<PAGE>
 
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                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549
 
                               ----------------
 
                                   FORM 10-K
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
   SECURITIES EXCHANGE ACT OF 1934
 
   For the fiscal year ended December 31, 1998
 
                                      OR
 
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
   SECURITIES ACT OF 1934
 
                       Commission file number: 000-24713
 
                               ----------------
 
                              EBS Pension, L.L.C.
            (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                            <C>
                  Delaware                                       42-1466520
        (State or other jurisdiction                          (I.R.S. Employer
              of incorporation)                            Identification Number)
</TABLE>
 
                         Norwest Bank Minnesota, N.A.
                        Sixth and Marquette: M.S. 0069
                       Minneapolis, Minnesota 55479-0069
                   (Address of principal executive offices)
 
                                (612) 667-4803
             (Registrant's telephone number, including area code)
 
          Securities registered pursuant to Section 12(b) of the Act:
 
                                     None
 
          Securities registered pursuant to Section 12(g) of the Act:
 
                           Class A Membership Units
                               (Title of class)
 
  Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
 
  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
 
  There is no aggregate market value of the registrant's Class A Membership
Units held by nonaffiliates of the registrant as of December 31, 1998. Book
value of the registrant's Class A Membership Units as of December 31, 1998 was
approximately $1.68 million.
 
  There were 10,000,000 Class A Membership Units outstanding as of February
28, 1998.
 
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<PAGE>
 
                                    PART I
 
ITEM 1--BUSINESS
 
  Unless otherwise noted, references to the "Company" shall mean EBS Pension,
L.L.C., a Delaware limited liability company.
 
Background
 
  On September 9, 1997, the United States Bankruptcy Court for the District of
Delaware (the "Bankruptcy Court") entered an order in accordance with section
1129 of the Bankruptcy Code, 11 U.S.C. (S)(S) 101-1330, et seq., (the
"Bankruptcy Code") confirming the Amended Joint Plan of Reorganization Under
Chapter 11 of the Bankruptcy Code (the "Plan") filed by Edison Brothers
Stores, Inc. ("Edison") and its affiliated debtors in possession (collectively
with Edison, the "Debtors"). The Plan became effective on September 26, 1997
(the "Effective Date").
 
  The Company was established pursuant to the Plan and the EBS Pension, L.L.C.
Members Agreement (the "Members Agreement"). Under the Plan, each holder of an
Allowed General Unsecured Claim (as defined in the Plan) against Edison was
entitled to receive a distribution on account of such claims, which
distribution included, among other things, the holder's pro rata share of
Class A Membership Units in the Company. The initial distribution date under
the Plan occurred on or about December 12, 1997. Accordingly, in late December
of 1997, holders of Allowed General Unsecured Claims began receiving
membership certificates evidencing their ownership of Class A Membership Units
in the Company. As of December 31, 1998, there were 10,000,000 Class A
Membership Units and 0 Class B Membership Units of the Company issued and
outstanding.
 
  The Plan further provided for the Debtors' transfer to the Company of their
right to receive the Pension Plan Proceeds, which the Plan defines as the cash
proceeds (the "Pension Plan Proceeds") to be received by the Debtors as a
result of the termination of the Edison Brothers Stores, Inc. Pension Plan,
(the "Pension Plan"), net of (a) the Pension Plan assets transferred to a
qualified replacement pension plan; (b) all costs, fees and expenses
(collectively, the "Pension Plan Termination Costs") relating to termination
of the Pension Plan and establishment of the replacement plan; and (c) all
applicable taxes incurred, or for which a reserve (the "Pension Plan Tax
Reserve") is established by Edison, in connection with termination of the
Pension Plan. The Pension Plan assets are the residual assets from the Pension
Plan. The Pension Plan was created for the purpose of providing pension
benefits to the employees of Edison. The Pension Plan was terminated by Edison
pursuant to an order of the Bankruptcy Court. Pursuant to the Plan, upon
termination of the Pension Plan, after (1) the liabilities of the Plan were
paid, (2) the required excise taxes were paid and the Pension Plan Tax Reserve
was established, (3) a replacement pension plan for the employees of Edison
was funded, and (4) the Pension Plan Termination Costs were paid, the residual
assets, i.e., the Pension Plan Proceeds, were distributed to the Company.
 
Company Formation and Summary of Certain Provisions of the Members Agreement
 
 Formation
 
  In accordance with the Plan, the Certificate of Formation of the Company was
filed on September 24, 1997 with the office of the Delaware Secretary of
State, for the purpose of forming the Company as a limited liability company
under the provisions and subject to the requirements of the State of Delaware,
in particular the Delaware Limited Liability Company Act, Del. Code Ann.
tit.6, ch. 18 (the "Delaware Act"). The Certificate of Formation became
effective, thereby providing for the formation of the Company, on September
25, 1997 (the "Inception Date").
 
 Purposes
 
  The Company is organized solely for the purposes of (a) receiving and
administering the "Company Assets," which the Members Agreement defines as all
Pension Plan Proceeds as well as any other property or
 
                                       2
<PAGE>
 
proceeds acquired by the Company and; (b) distributing the Company Assets to
holders of Membership Units pursuant to the terms of the Members Agreement.
The Company has no objective to engage in the conduct of any other trade or
business. In essence, then, the Company constitutes a vehicle for receiving
the Pension Plan Proceeds and then allocating and distributing all net funds
to holders of Membership Units in the Company.
 
 Administration and the Manager
 
  The Company has no employees. The affairs of the Company are managed by the
Manager. The Manager of the Company, as duly designated by the Official
Committee of Unsecured Creditors appointed in the Debtors' Chapter 11 Case
(the "Creditors' Committee"), is Norwest Bank Minnesota, N.A. (in such
capacity, the "Manager"). As contemplated by the Members Agreement, the
principal office of the Company is maintained at the principal office of the
Manager, which is located at Sixth and Marquette Streets, Minneapolis,
Minnesota 55479-0069, Attn: Lon P. LeClair. The telephone number is (612) 667-
4803.
 
  In furtherance of the Company's purposes and subject to the retained
jurisdiction of the Bankruptcy Court as provided for in the Plan, the Manager
is to make continuing efforts to (1) receive the Pension Plan Proceeds, and
(2) make distributions of any Pension Plan Proceeds to the Members, in each
case in an expeditious but orderly manner intended reasonably to maximize the
value of such distributions to the Members, but subject to the judgment and
discretion of the Manager and the provisions of the Members Agreement. The
Manager is not liable to the Company or to any Member for any action or
inaction, except in the case of its willful breach of a material provision of
the Members Agreement or gross negligence in connection with the performance
of its duties under the Members Agreement.
 
  The Manager is empowered to retain such independent experts and advisors
(including, but not limited to, law firms, tax advisors, consultants, or other
professionals) as the Manager may select to aid in the performance of its
duties and responsibilities and to perform such other functions as may be
appropriate in furtherance of the intent and purposes of the Members
Agreement. The Manager has selected the law firm of Jones, Day, Reavis & Pogue
("Jones Day") to serve as counsel to the Company. Prior to the Effective Date,
Jones Day served as counsel to the Creditors' Committee. The Manager has
selected PricewaterhouseCoopers LLP to provide the Company with financial
reporting and consulting services as well as tax-related services. Norwest
Bank Minnesota, N.A., which also serves as the Disbursing Agent under the Plan
and the Transfer Agent under the Members Agreement, maintains the ownership
registers of the Company, coordinates distributions to Members of the Company
and performs related administrative duties. Rubin, Brown, Gornstein & Co., LLP
serves as the Company's independent auditors.
 
  The Members Agreement also requires the Manager to designate one of the
Members as the "Tax Matters Partner" (as defined in the Section 6231 of the
Internal Revenue Code). The Tax Matters Partner is required to represent the
Company (at the Company's expense) in connection with all examinations of the
Company's affairs by tax authorities and to expend Company funds for
professional services associated therewith. The Tax Matters Partner also
arranges for the preparation and timely filing of all returns required to be
filed by the Company and the distribution of Form K-1 or other similar forms
to all Members. In accordance with the Members Agreement, the Manager has
designated Citibank, N.A., through its authorized representative Randolph I.
Thornton, Jr., to serve as the Tax Matters Partner of the Company.
 
  Subject to the retained jurisdiction of the Bankruptcy Court as provided for
in the Plan, but without prior or further authorization, the Manager may
control and exercise authority over the Company Assets, over the acquisition,
management and disposition thereof and over the management and conduct of the
Company to the extent necessary to enable the Manager to fulfill the intent
and purposes of the Members Agreement. No person dealing with the Company is
obligated to inquire into the authority of the Manager in connection with the
acquisition, management or disposition of the Company Assets. In connection
with the administration of the Company Assets and the management of the
Company's affairs, the Manager has the power to take any and all actions as,
in the Manager's sole discretion, are necessary or advisable to effectuate the
purposes of the Company. The Manager may not at any time, on behalf of the
Company or the Members, enter into or engage in
 
                                       3
<PAGE>
 
any trade or business, and no part of the Company Assets will be used or
disposed of by the Manager in furtherance of any such trade or business. All
decisions and actions taken by the Manager under the authority of the Members
Agreement will be binding upon all of the Members and the Company. Without the
consent of all of the Members, the Manager may not (1) take any action in
contravention of the Members Agreement; (2) take any action which would make
it impossible to carry on the activities of the Company; or (3) possess
property of the Company or assign the Company's rights in specific property
for other than Company purposes.
 
 Term of the Company; Dissolution
 
  Unless dissolved earlier because an adjudication of bankruptcy or because of
the unanimous written consent of all Members, the Company's existence will
terminate on September 26, 2000 (the third anniversary of the Effective Date),
unless extended by the Manager (with the approval of the Bankruptcy Court) for
one or more successive periods of two years each if the Company Assets have
not been fully liquidated and distributed or all Disputed General Unsecured
Claims (as defined in the Plan) have not been resolved. In the event of the
Company's dissolution, following the payment of, or provision for, all debts
and liabilities of the Company and all expenses of liquidation, and subject to
the right of the Liquidating Agent (as defined in the Members Agreement) to
set up reasonable cash reserves for any contingent or unforeseen liabilities
or obligations of the Company, all assets of the Company (or the proceeds
thereof) will be distributed to the Members in accordance with their
respective Capital Account balances. No Member will have any recourse against
Edison or any other Member for any distributions with respect to such Member's
Capital Account balances.
 
OPERATIONS OF THE COMPANY SINCE ITS FORMATION
 
 The Pension Plan Refund
 
  The Pension Plan was terminated as of May 31, 1997. Data provided to the
Company by Edison indicates that Edison received a cash refund of $51.41
million on account of the Pension Plan termination. After deducting Pension
Plan Termination Costs of $1.68 million and establishing a Pension Plan Tax
Reserve of $5.7 million, on January 23, 1998, Edison remitted Pension Plan
Proceeds totaling $43,985,315.40 to the Company.
 
 Initial Distribution to Members
 
  The Members Agreement obligates the Manager to facilitate the prompt
distribution of Pension Plan Proceeds to holders of Class A Membership Units
in the Company. Accordingly, on February 13, 1998, the Manager, after
establishing the reserves and making the calculations discussed below,
distributed the aggregate sum of $39,427,156 to 1,337 certificated holders of
record of Class A Membership Units as of February 11, 1998. This aggregate
distribution was calculated as follows:
 
<TABLE>
   <S>                                                              <C>
   Total Pension Plan Proceeds Received...........................  $43,985,315
   January Interest Earned........................................  $    35,197
                                                                    -----------
   Total Funds On Deposit (2/11/98)...............................  $44,020,512
                                                                    ===========
   Less:
     Reserve for Litigation Indemnification.......................  $ 1,500,000
     Reserve for Administrative Expenses..........................  $   300,000
     Tax Distribution to Edison...................................  $       959
                                                                    -----------
       Total Amount Available For First Distribution To Members...  $42,219,553
                                                                    ===========
   Less:
     Reserve for Disputed Claims and Claims Not Yet Eligible for
     Distribution.................................................  $ 2,792,397
                                                                    -----------
       Total Distributed To Holders Of Class A Membership Units On
       February 13, 1998..........................................  $39,427,156
                                                                    ===========
</TABLE>
 
                                       4
<PAGE>
 
  The reserve for litigation indemnification (the "Indemnification Reserve")
was established in accordance with the Plan and the Members Agreement. See
"Item 2. Financial Information--Management's Discussion and Analysis of
Financial Condition and Results of Operations".
 
STATUS AS OF DECEMBER 31, 1998
 
  As of December 31, 1998, the balance in the Company's operating account was
$286,927. Following satisfaction of administrative expenses, any funds
remaining on deposit would be available for distribution to holders of Class A
Membership Units in the Company. In addition, any remaining balance of the
$1.5 million Indemnification Reserve ultimately would be available for such
distribution.
 
  An additional potential component of a future distribution is the Pension
Plan Tax Reserve currently being held by Edison. In connection with the
termination of the Pension Plan, Edison sought a private letter ruling (the
"Tax Ruling") from the Internal Revenue Service ("IRS") to the effect that any
income realized by Edison as a result of the Pension Plan termination will be
available to offset certain deductions realized by the Debtors in the same
taxable year. On September 28, 1998, the IRS issued the Tax Ruling. The
Company was advised that as a result of the Tax Ruling, there are no
additional taxes to be paid by Edison in connection with termination of the
Pension Plan.
 
  On March 9, 1999, Edison filed a voluntary petition for relief under the
provisions of Chapter 11 of the Bankruptcy Code in the United States
Bankruptcy Court for the District of Delaware. In its petition, Edison listed
the Company among its largest unsecured creditors with a claim totaling
approximately $5.7 million. The claim stems from Edison's retention of the
Pension Plan Tax Reserve.
 
  As of the date hereof, Edison has declined to release the Pension Plan Tax
Reserve to the Company, in light of an ongoing audit by the Pension Benefit
Guaranty Corporation ("PBGC") of Edison's pension plan termination. Edison has
advised the Company that if the PBGC determines that Edison is obligated to
make an additional contribution to the qualified replacement plan established
by Edison upon termination of the Pension Plan, Edison may seek to make such
contribution from the funds in the Pension Plan Tax Reserve. The Company
disputes that Edison is entitled to utilize the Pension Plan Tax Reserve for
such a purpose. There can be no assurance, however, that the Company will
prevail if the pending dispute is adjudicated by the Bankruptcy Court or
otherwise, and the Company has not recorded any receivable due from Edison on
its financial statements in connection with the Pension Plan Tax Reserve.
There can be no assurance that any portion of the Tax Reserve Funds will ever
be collected by the Company.
 
  A meeting of Edison's largest creditors convened on Friday, March 19, 1999
at the office of the United States Trustee for the District of Delaware (the
"United States Trustee"). At this meeting, the United States Trustee appointed
representatives of the creditors to the Official Creditors' Committee (the
"1999 Committee"). Although the Company was not appointed to the Committee, as
one of Edison's largest creditors, the Company will continue to actively
monitor the progress of Edison's bankruptcy case.
 
ITEM 2--PROPERTIES
 
  The Company does not own or lease any property.
 
ITEM 3--LEGAL PROCEEDINGS
 
  Other than the Tax Ruling described in Item 1 of this Annual Report on Form
10-K, the Company is not involved in any legal proceedings.
 
ITEM 4--SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
 
  No matters were submitted to holders of Membership Units for vote during the
fourth quarter of the fiscal year ended December 31, 1998.
 
                                       5
<PAGE>
 
                                    PART II
 
ITEM 5--MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
  There is no established public trading market for the Company's Class A
Membership Units. As of December 31, 1998, there were 2,085 holders of record
of the Class A Membership Units. See Item 12-- "Security Ownership of Certain
Beneficial Owners and Management" for more information.
 
ITEM 6--SELECTED FINANCIAL DATA
 
  The following table sets forth selected financial information of the Company
as of and for the period ended December 31, 1997 since the Inception Date and
as of and for the year ended December 31, 1998. The selected financial data as
of and for the period ended December 31, 1997 and as of and for the year ended
December 31, 1998 has been derived from the Company's financial statements,
which were audited by Rubin, Brown, Gornstein & Co., LLP. The following
information should be read in conjunction with the Company's financial
statements and notes thereto included elsewhere herein and "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
presented below.
 
<TABLE>
<CAPTION>
                                                       Period
                                                        Ended      Year ended
                                                      December    December 31,
                                                     31, 1997(1)      1998
                                                     -----------  ------------
   <S>                                               <C>          <C>
   Operating Statement Data:
   Interest income.................................. $         0     321,488
   General and administrative expenses..............      51,910     256,064
   Net (loss) income................................     (51,910)     65,424
   Distribution per Class A Membership Unit.........           0        4.23(2)
   Balance Sheet Data (at period end):
   Cash.............................................           0   1,786,927
   Interest and distribution receivable.............           0      14,313
   Due from Edison.................................. $43,985,315           0
   Total assets.....................................  43,985,315   1,801,240
   Accrued expenses.................................      51,910     120,234
   Members' equity..................................  43,933,405   1,681,006
</TABLE>
--------
(1) The Company's inception date was September 25, 1997.
 
(2) This represents an average distribution made per Class A Membership Unit
    during the year. Actual distributions to Class A Membership Unit holders
    may differ. The following includes a detailed discussion of the
    distributions made during the year. During February 1998, the Company
    distributed $39.4 million of the initial proceeds received from Edison to
    the holders of the 9,338,601 Class A Membership Units that were
    outstanding at the date of distribution. During June 1998, the Company
    distributed $0.6 million of reserved amounts to the holders of the 128,337
    Class A Membership Units that were distributed in June 1998. During
    November and December 1998, Edison exchanged a total of 533,062 Class B
    Membership Units for 533,062 Class A Membership Units of the Company and
    simultaneously distributed such Class A Membership Units to holders of
    Allowed General Unsecured Claims that had not previously received Class A
    Membership Units. On December 31, 1998, the Company distributed $2.3
    million of reserved amounts to holders of the Class A Membership Units of
    record that were distributed in exchange for Class B Membership Units in
    November and December 1998.
 
                                       6
<PAGE>
 
ITEM 7--MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS
 
  The following is a discussion and analysis of the financial condition and
results of operations of the Company as of and for the period ended December
31, 1997, and as of and for the year ended December 31, 1998, and of certain
factors that may affect the Company's prospective financial condition and
results of operations. The following should be read in conjunction with the
Company's Financial Statements and Notes thereto included elsewhere herein.
This discussion contains certain forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from the results expressed in, or implied by, such statements.
 
Results of Operations
 
  The Company, which was formed pursuant to the Plan and the Members
Agreement, is a limited purpose entity which may not engage in any business.
The Company was organized for the exclusive purposes of (a) receiving and
administering the Company Assets, and (b) distributing the Company Assets to
holders of the Company's Class A Membership Units pursuant to the terms of the
Members Agreement.
 
  On January 23, 1998, the Company received from Edison the Pension Plan
Proceeds totaling approximately $44.0 million. The Company recognizes income
from interest earned on its funds. The Company invests such funds in a money
market fund investing solely in direct obligations of the United States
Government. The Members Agreement permits all funds received by the Company to
be temporarily invested in United States treasury bills and notes with
maturities of 12 months or less, institutional money market funds and demand
or time deposits and certificates of deposit with U.S. federal or state
commercial banks having primary capital of not less than $500 million. During
the period ended December 31, 1997, the Company did not recognize any interest
income because it did not receive the Pension Plan Proceeds until January
1998. During the year ended December 31, 1998, the Company recognized $321,488
of interest income. The amount of interest income recognized by the Company in
future periods will be dependent on, among other things, (1) fluctuations in
interest rates, (2) the amounts and timing of any amounts received in the
future from the Pension Plan Tax Reserve (described below), (3) the amounts
and timing of any distributions to holders of Class A Membership Units, and
(4) the amount and timing of the Company's expenses. The Company may in the
future receive funds currently held in the Pension Plan Tax Reserve,
aggregating approximately $5.7 million. At present, the Company has requested,
but not received, the funds currently on deposit as the Pension Plan Tax
Reserve. The Company believes that all Plan conditions precedent to the
Company's receipt of the Pension Plan Tax Reserve have been satisfied. There
can be no assurance, however, that any funds will be distributed to the
Company from the Pension Plan Tax Reserve.
 
  The Company's general and administrative expenses consist primarily of fees
payable to the Transfer Agent, the Manager, and the Company's lawyers and
accountants. The Company had expenses of $51,910 and $256,064 for the period
ended December 31, 1997 and the year ended December 31, 1998, respectively.
These expenses are expected to fluctuate in future periods primarily based on
the volume of any future disbursements on account of Class A Membership Units
and any actions the Company takes in attempting to collect the Pension Plan
Tax Reserve from Edison.
 
  The Company and EBS Litigation, L.L.C. (another limited liability company
formed pursuant to the Plan) have agreed to indemnify the Debtors and their
present or former officers, directors and employees from and against any
losses, claims, damages or liabilities by reason of any actions arising from
or relating to the Company and any actions taken or proceeding commenced by
EBS Litigation, L.L.C. (other than with respect to any Unresolved Avoidance
Claims (as defined in the Plan) that EBS Litigation, L.L.C. may have against
such persons other than in their capacities as officers, directors or
employees of the Debtors. Pursuant to the Plan, the Company established the
Litigation Reserve ($1.5 million) from the Pension Plan Proceeds for the
benefit of these indemnified persons, to pay their costs and expenses incurred
in defending the LLC Related Claims (as defined in the Plan). Payment of such
cost and expenses must first be sought from any applicable officers' and
 
                                       7
<PAGE>
 
directors' insurance policy and then from the Indemnification Reserve. The
Company's indemnification liability is limited to the amount of the Litigation
Reserve, i.e. an aggregate of $1.5 million. Although to date there has not
been any indemnification claim, there can be no assurance such a claim will
not be made in the future. All liabilities of the Company, including the
foregoing indemnification obligations, will be satisfied from the Company
Assets.
 
  At December 31, 1997, the Company had no cash or cash equivalents. At
December 31, 1998, the Company had cash and cash equivalents of approximately
$1.8 million, after approximately $42.3 million was distributed to holders of
Class A Membership Units in 1998. When determining the amount and timing of
distributions, the Manager considered, among other things, (1) the terms of
the Members Agreement governing distributions, and (2) the anticipated amount
of necessary reserves and future administrative expenses. The amount and
timing of any future distributions of Pension Plan Proceeds will be determined
by the Manager in accordance with the terms of the Members Agreement. There
can be no assurance as to the amount (if any) of any further distributions
that will be made.
 
  The Company is classified as a partnership for federal income tax purposes
and, therefore, does not pay any taxes. Instead, the Members pay taxes on
their proportionate share of the Company's income.
 
Year 2000 Issues
 
  In the light of the limited nature of the Company's activities, it does not
believe its operations or financial condition are affected by Year 2000
issues, except insofar as it would be affected by a general interruption of
telephone and utility services or if its Transfer Agent were unable to process
distributions or transfers of Membership Units. The Company will seek written
assurances from its Transfer Agent as to Year 2000 compliance. If the Company
does not receive adequate assurances or if, notwithstanding those assurances,
the Transfer Agent were noncompliant, it would replace the Transfer Agent with
one that has systems that are Year 2000 compliant.
 
 
                                       8
<PAGE>
 
ITEM 8--FINANCIAL STATEMENTS
 
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
                         Independent Auditors' Report
 
                      Rubin, Brown, Gornstein & Co., LLP
                           230 South Bemiston Avenue
                              St. Louis, MO 63105
 
Members
EBS Pension, L.L.C.
 
  We have audited the accompanying balance sheet of EBS Pension, L.L.C., a
Delaware limited liability company, as of December 31, 1997 and December 31,
1998 and the related statements of operations, changes in members' equity and
cash flows for the period beginning September 25, 1997 and ended December 31,
1997 and for the year ended December 31, 1998. 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 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 financial statements referred to above present fairly,
in all material respects, the financial position of EBS Pension, L.L.C. as of
December 31, 1997 and December 31, 1998, and the results of its operations and
its cash flows for the period beginning September 25, 1997 and ended December
31, 1997 and for the year ended December 31, 1998, in conformity with
generally accepted accounting principles.
 
                                          /s/ RUBIN, BROWN, GORNSTEIN & CO.,
                                           LLP
                                          -------------------------------------
                                          Rubin, Brown, Gornstein & Co., LLP
 
March 2, 1999
 
                                       9
<PAGE>
 
                              EBS PENSION, L.L.C.
 
                                 Balance Sheet
                           December 31, 1998 and 1997
 
<TABLE>
<CAPTION>
                                                            December 31,
                                                       ----------------------
                                                          1998       1997
                                                       ---------- -----------
 
<S>                                                    <C>        <C>
ASSETS
 
Cash and cash equivalents
  Available for general operations.................... $  286,927 $       --
  Available for anticipated cost of legal
   indemnification of officers........................  1,500,000         --
Interest and distribution receivable..................     14,313         --
Due from Edison Brothers Stores, Inc. ................        --   43,985,315
                                                       ---------- -----------
    Total assets...................................... $1,801,240 $43,985,315
                                                       ========== ===========
 
LIABILITIES
 
Accrued expenses...................................... $  112,531 $    51,910
Overdrawn cash balance................................      7,703         --
                                                       ---------- -----------
    Total liabilities.................................    120,234      51,910
                                                       ---------- -----------
 
Members' equity:
Membership Units (Class A--10,000,000 authorized,
 10,000,000 and 9,058,041 issued and outstanding at
 December 31, 1998 and 1997, respectively; Class B--0
 and 941,959 authorized, issued and outstanding at
 December 31, 1998 and 1997, respectively)
Paid-in capital.......................................  1,667,492  43,985,315
Retained earnings.....................................     13,514     (51,910)
                                                       ---------- -----------
    Total members' equity.............................  1,681,006  43,933,405
                                                       ---------- -----------
    Total liabilities and members' equity............. $1,801,240 $43,985,315
                                                       ========== ===========
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                       10
<PAGE>
 
                              EBS PENSION, L.L.C.
 
                            Statements of Operations
                For the Periods Ended December 31, 1998 and 1997
 
<TABLE>
<CAPTION>
                                                                  Period
                                                            September 25, 1997
                                                Year ended  (date of inception)
                                               December 31,       through
                                                   1998      December 31, 1997
                                               ------------ -------------------
<S>                                            <C>          <C>
Income:
  Interest....................................   $321,488        $    --
                                                 --------        --------
    Total income..............................   $321,488        $    --
                                                 --------        --------
Expenses:
  Manager fees................................     63,565             --
  Accounting fees.............................     37,000          20,000
  Legal fees..................................     82,600          13,288
  Transfer agent and settlement administration
   fees.......................................     71,060          18,621
  Other.......................................      1,839             --
                                                 --------        --------
    Total expenses............................    256,064          51,909
                                                 --------        --------
  Net income (loss)...........................   $ 65,424        $(51,909)
                                                 ========        ========
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                       11
<PAGE>
 
                              EBS PENSION, L.L.C.
 
                    Statement of Changes in Members' Equity
                For the Periods Ended December 31, 1998 and 1997
 
<TABLE>
<CAPTION>
                          Class A     Class B
                         Membership  Membership    Paid In     Retained
                           Units       Units       Capital     Earnings     Total
                         ----------  ----------  ------------  --------  ------------
<S>                      <C>         <C>         <C>           <C>       <C>
Balance, September 25,
 1997...................        --          --   $        --   $    --   $        --
Original capital
 contribution...........        --   10,000,000    43,985,315       --     43,985,315
Units transferred.......  9,058,041  (9,058,041)          --        --            --
Period loss.............        --          --            --    (51,910)      (51,910)
                         ----------  ----------  ------------  --------  ------------
Balance, December 31,
 1997...................  9,058,041     941,959    43,985,315   (51,910)   43,933,405
Capital distribution....        --          --    (42,318,251)      --    (42,318,251)
Units transferred.......    942,238    (942,238)          --        --            --
Units and proceeds
 returned from June
 distribution...........       (279)        279           428       --            428
Current year income.....        --          --            --     65,424        65,424
                         ----------  ----------  ------------  --------  ------------
Balance, December 31,
 1998................... 10,000,000           0  $  1,667,492  $ 13,514  $  1,681,006
                         ==========  ==========  ============  ========  ============
</TABLE>
 
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                       12
<PAGE>
 
                              EBS PENSION, L.L.C.
 
                            Statement of Cash Flows
                For the Periods Ended December 31, 1998 and 1997
 
<TABLE>
<CAPTION>
                                                                    Period
                                                              September 25, 1997
                                                Year ended    (date of inception)
                                               December 31,         through
                                                   1998        December 31, 1997
                                               -------------  -------------------
<S>                                            <C>            <C>
Cash flows from operating activities:
  Net income (loss)........................... $      65,424      $   (51,910)
  Reconciliation of net income (loss) to cash
   flows provided by operating activities:
  Decrease in due from Edison Brothers,
   Inc. ......................................    43,985,315              --
  Increase in interest and distribution
   receivable.................................       (14,313)             --
  Increase in liabilities.....................        68,324           51,910
                                               -------------      -----------
    Cash flows provided by operating
     activities...............................    44,104,750              --
                                               -------------      -----------
Cash flows from financing activities:
  Capital distribution, net...................   (42,317,823)             --
                                               -------------      -----------
    Cash flows used in financing activities...   (42,317,823)             --
 
Net increase in cash and cash equivalents.....     1,786,927              --
Cash and cash equivalents at beginning of
 period.......................................           --               --
                                               -------------      -----------
Cash and cash equivalents at end of period.... $   1,786,927      $       --
                                               =============      ===========
Supplemental disclosure of noncash financing
 activities:
  Contribution of net cash pension proceeds
   (Due from Edison Brother Stores, Inc.)..... $         --       $43,985,315
                                               =============      ===========
</TABLE>
 
 
 
   The accompanying notes are an integral part of these financial statements.
 
                                       13
<PAGE>
 
                              EBS PENSION, L.L.C.
 
                         Notes to Financial Statements
                          December 31, 1998 and 1997
 
1. Description of business
 
EBS Pension, L.L.C. (the "Company") is governed by a Members Agreement, dated
as of September 25, 1997 (the "Members Agreement"). Pursuant to the Members
Agreement, the Company is organized for the exclusive purposes of (a)
receiving and administering the cash proceeds (the "Pension Plan Proceeds") to
be received by Edison Brothers Stores, Inc. ("Edison") and its affiliated
debtors in possession (collectively with Edison, the "Debtors") as a result of
the termination of the Edison Brothers Stores, Inc. Pension Plan (the "Pension
Plan"), net of (1) the Pension Plan assets transferred to a qualified
replacement pension plans, (2) all costs, fees and expenses relating to
termination of the Pension Plan and establishment of the replacement Plan, and
(3) all applicable taxes incurred or for which a reserve is established in
connection with termination of the Pension Plan, and (b) distributing such
assets to holders of Class A Membership Units (the "Members") in accordance
with the Members Agreement.
 
2. Summary of significant accounting policies
 
This summary of significant accounting policies is presented to assist in
evaluating the Company's financial statements included in this report. These
principles conform to generally accepted accounting principles. The
preparation of financial statements in conformity with generally accepted
accounting principles requires that management make estimates and assumptions
which impact the reported amounts of 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.
 
Basis of presentation
 
These financial statements include the accounts of the Company for the periods
from September 25, 1997 (date of inception) through December 31, 1997, and
January 1, 1998 through December 31, 1998.
 
Cash and cash equivalents
 
Cash consists of amounts held in an account in the Company's name at a highly-
rated financial institution, along with U.S. Treasury Securities purchased and
held in the Company's name.
 
Accrued expenses
 
Accrued expenses includes amounts for unpaid legal, tax, accounting, manager
and transfer agent fees. Amounts are payable within one year.
 
Interest
 
Interest income is determined on the accrual basis. Interest receivable is
interest due to be received within one year.
 
Expenses
 
All expenses of the Company are recorded on the accrual basis of accounting.
 
Income taxes
 
The Company is not subject to taxes. Instead, the Members report their
distributive share of the Company's profits and losses on their respective
income tax returns.
 
                                      14
<PAGE>
 
                              EBS PENSION, L.L.C.
 
                  Notes to Financial Statements--(Continued)
                          December 31, 1998 and 1997
 
 
3. Members' equity
 
On September 25, 1997, Edison transferred the right to receive net cash
proceeds from the termination of the Pension Plan in exchange for 10,000,000
Class B Membership Units of the Company, which represented all of the
outstanding Membership Units of the Company. The net cash proceeds amounted to
approximately $43.9 million at December 31, 1997 and were due from Edison at
that date. An additional amount of approximately $5.7 million is being held by
Edison for certain fees and tax liabilities of Edison. Some portion of this
amount may ultimately be distributed by Edison to the Company, however the
amount of such distribution (if any) cannot be determined at this time. See
Note 5 hereof for further discussion of this amount.
 
On December 12, 1997, in accordance with the Members Agreement and the Plan of
Reorganization, Edison exchanged 9,058,041 Class B Membership Units for
9,058,041 Class A Membership Units of the Company and simultaneously
distributed such Class A Membership Units to holders of Allowed General
Unsecured Claims.
 
During 1998, Edison paid $43.9 million to the Company related to the
settlement of the Company's receivable recorded at December 31, 1997. Of this
amount, $42.3 million was distributed to Class A Members during 1998, $1.5
million is retained for the anticipated cost of legal indemnification of the
officers of Edison, and the remaining amount is retained for other anticipated
expenses expected to be incurred by the Company.
 
During 1998, Edison exchanged 942,238 Class B Membership Units for 942,238
Class A Membership Units of the Company and simultaneously distributed such
units to holders of Allowed General Unsecured Claims.
 
Also during 1998, certain Class A Membership Unit holders returned 279 Class A
Membership Units to Edison as such Membership Units had been distributed in
error. The distribution proceeds relating to these returned Membership Units
are included in paid in capital and were available for future distributions to
holders of Class A Membership Units. At December 31, 1998, Edison has no Class
B Membership Units.
 
4. Related parties
 
The Manager of the Company is the same financial institution that holds the
Company's cash and cash equivalents.
 
5. Subsequent events
 
Cash on deposit as of February 19, 1999
 
As of February 19, 1999, the aggregate sum of approximately $1.8 million was
on deposit for the account of the Company. Such sum represents the original
contribution to the Company and accrued interest through February 19, 1999,
less disbursements through February 19, 1999. These proceeds will be used for
general operations and for the anticipated cost of legal indemnification of
the officers of Edison. Any amounts not used for these purposes will be made
available for future distributions to Class A Membership Unit holders.
 
Edison files for bankruptcy
 
On March 9, 1999, Edison filed for protection under Chapter 11 of the
Bankruptcy Code. This may have a materially adverse impact on the
collectibility of the $5.7 million amount discussed in the first paragraph of
Note 3 to these financial statements.
 
                                      15
<PAGE>
 
ITEM 9--CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
 FINANCIAL DISCLOSURE
 
  None.
 
                                   PART III
 
ITEM 10--DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
  The Company has no directors and the Manager, Norwest Bank Minnesota, N.A.,
acts as the Company's sole executive officer. The Manager may resign at any
time or be removed by the Designation Members (defined below), with or without
cause, at any time, such resignation or removal to be effective upon the
appointment of a successor Manager. In the event of the resignation or removal
of the Manager, the Designation Members may appoint a successor Manager that
is not affiliated with Edison. If such appointment does not occur within
90 days, the Manager may petition the Bankruptcy Court for the appointment of
a successor Trustee. The "Designation Members" means the three Members who, at
the applicable date for any action to be taken by Designation Members,
constitute the holders of record of the three largest amounts of Class A
Membership Units provided that (1) affiliated persons are treated as a single
person for these purposes; (2) no affiliate of Edison may be a Designation
Member; and (3) any person may notify the Company that it does not wish to be
a Designation Member. See Item 1 -- Business "Administration and Manager" for
further discussion.
 
ITEM 11--EXECUTIVE COMPENSATION
 
  The Manager is to receive reasonable compensation for services rendered to
and on behalf of the Company, as well as reimbursement for the reasonable
expenses incurred in connection with the performance of its duties under the
Members Agreement.
 
  With respect to services rendered from the Inception Date to December 31,
1997, the Company did not accrue for such services rendered by the Manager, as
this amount was not yet determined. With respect to services rendered during
the year ended December 31, 1998, the Company paid approximately $64,000 for
services rendered by, and reimbursements due to, the Manager.
 
ITEM 12--SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
  The following table sets forth certain information regarding the beneficial
ownership of the Company's Class A Membership Units of persons owning of
record or known to the Company to be the beneficial owner of more than five
percent of the outstanding Class A Membership Units as of December 31, 1998.
The Manager of the Company owns 115 Class A Membership Units.
 
<TABLE>
<CAPTION>
   Name and Address of         Number of Class A  Nature of Beneficial
   Beneficial Owner            Membership Units        Ownership        Percent
   -------------------         -----------------  --------------------  -------
   <S>                         <C>               <C>                    <C>
   Swiss Bank Corporation....      1,603,998     Sole Voting/Investment  16.0%
   Citibank, N.A.............        841,524     Sole Voting/Investment   8.4%
   Principal Mutual Life.....        807,659     Sole Voting/Investment   8.1%
   Loeb Partners
    Corporation..............        783,461     Sole Voting/Investment   7.8%
   Contrarian Capital
    Advisors, L.L.C..........        682,517     Sole Voting/Investment   6.8%
   Morgens Waterfall Overseas
    Partners.................        657,578     Sole Voting/Investment   6.6%
</TABLE>
 
ITEM 13--CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
  None.
 
                                      16
<PAGE>
 
                                    PART IV
 
ITEM 14--EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
 

(a)1.  The following financial statements and the report thereon of Rubin,
       Brown, Gornstein & Co., L.L.P. are included in Item 8 of this report:
 
    Report of Independent Public Accountants
 
    Balance Sheets as of December 31, 1997 and December 31, 1998
 
    Statements of Operations for the Period Ended December 31, 1997 and for
    the Year Ended December 31, 1998.
 
    Statements of Changes in Members' Equity for the Period Ended December
    31, 1997 and the Year Ended December 31, 1998
 
    Statements of Cash Flows for the Period Ended December 31, 1997 and the
    Year Ended December 31, 1998
 
    Notes to Financial Statements
 
2.  Financial Statement Schedules:
 
    All schedules are omitted since the required information is not present
    in amounts sufficient to require submission of the schedules or because
    the information required is included in the financial statements and
    notes thereto.
 
(b) The Company has not filed any reports on Form 8-K during the last quarter of
    the period covered by this Annual Report on Form 10-K.
   
(c)
 
Exhibits
 
<TABLE>
<CAPTION>
 Exhibit
 Number  Description
 ------- -----------
 <C>     <S>
  2.1*   Amended Joint Plan of Reorganization of Edison Brothers Stores, Inc.
  3.1*   EBS Pension, L.L.C. Certificate of Formation
  3.2*   EBS Pension, L.L.C. Membership Agreement
 23.1    Consent of Independent Public Accountants of ABC
 27.1    Financial Data Schedule
</TABLE>
--------
* Incorporated by reference to the Company's Form 10 originally filed with the
  Securities and Exchange Commission on July 29, 1998 (SEC File No. 000-
  24713).
 
                                      17
<PAGE>
 
                                   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.
 
Dated March 30, 1999                      EBS PENSION, L.L.C.
                                          (Registrant)
 
                                          By: NORWEST BANK MINNESOTA, N.A., in
                                           its capacity as Manager of EBS
                                           Pension, L.L.C.
 
                                             /s/ Lon P. LeClair
                                          By: _________________________________
                                             Lon P. LeClair
                                             Vice President
 
                                       18
<PAGE>
 
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
 Exhibit
 Number  Item                                        Location
 ------- ----                                        --------
 <C>     <S>                                         <C>
         Amended Joint Plan of Reorganization of
 2.1*    Edison Brothers Stores, Inc.                Incorporated by reference
         EBS Pension, L.L.C. Certificate of
 3.1*    Formation                                   Incorporated by reference
 3.2*    EBS Pension, L.L.C. Membership Agreement    Incorporated by reference
 23.1    Consent of Independent Public Accountants   Filed herewith
 27.1    Financial Data Schedule                     Filed herewith
</TABLE>
--------
* Incorporated by reference to the Company's Form 10 originally filed with the
  Securities and Exchange Commission on July 29, 1998 (SEC File No. 000-
  24713).