburn.

      10.31           Employment Agreement dated as of March 6,
                        1997, among Pamida Holdings Corporation,
                        Pamida, Inc., and George R. Mihalko.

      10.32           Long-Term Incentive Award Agreement dated as
                        of March 6, 1997, between Pamida, Inc. and,
                        Steven S. Fishman.

      10.33           Long-Term Incentive Award Agreement dated as
                        of March 6, 1997, between Pamida, Inc., and
                        Frank A. Washburn.

      10.34           Long-Term Incentive Award Agreement dated as
                        of March 6, 1997, between Pamida, Inc., and
                        George R. Mihalko.

 (1)  22.1            Subsidiaries of Pamida Holdings Corporation.

      23.1            Consent of Deloitte & Touche LLP.

      23.2            Consent of Coopers & Lybrand L.L.P.

      24.1            Power of Attorney.

      27.1            Financial Data Schedule (EDGAR filing only)
-------------------------

(1)  Previously filed as an exhibit to Registration Statement of Pamida Holdings
     Corporation on Form S-1 (Registration No. 33-35324) and incorporated herein
     by this reference.

(2)  Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings   Corporation   for  the  period  ended  October  28,  1990,   and
     incorporated herein by this reference.

(3)  Previously filed as an exhibit to Registration Statement of Pamida, Inc. on
     Form S-l  (Registration  No.  33-10980)  and  incorporated  herein  by this
     reference.

(4)  Previously  filed as an  exhibit  to Form  10-K  Annual  Report  of  Pamida
     Holdings  Corporation  for the fiscal  year  ended  February  3, 1991,  and
     incorporated herein by this reference.

(5)  Previously  filed as an exhibit to Registration  Statement of Pamida,  Inc.
     and Pamida Holdings Corporation on Form S-1 (Registration No. 33-57990) and
     incorporated herein by this reference.

(6)  Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings  Corporation  for the period ended May 2, 1993,  and  incorporated
     herein by this reference.

(7)  Previously  filed as an  exhibit to Form 10-Q  Quarterly  Report of Pamida,
     Inc.  (File  No.  33-57990)  for the  period  ended  August  1,  1993,  and
     incorporated herein by this reference.

(8)  Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings  Corporation for the period ended August 1, 1993, and incorporated
     herein by this reference.

(9)  Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings  Corporation for the period ended July 31, 1994, and  incorporated
     herein by this reference.

(10) Previously  filed as an  exhibit  to Form  10-K  Annual  Report  of  Pamida
     Holdings  Corporation  for the fiscal  year ended  January  30,  1994,  and
     incorporated herein by this reference.

(11) Previously  filed as an  exhibit  to Form  10-K  Annual  Report  of  Pamida
     Holdings  Corporation  for the fiscal  year ended  January  29,  1995,  and
     incorporated herein by this reference.

(12) Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings   Corporation   for  the  period  ended  October  29,  1995,   and
     incorporated herein by this reference.

(13) Previously  filed as an  exhibit  to Form  10-K  Annual  Report  of  Pamida
     Holdings  Corporation  for the fiscal  year ended  January  28,  1996,  and
     incorporated herein by this reference.

(14) Previously  filed as an  exhibit  to Form 10-Q  Quarterly  Report of Pamida
     Holdings   Corporation   for  the  period  ended  October  27,  1996,   and
     incorporated herein by this reference.