UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

    FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

(Mark One)
     [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
                              EXCHANGE ACT OF 1934

                   For the fiscal year ended January 29, 1999

     [ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES 
                              EXCHANGE ACT OF 1934

            For the transition period from ____________to_____________

                           COMMISSION FILE NO. 1-13322

                                JUMBOSPORTS INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)
             

                  FLORIDA                               52-1643157
     -------------------------------                -------------------
     (STATE OR OTHER JURISDICTION OF                (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)                IDENTIFICATION NO.)

        4701 W. HILLSBOROUGH AVENUE
              TAMPA, FLORIDA                               33614
  ---------------------------------------                ----------
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)               (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (813) 886-9688

           SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

                                                    NAME OF EACH EXCHANGE
          TITLE OF EACH CLASS                        ON WHICH REGISTERED
---------------------------------------            -----------------------
COMMON STOCK, PAR VALUE $0.01 PER SHARE              OTC BULLETIN BOARD


           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                               TITLE OF EACH CLASS
                               -------------------
                 4 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2000
                 ----------------------------------------------

     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 March 25, 1999 is unknown due to lack of trading  activity.
The number of shares of the  registrant's  common stock  outstanding as of March
25, 1999, was 20,420,001.

<PAGE>
         As used in this Annual Report on Form 10-K, unless the context requires
otherwise,  the terms the "Company" and "JumboSports"  refer to JumboSports Inc.
and its operating subsidiaries.

                                     PART 1

ITEM 1.   BUSINESS

Forward-Looking Statements

         Information  included  in this  Report  on  Form  10-K  may  constitute
forward-looking  statements  that  involve a number of risks and  uncertainties.
From time to time, information provided by the company or statements made by its
employees may contain other forward-looking statements. Factors that could cause
actual results to differ materially from the forward-looking  statements include
but are not limited to:  Bankruptcy Court actions or proceedings  related to the
bankruptcy,  general  economic  conditions  including  inflation,  consumer debt
levels,  trade restrictions and interest rate fluctuations;  competitive factors
including pricing pressures,  technological developments and products offered by
competitors;  inventory  risks due to changes in market  demand or the Company's
business strategies; and changes in effective tax rates.

Readers  are  cautioned  not to place undue  reliance  on these  forward-looking
statements,  which  speak only as of the date made.  The Company  undertakes  no
obligation to publicly update or revise any forward-looking statements,  whether
as a result of new information, future events or otherwise.

General

         On  February  14,  1997,  the  Company  (which  prior to such  date was
incorporated in Delaware under the name "Sports & Recreation,  Inc.") was merged
into a wholly owned subsidiary  organized under Florida law. The purpose of such
merger was to change the  corporate  domicile  of the Company  from  Delaware to
Florida.  Also on February 14, 1997, the Company changed its corporate name from
Sports & Recreation, Inc. to JumboSports Inc.

         JumboSports  is a  specialty  retailer of quality  name brand  sporting
equipment,  athletic  footwear and apparel,  operating 42 big-box sporting goods
superstores  in 33 markets and 18 states.  The Company began fiscal 1998 with 59
stores.  In May 1998,  the  Company  announced  the closing of two stores and in
August 1998, the Company  opened two new stores.  In January 1999, an additional
17 stores were identified to be closed during the first half of fiscal 1999. The
Company's  business strategy is to offer its customers the best overall value in
sporting  goods  through a wide  assortment  of quality name brand  merchandise,
superior customer service and competitive  prices.  The Company's stores average
approximately  48,000  gross  square  feet.  JumboSports  has located  stores in
Standard Metropolitan Statistical Areas with populations as small as 200,000 and
as large as 3,000,000.

         As of January  29,  1999,  the  Company  employed  approximately  2,300
people.  None of the Company's  associates are covered by collective  bargaining
agreements.  The Company believes that its relationships with its associates are
good.

         The Company's merchandising strategy is to offer both breadth and depth
of  selection  in  quality  name  brand  sporting  goods in each of its  product
categories.  Each store offers approximately 70,000 stock keeping units ("SKUs")
across 23 major  departments and over 200  subdepartments.  The Company's target
customer ranges from the frequent sports enthusiast to the casual sporting goods
customer.

         The  sporting  goods  retail  business  is  seasonal in nature with the
fourth quarter  (Christmas  selling season)  representing  approximately  28% of
sales for a  JumboSports  store that is open for the entire  year.  The  average
maturity and geographic  dispersion of the Company's  store base may impact this
percentage in the future. The Company operates in one business segment. See Item
6, Selected Financial Data, for financial information.

                                       2
<PAGE>

Chapter 11

         On December 27, 1998 (the "Petition Date"),  after  experiencing a poor
holiday  season and with  increased  pressure  being  applied  by the  Company's
lenders and suppliers,  JumboSports Inc. and certain of its  subsidiaries  filed
voluntary  petitions for reorganization  under Chapter 11 of the Bankruptcy Code
in the United States  Bankruptcy  Court for the Middle  District of Florida (the
"Bankruptcy  Court").  These related proceedings are being jointly  administered
under the caption "In re.:  JumboSports  Inc.,  d/b/a  Vacations  Travel,  f/k/a
Sports & Recreation, Inc., and f/d/b/a/ Sports Unlimited, Guide Series, Inc. and
Property   Holdings  Company  I"  Case  Nos.   98-22545-8C1,   98-22546-8C1  and
98-22547-8C1,  pursuant  to an  order of the  Bankruptcy  Court.  The  following
subsidiaries were not included in the bankruptcy filings: Nationwide Team Sales,
Inc.,  Retail Process  Management,  Inc.,  Sports & Recreation,  Inc.,  Sports &
Recreation Holdings of PA, Inc. and Construction Resolution, Inc.

         The  bankruptcy  petitions  were  filed in order to  preserve  cash and
permit the Company an opportunity to reorganize while working to restructure its
indebtedness. Pursuant to the Senior-Secured Super Priority Debtor-In-Possession
Loan and Security  Agreement (the "DIP facility") dated February 12, 1999, among
JumboSports  Inc.,  as Borrower,  various  financial  institutions,  as Lenders,
Foothill  Capital  Corporation,  as Agent  and  Congress  Financial  Corporation
(Southern),  as Co-Agent,  the lenders have agreed to provide up to $110 million
in post-petition financing to the Company.

         As a  result  of  the  Chapter  11  filings,  absent  approval  of  the
Bankruptcy  Court,  the Company is  prohibited  from paying,  and  creditors are
prohibited from attempting to collect claims or debts arising pre-petition.  The
consummation  of a plan of  reorganization  is the  principal  objective  of the
Company's Chapter 11 cases. The plan of reorganization  will set forth the means
for satisfying  claims,  including the  liabilities  subject to compromise,  and
interests in the Company and its debtor subsidiaries. The consummation of a plan
of  reorganization  for the Company  and its debtor  subsidiaries  will  require
approval of the Bankruptcy Court.

         The Company expects to propose a plan of reorganization  for itself and
the other filing  subsidiaries.  The Bankruptcy  Court has granted the Company's
request to extend its exclusive right to file a plan of  reorganization  through
June 1,  1999.  The  Company  intends  to  request  a further  extension  of the
exclusivity   period  while  management  works  on  implementing  new  operating
strategies that are intended to improve operating  performance.  There can be no
assurance  that the Bankruptcy  Court will grant such further  extension or that
management's  new  strategies  will  produce  the  desired  results.  After  the
expiration of the exclusivity period, creditors of the Company have the right to
propose their own plans of reorganization. A plan of reorganization, among other
things, may result in material dilution or elimination of the equity of existing
stockholders  as a  result  of  the  issuance  of  equity  to  creditors  or new
investors.

         At this time,  it is not possible to predict the outcome of the Chapter
11 filing,  in general,  or its effects on the business of the Company or on the
interests of creditors or stockholders.  The Company's  independent  accountants
have issued a report expressing doubt about the Company's ability to continue as
a going  concern.  See the  Consolidated  Financial  Statements  of the  Company
beginning on page F-1.

         The Company does not plan to hold annual  stockholder  meetings  during
the pendency of its Chapter 11 case.


Store Closings

         Since January 31, 1997,  when the Company  operated 85 stores,  two new
stores have opened and 45 stores have closed.  The  remaining 42 open stores are
cash contributors and have generally been profitable.  The financial performance
of these remaining  stores will be reviewed on a continuing basis and additional
stores  may be  closed,  with the  approval  of the  Bankruptcy  Court,  if such
closings are warranted.

         When a store is closed,  the inventory is  liquidated  and the proceeds
are used to pay down the Company's  revolving credit line. If the store is owned
in fee,  the real estate is  marketed.  The  proceeds  from the sale of the real
estate was used to further  reduce debt,  and  consequently  future debt service
requirements and interest expense. If the store is leased, the lease is marketed
during the stores'  going out of business  period and any proceeds from the sale
of the lease are used to reduce  debt.  If no market  exists for the lease,  the
lease is rejected to minimize cash obligations on the Company.

                                       3
<PAGE>

New Management

     On  April  13,  1999,  with  the  support  of the  official  committees  of
bondholders  and  unsecured   creditors,   the  Bankruptcy  Court  approved  the
appointment of Alfred F. Fasola,  Jr. as Chief Executive  Officer and Michael J.
Worrall as President, replacing Jack E. Bush. Mr. Bush will continue to serve as
Chairman of the Board.  Both Mr. Fasola and Mr. Worrall have years of experience
in  challenging  turnaround  situations  and  extensive  knowledge of the retail
sporting goods industry.  Along with B. Robert Floum,  Chief Operating  Officer,
the new management  team is expected to implement  major new initiatives as part
of the Company's reorganization efforts.


Industry and Competition

         While JumboSports' competition differs by market,  management generally
classifies its competition within one of the following categories:

         TRADITIONAL  AND  SPECIALTY  SPORTING  GOODS  RETAILERS.  This category
includes  traditional  sporting  goods  chains  (e.g.,   Dunham's,  MC  Sports),
specialty  sports stores (e.g.,  Foot Locker,  Just for Feet,  Champs) and local
sporting goods retailers (e.g.,  local  independent  stores,  pro shops).  These
stores typically range in size from the small 1,000 square foot pro shops to the
larger  20,000  square  foot  traditional  sporting  goods  chains and  footwear
retailers.  The traditional and specialty sporting goods retailers are primarily
located in regional  malls,  strip  shopping  centers,  local  country clubs and
resorts.  The traditional chains and local sporting goods stores typically carry
a varied assortment of merchandise; however, the size of their stores limits the
breadth and depth of selection. The specialty stores and pro shops often carry a
wide  assortment  of one  specific  product  category,  such as athletic  shoes,
fishing gear, golf or tennis equipment.

         MASS  MERCHANDISERS.  This  category  includes  discount  stores (e.g.,
Wal-Mart, Kmart, Target) and department stores (e.g., Sears, J.C. Penney). These
stores range in size from  approximately  50,000 to 200,000  square feet and are
primarily located in regional malls and strip shopping centers in markets across
the country.  Sporting goods merchandise and apparel represent only a portion of
the total merchandise sales in these stores and generally reflect a more limited
selection with fewer high quality name brands.

         BIG-BOX  SPORTING  GOODS CHAINS.  This category  includes the "category
killer"   sporting  goods  retailers  (e.g.  The  Sports   Authority,   Oshman's
Superstores,  Gart Sports) more directly comparable to JumboSports.  The big-box
stores range in size from 35,000 to 100,000 square feet and offer a selection of
sporting goods  merchandise  and apparel of 40,000 to 70,000 SKUs.  These stores
compete on selection and depth of high quality  merchandise  and on the basis of
price;  certain  operators are able to attract  higher-end brands not carried by
other competitive channels of distribution.

         The Company  believes that although its sales are impacted by retailers
in all  three  of  the  categories  referred  to  above,  the  most  significant
competition  comes from the big-box sporting goods  retailers.  Of the Company's
stores,  approximately  six do not presently face  competition from such big-box
sporting goods retailers. Management expects it will continue to face additional
competition in its markets from big-box stores over the next few years.

         The Company  purchases  merchandise from over 1,000 vendors.  In fiscal
1998, the 100 highest volume vendors  represented over 70% of total  merchandise
purchased. Nike, Inc., the Company's largest vendor, accounted for 8.7% of total
merchandise purchased.  The Company does not maintain any long-term or exclusive
commitments or arrangements  to purchase from any vendor.  The Company is one of
the largest customers for many of its vendors.

                                       4
<PAGE>

Environmental

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


ITEM 2.   PROPERTIES.

         As of January 29, 1999, the Company  operated 59 retail stores of which
17 are scheduled to close in April 1999.  These 17 closing  stores operate in 12
states (1 in Arizona, 1 in Colorado, 4 in Florida, 1 in Georgia, 1 in Iowa, 1 in
Illinois,  1 in Indiana,  1 in Louisiana,  1 in North Carolina,  1 in Ohio, 3 in
Tennessee and 1 in Virginia). The remaining 42 stores operate in 18 states (2 in
Alabama, 1 in Arkansas, 2 in Colorado, 1 in Delaware, 7 in Florida, 1 in Iowa, 1
in Kansas, 3 in Kentucky, 4 in Louisiana, 1 in Mississippi,  2 in Nebraska, 1 in
Nevada, 3 in North Carolina, 3 in Oklahoma, 3 in South Carolina, 2 in Tennessee,
3 in Texas and 2 in  Virginia)  and its  Corporate  Headquarters  are located in
Tampa, Florida. The Company owns the beneficial interest in 24 stores and leases
the other 18 of its remaining 42 retail stores.  The primary lease terms are for
10 to 20  years,  with  options  to renew  ranging  from two to four  additional
five-year  terms.  Two of the leases are  treated  for  accounting  purposes  as
capital  leases.  Additionally,  as of January 29, 1999, the Company had sixteen
properties  held for sale and twelve  leases on stores closed or scheduled to be
closed.


ITEM 3.   LEGAL PROCEEDINGS.

         The  Company  is from  time  to time  involved  in  routine  litigation
incidental  to the conduct of its  business.  The Company  believes that no such
currently pending routine litigation to which it is a party will have a material
adverse effect on its financial condition or results of operations.

         On Sunday,  December  27,  1998,  JumboSports  Inc.  and certain of its
subsidiaries filed for reorganization under Chapter 11 of the Bankruptcy Code in
the United States  Bankruptcy  Court for the Middle  District of Florida.  These
related  proceedings are being jointly  administered  under the caption "In re.:
JumboSports Inc., d/b/a/ Vacations Travel, f/k/a Sports & Recreation,  Inc., and
f/d/b/a Sports Unlimited,  Guide Series,  Inc. and Property Holdings Company I",
Case Nos 98-22545-8C1, 98-22546-8C1 and 98-22547-8C1. The following subsidiaries
were not included in the bankruptcy filings: Nationwide Team Sales, Inc., Retail
Process  Management,  Inc.,  Sports &  Recreation,  Inc.,  Sports  &  Recreation
Holdings of PA, Inc. and Construction Resolution, Inc.

         In connection  with the Bankruptcy  filing,  all  pre-petition  actions
against the Company have been stayed.

         A  complaint  was filed on March 23,  1999,  in the  Bankruptcy  Court,
"LaSalle  National  Bank,  Trustee  for JP Morgan  Commercial  Mortgage  Finance
Corporation  Pass-through  Certificate  Series  1997-C5,  acting by and  through
AMRESCO  Management,  Inc.,  its Special  Servicer v.  JumboSports  Inc.,  which
alleges that  JumboSports did not have the right to terminate  certain Trusts of
which  JumboSports was the sole  beneficiary  and sole settlor.  The Trusts held
bare legal title to real estate  ("the  Property")  and pledged the  Property as
security for loans.  The  plaintiff is seeking a judicial  declaration  that the
Property in question is not property of JumboSports,  the Debtor's  estate,  and
that the Plaintiff  may proceed  against the Property as if it were not property
of the Debtor's estate. The Plaintiff further seeks a judicial  declaration that
the  Trusts  are  separate  legal  entities,  that  the  Trusts  have  not  been
terminated,  that  the  termination  is not  valid,  that  there  is no right to
terminate  the Trusts  except in accordance  with  applicable  Delaware law, the
Trust  Agreements,  and the relevant  loan  documents and that there has been no
transfer of the  Property  to the  Debtor.  Management  is  currently  unable to
predict  the  outcome  of this case or the  impact of an  adverse  ruling on its
reorganization  efforts.  The Company expects to file its written  responses and
any claim for affirmative relief by April 30, 1999.


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

         None.
                                       5
<PAGE>


                                     PART II

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

         On December 28, 1998, the New York Stock Exchange  suspended trading in
the  Company's  Common  Stock and on February  22,  1999,  the SEC  delisted the
Company's  Common Stock.  Subsequent to December 28, 1998, the Company's  Common
Stock has been  traded on the "OTC  Bulletin  Board"  under the symbol  "JSIBQ".
Prior to December 28,  1998,  the  Company's  Common Stock was traded on the New
York Stock  Exchange  under the symbol "JSI" and prior to February 20, 1997, the
stock was traded under the symbol "WON".  The following table reflects the range
of high and low selling prices of the Company's Common Stock by quarter over the
past two fiscal years.


          Fiscal 1997                   High                       Low
          -----------                   ----                       ----
          First Quarter                 6.750                      4.375
          Second Quarter                4.875                      2.750
          Third Quarter                 4.063                      3.000
          Fourth Quarter                3.250                      1.000

          Fiscal 1998                   High                       Low
          ------------                  ----                       ----
          First Quarter                 2.063                      1.250
          Second Quarter                1.750                      0.938
          Third Quarter                 1.063                      0.250
          Fourth Quarter                0.500                      0.020

         The Company did not pay any dividends  during the last two fiscal years
(see  Management's  Discussion  & Analysis -  Liquidity  and  Capital  Resources
regarding  dividend  prohibitions).  The  approximate  number of stockholders of
record  as of  January  29,  1999  was 422,  and as of that  date,  the  Company
estimates that there were approximately 7,128 beneficial owners holding stock in
nominee or "street" name.

         In connection with their respective employment agreements, and pursuant
to the terms  thereof,  during  fiscal  year 1996 the Company  loaned  $166,667,
$137,500 and $30,250 to each of Messrs.  Bebis (former  Chairman,  President and
Chief Executive  Officer),  Springer and Henning,  respectively,  to assist them
with the purchase of  non-registered  shares of the Company's  Common Stock. Mr.
Bebis resigned in December 1997,  and as part of his  termination  agreement the
Company agreed to file a registration statement in order to register his shares.
In lieu of incurring the expense of registering  Mr. Bebis' shares,  the Company
accepted the shares,  valued at the closing  price 90 days after Mr. Bebis' date
of termination,  plus cash in satisfaction of the outstanding loan balance.  The
shares were then canceled.

         On February 17, 1998 the Company  re-priced all options  outstanding at
January  30, 1998 for active  employees  to an  exercise  price of $1.8125,  the
market  closing  price on that date.  The number of options  this  impacted  was
876,221 with previous market valued prices ranging from $3.44 to $26.08.


                                       6
<PAGE>
ITEM 6.   SELECTED FINANCIAL DATA.
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND SELECTED OPERATING DATA)
<TABLE>
<CAPTION>
                                           January 29,     January 28,     January 31,    January 30,   January 29,
                                              1995            1996            1997           1998          1999
                                           ----------      ----------      ----------     ----------    ----------
"Fiscal Year"                                 "1994"         "1995"          "1996"         "1997"        "1998"
STATEMENT OF OPERATIONS DATA:
<S>                                        <C>             <C>              <C>          <C>           <C>
 Sales                                     $383,600        $525,762       $624,019       $528,634      $362,395
 Cost of sales including buying
   and occupancy costs                      283,908         395,208        505,062        453,509       282,251
                                            -------         -------        -------        -------       -------
 Gross profit                                99,692         130,554        118,957(1)      75,125(1)     80,144
 Selling, general and 
   administrative expenses                   69,207         106,233        124,918        112,489        78,911
 Proceeds from a settlement of legal
   proceedings                                                                                           (1,000)
 Loss on disposition of assets, closed store
   expenses, and other charges                                2,096         22,568         43,055        15,200
                                            -------         -------        -------        -------       -------
 Income (loss) from operations               30,485          22,225        (28,529)       (80,419)      (12,967)
 Interest expense, net                        4,815          11,254         19,890         30,395        22,366
                                            -------         -------        -------        -------       -------
 Income (loss) before provision (benefit)
   for income taxes, reorganization items
   and extraordinary items                   25,670          10,971        (48,419)      (110,814)      (35,333)
 Reorganization items                                                                                    58,344
                                            -------         -------        -------        -------       -------
 Income (loss) before provision (benefit)
   for income taxes and
   extraordinary items                       25,670          10,971        (48,419)      (110,814)      (93,677)
 Provision (benefit) for income taxes         9,775           3,975        (17,875)           483          (163)
                                            -------         -------        -------        -------       -------
 Income (loss) before extraordinary item     15,895           6,996        (30,544)      (111,297)      (93,514)
 Extraordinary item (less applicable
   income tax benefit)                         (181(2)   
                                            -------         -------        -------        -------       -------
 Net income (loss)                         $ 15,714        $  6,996       $(30,544)     $(111,297)     $(93,514)
                                            =======         =======        =======        =======       =======
 Net income (loss) per share
   before extraordinary item               $   0.84(3)     $   0.35(3)    $  (1.53)(3)  $   (5.47)     $  (4.58)
 Net income (loss) per share               $   0.83(3)     $   0.35(3)    $  (1.53)(3)  $   (5.47)     $  (4.58)
 Average number of shares outstanding    18,844,412      19,744,013     19,984,993     20,363,299    20,404,857
 Ratio of earnings to fixed charges            3.61            1.61            N/M            N/M           N/M

SELECTED OPERATING DATA:
 Stores open at end of period                    56              80             85             77(4)         59(4)
 Total gross square feet 
   of store space                         2,626,600       3,996,920      4,257,000      3,803,677     2,805,897
 Average gross square feet per store(5)      46,904          49,962         50,082         49,398        47,558
 Comparable store sales increase(6)            9.6%            1.7%           0.1%          (8.8%)       (12.4%)
 Capital expenditures                      $ 89,610        $ 60,738       $ 15,236      $  11,164      $  6,041

BALANCE SHEET DATA:
 Working Capital                           $167,498        $190,974       $158,678       $195,969      $137,080
 Total assets                               389,852         484,843        525,586        466,549       307,967
 Long-term debt, less current maturities    167,703         234,557        294,325        335,557       322,058
 Total stockholders' equity (deficit)       180,122         187,530        159,624         48,498       (45,065)
<FN>
(1)  The Company recorded  one-time charges to cost-of-sales of $32.4 million in
     fiscal 1996 and $45.0  million in fiscal  1997.  See Item 7 -  Management's
     Discussion and Analysis of Financial Condition and Results of Operations.
(2)  The  extraordinary  item for the fiscal year ended January 29, 1995 relates
     to early redemption  premiums incurred in connection with the prepayment of
     certain liabilities.
(3)  Earnings per share has been restated as required by SFAS No. 128, "Earnings
     Per Share."
(4)  Eighteen stores closed in early fiscal 1998 and seventeen stores will close
     in early fiscal 1999.
(5)  Average gross square feet per store  represents  the average square feet of
     total  store  space at the end of each  fiscal  year.  
(6)  A  store's  sales  growth  is  included  in  the  comparable   store  sales
     calculation  after its  twelfth  full month of  operation.  The fiscal 1997
     comparable store calculation was adjusted for the below cost clearance sale
     and five additional days of sales which occurred in fiscal 1996.
</FN>
</TABLE>
                                       7
<PAGE>

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

     General

         The notes to the consolidated financial statements are an integral part
of  Management's  Discussion and Analysis of Financial  Condition and Results of
Operation.

         This  Management's  Discussion  and Analysis  contains  forward-looking
statements.  These  forward-looking  statements  are  subject  to  the  inherent
uncertainties  in predicting  certain  future  results and  conditions.  Certain
factors could cause actual results to differ  materially from those projected in
these forward-looking statements. These factors include, but are not limited to,
product demand and market  acceptance  risks, the effect of economic  conditions
generally,  the  impact  of  competition,  commercialization  and  technological
difficulties and the condition of the retail and sporting goods industries.

         On December 27, 1998,  JumboSports Inc. and certain of its subsidiaries
filed  petitions  for  reorganization  under  Chapter  11 of the  United  States
Bankruptcy Code and are presently operating as debtors-in-possession  subject to
the  jurisdiction of the Untied States  Bankruptcy Court for the Middle District
of  Florida.  For  further  discussion  of  Chapter 11  proceedings,  see Item 1
"Chapter 11" and Note 1 to the consolidated financial statements.

     Results of Operations

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

<TABLE>
<CAPTION>
                                              1996                   1997                  1998
   <S>                                       <C>                    <C>                   <C>
   Sales                                     100.0%                 100.0%                100.0%
   Cost of sales including
     buying and occupancy costs               80.9                   85.8                  77.9
                                              ----                   ----                  ----
   Gross profit                               19.1                   14.2                  22.1
   Selling, general and
     administrative expenses                  20.0                   21.3                  21.8
   Proceeds from a settlement of
     legal proceedings                                                                     (0.3)
   Loss on disposition of assets,
     closed store expenses and
     non-recurring charges                     3.7                    8.1                   4.2
                                              ----                   ----                  ----
   Loss before provision (benefit) for
     income taxes, reorganization items
     and interest expense                     (4.6)                 (15.2)                 (3.6)
   Interest expense, net                       3.2                    5.8                   6.2
                                              ----                   ----                  ---- 
   Loss before provision (benefit) for
     income taxes and reorganization items    (7.8)                 (21.0)                 (9.8)
   Reorganization items                                                                    16.1
                                              ----                   ----                  ----
   Net income (loss) before
     provision (benefit) for income taxes     (7.8)                 (21.0)                (25.9)
   Provision (benefit) for income taxes       (2.9)                   0.1                  (0.1)
                                              ----                   ----                  ----

   Net loss                                   (4.9)%                (21.1)%               (25.8)%
                                              ====                   ====                  ====
</TABLE>
                                        8
<PAGE>
         In the second  fiscal  quarter of fiscal 1998,  the Company  recorded a
$15.2 million  charge (4.2% of sales) for the loss on  disposition of assets and
closed store expenses. The components are as follows (in millions):

  Loss on disposition of assets and closed store expenses:
  Loss on disposition of real estate                                   $ 8.6
  Loss on disposals of closed store fixtures and equipment               2.9
  Closed store expenses                                                  3.7
                                                                       -----
  Total                                                                $15.2
                                                                       =====

         The $8.6 million loss on disposition of real estate represents the loss
on sale of 16 properties comprised of closed stores and excess parcels. The $2.9
million loss on disposal of closed store fixtures  relates to the excess loss on
the disposition of the 28 stores closed since 1997. Both the loss on real estate
and loss on closed  store  fixtures  did not result in cash  payments.  The $3.7
million  charge for  closed  store  expenses  relates  primarily  to the loss on
inventory  and  expenses of two closed  stores  which  closed  during the second
quarter of 1998,  located in the Texas  cities of San Antonio  and El Paso.  The
balance relates to additional charges for prior closed store lease and severance
reserves. These charges may result in future cash payments.

         As a result of the Chapter 11 filings,  the  Company has  recorded  the
following reorganizational charges (in millions):

  Loss on disposition of real estate                                  $24.4
  Loss on disposals of closed store
     fixtures and equipment                                             6.4
  Closed store expenses                                                 8.9
  Lease rejection damages                                               9.1
  Restructuring charges                                                 7.8
  Retention and severance pay                                           1.8
                                                                      -----
  Total                                                               $58.4
                                                                      =====

         The $24.4 million loss on  disposition  of real estate  represents  the
write-down to net realizable value of the eight closing store properties held in
fee, the write-off of leasehold  improvements on the 9 closing store  properties
held under lease and certain  other  capitalized  and deferred  costs.  The $6.4
million loss on disposals of closed stores fixtures and equipment represents the
write-down to net  realizable  value of fixtures and equipment of the 17 closing
stores.  Both the  loss on the real  estate  and the  loss on the  fixtures  and
equipment will not result in cash  payments.  The $8.9 million charge for closed
store expenses relates primarily to the loss on inventory ($7.0 million) and the
expenses  to be  incurred  in the 17  closing  stores  during  the  going out of
business sales ($1.9 million).  The $7.8 million  restructuring  charges include
legal and  professional  fees incurred or paid prior to the petition  date,  the
write-off of loan costs  previously  incurred in  connection  with the Company's
pre-petition working capital facility,  certain capitalized inventory costs, and
uncollectible receivables from vendors.

         Certain  leases  on  equipment  and real  estate  will be  rejected  or
modified  in  connection  with the  Company's  efforts to  reorganize.  The $9.1
million of lease rejection damages is the Company's current estimate of expected
loss  associated  with the rejection of these leases.  A $1.8 million charge was
recorded to recognize certain retention payments and severance pay in connection
with the Company's  initiatives.  Of the $58.4 million, $2.0 million was paid in
cash in FY 1998, and up to an additional  $4.5 million may result in future cash
payments. The remainder of the charges is non-cash.

         The following  represents  reserve amounts created by the $58.4 million
of reorganization items (in millions):

  Loss on disposition of real estate                                  $ 0.6
  Closed store expenses                                                 8.9
  Restructuring charges                                                 2.5
  Retention and severance pay                                           1.3
                                                                      -----
  Total                                                               $13.3
                                                                      =====
                                       9
<PAGE>

         In the third and fourth  quarters of fiscal 1997, the Company  recorded
non-recurring  charges  related  to  store  closings,  excess  and  slow  moving
inventory,  severance,  outdated  technology  and the write-off of debt costs in
connection  with the Company's  revolving line of credit.  The components are as
follows (in millions):

  Cost of Sales:
    Mark-down of slow moving and
     excess inventory                                                 $17.9
    Additional shrinkage                                                9.5
    Write-down for inventory liquidation
     of closing stores                                                 17.6
                                                                      -----
                                                                       45.0
  Non-recurring and other charges:        
    Charges related to store closings                                  40.0
    Other charges                                                       4.0
                                                                      -----
                                                                       44.0
  Interest:
    Write-off of deferred debt costs                                    5.3
                                                                      -----
  Total                                                               $94.3
                                                                      =====

         The  markdown  of  excess  inventory  of  $17.9  million  was  taken to
correctly  state the value of  merchandise  at the lower of cost or market.  The
primary  cause for this  charge  was due to  problems  experienced  in  athletic
footwear and apparel;  both categories  were impacted by distribution  problems,
overly  aggressive   purchasing  and  soft  sales.  The  Company  took  physical
inventories in each of its stores at year-end.  Throughout the year,  management
had estimated  shrinkage at 2.2% of sales.  This estimate was based on the prior
year's actual  shrinkage of 2.8% and the industry  average of 1.5%. The year-end
physical inventories resulted in a total shrinkage of 4.0% or approximately 1.8%
above  the  accrual.  The  additional  shrinkage  is  believed  to be  primarily
attributable to  implementation  issues in connection with the new merchandising
systems and problems  encountered with the Company's new distribution  facility.
In February  1997,  the Company  changed its inventory  distribution  method and
inventory  systems.  The Company  transitioned  the majority of merchandise flow
from direct  delivery to stores,  to a third-party  managed cross dock facility.
The  initial  start-up of the cross dock  facility  caused  significant  product
delays.  Because of these delays, the Company  experienced lost inventory,  poor
sales and overstocks,  resulting in higher shrinkage and increased  markdowns to
alleviate  seasonal and fashion oriented  inventory levels. In October 1997, the
Company  terminated its relationship with the third-party  distribution  manager
and returned to a  merchandise  flow direct to the Company's  stores.  By fiscal
year end,  inventory  levels  returned to normal,  and the Company expects gross
margins to return to historical levels in fiscal 1998. The Company installed new
financial and inventory  systems to enhance  inventory  control  information and
support  the  existing  and  future  corporate  infrastructure.  As with any new
system,  conversion issues arose, but the issues were timely corrected.  The new
systems gave the Company  real-time  information to manage and control inventory
levels. Many of the aforementioned  causes have been addressed and management is
focused on reducing and controlling shrinkage during fiscal 1998.  Additionally,
the Company will be taking  physical  inventories  throughout the year to better
estimate  the proper  shrinkage  accrual.  The Company  recorded  the  inventory
write-down of $17.6 million for store closings  inventory  liquidation  based on
the net realizable  value of liquidating  inventory at 26 stores  anticipated to
close  from   January  1998  through  May  1998.   The   establishment   of  the
aforementioned  reserves did not result in  additional  cash  payments in fiscal
1997.

         The $40.0 million of charges  related to store  closings  represent the
establishment  of reserves of $29.1 million for the write-down of closed stores'
property  and  equipment  to net  realizable  value,  $6.7  million for expenses
attributable  to the  closing  stores and $4.2  million  for lease  reserves  at
closing  locations.  The  establishment  of these  reserves  did not  result  in
additional  cash  payments  in fiscal  1997,  but  resulted  in payments of $7.5
million in fiscal 1998.

         Other charges of $4.0 million are for severance agreements attributable
to the administrative and management  workforce  reductions in January 1998, the
establishment of reserves for outdated information communications technology and
other miscellaneous  charges.  Cash payments of $0.5 million were made in fiscal
1997 and $2.5 million of cash payments were made in fiscal 1998.

                                       10
<PAGE>
         The  Company  accelerated  the  write-off  of  deferred  debt  costs in
connection with the renegotiation of the Company's credit facility in the amount
of $5.3  million.  The  deferred  debt  costs  were loan  fees and  legal  costs
associated with the Company's  former $185.0 million  revolving  credit facility
which was  revised  on  January  30,  1998,  and  subsequently  refinanced.  The
write-off  of  deferred  debt costs were for cash  payments  of $3.0  million in
fiscal 1997,  $1.0 million in non-cash  payments and an additional  $1.3 million
for cash payments to be made in fiscal 1998.

         The following  represents reserve accounts created by the $55.0 million
in charges  recorded in 1996, the $94.3 million in charges  recorded in 1997 and
the $15.2 million in charges in 1998 are as follows (in thousands):
<TABLE>
<CAPTION>
                                            1/31/97                           1/30/98                          1/29/99
Reserve              Initial                Ending                            Ending                           Ending 
Description          Addition  Reductions   Balance   Additions  Reductions   Balance    Additions   Reductions  Balance
----------------------------------------------------------------------------------------------------------------------
<S>                  <C>       <C>          <C>       <C>        <C>          <C>        <C>         <C>         <C>
Markdown of slow 
  moving and 
  excess inventory                                    $17,928.5  $16,100.0    $1,828.5             $1,828.5
Write-down for 
  inventory 
  liquidation of 
  closing stores                                       17,538.2    7,348.7    10,189.5   $1,465.0  11,654.5
Expenses attributable 
  to closing stores                                     6,687.7                6,687.7      935.0   7,455.9      $166.8
Closing store equipment
  reserve                                               5,011.5                5,011.5    2,886.4   7,882.2        15.7
Closed store leases                                     4,221.5      188.9     4,032.6      850.1   3,041.6     1,841.1
Other charges - 
 severance & outdated
 communications
 technology          $1,800.0   $841.7      $958.3      3,543.6      720.4     3,781.5      487.3   3,327.2       941.6
Disposition and 
 impairment of
 under-performing
 assets               9,228.7  2,253.7     6,975.0                 5,522.3     1,452.7    8,576.2  10,026.8         2.1
                     --------  -------     -------     -------    --------    --------   --------  --------     -------
Reserve Totals      $11,028.7 $3,095.4    $7,933.3    $54,931.0  $29,880.3   $32,984.0  $15,200.0 $45,216.7    $2,967.3
                     ========  =======     =======     =======    ========    ========   ========  ========     =======
</TABLE>
     Fiscal 1998 Compared with Fiscal 1997

     The Company began fiscal 1998 with 59 stores; two stores were closed in the
second  fiscal  quarter and two stores opened in the third fiscal  quarter.  The
Company ended the fiscal year with 59 stores.  During the fourth fiscal quarter,
the Company  announced the closing of 17 stores.  These 17 stores will run going
out of business sales and close in late April, 1999.

     Sales for fiscal 1998 decreased 31.4% to $362.4 million compared with sales
of $528.6 million in the prior year. The majority of the sales decline is due to
fewer stores in  operation.  Same store sales  decreased by 12.4% for the fiscal
year. Same store sales were adversely affected by the following:
     1.  Poor sales trends were experienced throughout the retail sporting goods
         industry as a result of the lack of new exciting  product,  unfavorable
         weather  conditions,  changing  consumer  preferences and lower average
         price points caused by heavy discounting.
     2.  Apparel  sales on a same store  basis were off 23.8%,  with the biggest
         declines  occurring in licensed apparel and outerwear.  License apparel
         is driven by a number of factors  including team uniform  changes,  the
         location of league  champions and  professional  sports labor disputes.
         The NBA  lockout,  for example,  has  adversely  impacted  sales of NBA
         licensed product.  Outerwear sales are driven by weather conditions. An
         unseasonably  warm  fall  adversely  affected  sales  and led to  heavy
         discounting.
     3.  Footwear sales were down 20.9% due to a general decline in the athletic
         footwear  category  industry  wide.  Heavy  discounting by the footwear
         specialty  retailers also  contributed to the Company's sales declines.
         Due to the Company's  weakened financial  condition,  the Company could
         not take advantage of manufacturer  close-out  merchandise which fueled
         the sales by the specialty  stores and the better  capitalized  big-box
         competitors.
     4.  Tennis  and golf  continued  poor  sales  trends  as  reported  by most
         retailers. The Company's golf offering is limited to mostly entry-level
         brands and its own controlled label.  Famous names such as Ping, Taylor
         Made and Cobra are not made available to the Company by manufacturers.

                                       11
<PAGE>
         Gross  profit  for the year  was  $80.1  million,  or 22.1% of sales as
compared to $75.1 million or 14.2% of sales in the prior year. This year's gross
profit  percentage  reflects a 0.85%  inventory  shrinkage  whereas  last year's
inventory  shrinkage  totaled  4.0% of sales.  In the prior  year,  the  Company
recorded a $45 million  inventory write down, or 8.5% of sales,  related to slow
moving  athletic  footwear  and  apparel,  excess  shrinkage  and the  inventory
liquidation of closing stores.

         Selling,  general and administrative  expenses for the fiscal year were
$78.9 million, or 21.8% of sales, compared to $112.5 million, or 21.3% of sales,
in the prior year.  The increase as a percentage of sales was due to lower sales
volume leverage on general and administrative  expenses and certain  operational
expenses.  Store payroll expense  improved 110 basis points versus last year and
advertising expense was 34 basis points less than last year.

         During the third quarter of the fiscal year, the Company  recorded $1.0
million of income for the settlement of legal  proceedings.  Due to the size and
nature  of this  settlement,  the  amount  has  been  separately  stated  on the
Company's financial statements.

         In the second  quarter of fiscal  1998,  the  Company  recorded a $15.2
million charge for the loss on disposition of assets and closed store  expenses.
The components are as follows (in millions):

 Loss on disposition of assets and closed store expenses:
 Loss on disposition of real estate                                    $ 8.6
 Loss on disposals of closed store fixtures and equipment                2.9
 Closed store expenses                                                   3.7
                                                                       -----
 Total                                                                 $15.2
                                                                       =====

         The $8.6 million loss on disposition of real estate represents the loss
on sale of 16 properties comprised of closed stores and excess parcels. The $2.9
million loss on disposal of closed store fixtures  relates to the excess loss on
the disposition of the 28 stores closed since 1997. Both the loss on real estate
and loss on closed  store  fixtures  did not result in cash  payments.  The $3.7
million  charge for  closed  store  expenses  relates  primarily  to the loss on
inventory  and  expenses of two closed  stores  which  closed  during the second
quarter of 1998,  located in the Texas  cities of San Antonio  and El Paso.  The
balance relates to additional charges for prior closed store lease and severance
reserves. These charges may result in future cash payments.

         Loss from operations was $13.0 million, or 3.6% of sales in fiscal 1998
as compared to loss from operations of $80.4 million or 15.2% of sales in fiscal
1997.  The loss in the  current  year is  primarily  attributable  to the  $15.2
million  charge  taken in the  second  quarter.  The loss in the  prior  year is
primarily attributable to $89.0 million in charges taken in the third and fourth
quarters.

         Interest  expense for fiscal 1998 was $22.4  million,  or 6.2% of sales
compared  to $30.4  million,  or 5.8% of sales for the prior  fiscal  year.  The
decrease in interest  expense  relates  primarily to a reduction in average debt
outstanding  due to the  liquidation  of closed store  inventory and the sale of
closed store and excess real estate.  Average interest rates in fiscal 1998 were
up 20  basis  points  over  the  prior  year.  No  interest  on the  convertible
subordinated notes was accrued after the petition date.

         Reorganization  items represent charges incurred by the Company as part
of its Chapter 11 reorganization. The components are as follows (in millions):

 Loss on disposition of real estate                                    $24.4
 Loss on disposals of closed store
   fixtures and equipment                                                6.4
 Closed store expenses                                                   8.9
 Lease rejection damages                                                 9.1
 Restructuring charges                                                   7.8
 Retention and severance pay                                             1.8
                                                                       -----
 Total                                                                 $58.4
                                                                       =====
                                       12
<PAGE>

         The $24.4 million loss on  disposition  of real estate  represents  the
write-down to net realizable value of the eight closing store properties held in
fee, the write-off of leasehold  improvements on the 9 closing store  properties
held under lease and certain  other  capitalized  and deferred  costs.  The $6.4
million loss on disposals of closed stores fixtures and equipment represents the
write-down to net  realizable  value of fixtures and equipment of the 17 closing
stores.  Both the  loss on the real  estate  and the  loss on the  fixtures  and
equipment will not result in cash  payments.  The $8.9 million charge for closed
store expenses relates primarily to the loss on inventory ($7.0 million) and the
expenses  to be  incurred  in the 17  closing  stores  during  the  going out of
business sales ($1.9 million).  The $7.8 million  restructuring  charges include
legal and  professional  fees incurred or paid prior to the petition  date,  the
write-off of loan costs  previously  incurred in  connection  with the Company's
pre-petition working capital facility,  certain capitalized inventory costs, and
uncollectible  receivables  from vendors.  Certain  leases on equipment and real
estate will be rejected or modified in connection with the Company's  efforts to
reorganize. The $9.1 million of lease rejection damages is the Company's current
estimate of expected loss associated with the rejection of these leases.  A $1.8
million  charge  was  recorded  to  recognize  certain  retention  payments  and
severance  pay in  connection  with  the  Company's  initiatives.  Of the  $58.4
million,  $2.0 million was paid in cash in FY 1998, and up to an additional $4.5
million  may result in future cash  payments.  The  remainder  of the charges is
non-cash.

         For fiscal  1998 the  Company  recorded  a $163  thousand  tax  benefit
related to certain tax  carrybacks.  In fiscal 1997 the Company  recorded a $483
thousand  tax expense as a result of writing  off a deferred  tax asset that had
been recorded in the prior year.

         In the current  fiscal  year,  the  Company  posted a net loss of $93.5
million,  or 25.8% or sales,  compared to a net loss of $111.3 million, or 21.1%
of  sales in the  prior  fiscal  year.  The net  loss  for the  current  year is
primarily  attributable  to the $15.2  million loss recorded on  disposition  of
assets,  closed stores expenses and non-recurring  charges and the $58.4 million
in reorganization items. In the prior year, the net loss was attributable to the
$94.3 million of charges for store  closings,  inventory  write-downs  and other
charges.

         As  part  of its  Chapter  11  reorganization  efforts,  management  is
developing  a plan to  reorganize  and  return  the  Company  to  profitability.
Seventeen unprofitable stores have been closed and expenses reduced accordingly.
Sales  continue  to present  the  biggest  opportunity  for  management.  Proper
in-stock levels as well as better presentation of merchandise are believed to be
key components to improving sales.  Additionally,  associates will be trained on
improving their customer service skills and sales productivity.

         The Company believes that the sale of real estate that is held for sale
will reduce debt and interest expense,  although the precise amount that will be
available to reduce debt will depend upon the  interpretation and enforceability
of  contractual  provisions in various  mortgages.  Prior to Petition  Date, the
Company negotiated prepayment premiums of approximately 5% on certain parcels of
real estate  which were  subject to  mortgages  containing  similar  contractual
provisions. An adverse judicial determination finding the contractual formula to
be  enforceable  would cause the Company to reassess  its real estate  marketing
program.


     Fiscal 1997 Compared with Fiscal 1996

         During fiscal 1997,  the Company  announced the closing of 26 stores in
13 states as  compared  to opening  five new stores  with no store  closings  in
fiscal 1996.  The Company  operated 85 stores for three  fiscal  quarters and 77
stores for one fiscal quarter, ending fiscal 1997 with 77 operating stores.

         Sales for fiscal 1997 decreased  15.3% to $528.6 million  compared with
sales of $624.0 million in the prior year.  Same store sales  decreased by 14.3%
for fiscal  1997.  While  these same store  sales were  unfavorable,  management
believes  they are not truly  comparable  because  sales in the prior  year were
bolstered by the 1996 inventory  clearance sale the Company started in June 1996
and continued  through  November 1996 and the  additional  five days of sales in
fiscal 1996,  fiscal 1996 being a 52 week and five day period.  Sales below cost
incurred during the inventory clearance sale were $32.8 million which represents
5.3% of the prior years sales and the  additional  five days sales  totaled $3.5
million.  Adjusting  same  store  sales in the  prior  year for the  below  cost
clearance sale and the five additional days of sales in fiscal 1996,  results in
a comparable sales decrease of 8.8%.  Sales have been adversely  impacted by the
following:

                                       13
<PAGE>

     1.  New merchandise  management systems,  installed at the beginning of the
         fiscal year, caused significant  disruptions in merchandise flow due to
         problems  encountered  in receiving and making product ready to sell at
         the store level;
     2.  Operational problems with the Company's  distribution center during the
         first eight months of the year caused substantial delays in the flow of
         merchandise  creating out of stock conditions for basic merchandise and
         late arrivals of seasonal merchandise;
     3.  Certain merchandise  categories were further affected.  Outerwear sales
         were lower due to less clearance sales than in the prior year.  Fitness
         was lower due to fewer new "informercial"-driven product introductions.
         The footwear  category was affected due to the declining  in-line skate
         business and general softness in the athletic footwear industry;
     4.  Sales were generally soft throughout the sporting goods retail segment,
         partially  as a result  of  comparisons  against  last  year's  Olympic
         merchandise  sales and last year's  increased  foot  traffic due to the
         Olympics; and
     5.  Competition continued to increase.  Thirty-four  additional stores this
         year were affected by new big-box  competitors  which have opened since
         the beginning of the prior year.

         Gross profit for fiscal 1997 was $75.1 million,  or 14.2% of sales,  as
compared  to $119.0  million,  or 19.1% of sales in  fiscal  1996.  The  Company
incurred a $45.0 million inventory  write-down  charge, or 8.5% of sales related
primarily to slow moving athletic footwear and apparel, excess shrinkage and the
inventory  liquidation in connection with the closing of 26 stores. In the prior
year, the Company took a charge of $32.4 million, or 5.2% of sales, to recognize
the loss on outdated  and  discontinued  product.  The  remaining  decrease  was
attributable to higher buying and occupancy costs as a percentage of sales.

         Selling,  general and administrative  expenses for the fiscal year were
$112.5  million,  or 21.3% of sales,  compared  to $124.9  million,  or 20.0% of
sales, in the prior year. The increase as a percentage of sales was due to lower
sales volume leverage on fixed costs and certain higher operating costs. Payroll
expense as a  percentage  of sales was up 29 basis  points  due to the  in-store
problems  encountered by the  introduction  of the new  merchandise  information
systems  as  well  as  problems  experienced  in the  implementation  of the new
distribution   center;   also  a  higher   average   wage   resulted   from  the
"ripple-effect"  of the minimum  wage  increase  and a generally  tighter  labor
market.  Advertising  expense as a percentage  of sales was up 121 basis points,
due to additional expenditures for radio and television  advertising,  newspaper
advertising  and the  multi-paged  advertising  books  in  connection  with  the
corporate name change.

         In addition to the $45.0 million inventory charge, the Company incurred
$43.0 million of non-recurring  charges, or 8.1% of sales, in the current year's
third and fourth fiscal  quarters for charges as discussed  above. In the second
quarter of the prior year, the Company recorded a $22.6 million charge,  or 3.7%
of sales for the disposition of and impairment of  underperforming  assets,  for
certain loss contingencies and other charges.

         Loss from  operations  in fiscal  1997 was $80.4  million or (15.2)% of
sales,  compared to a loss from operations of $28.5 million,  or (4.6)% of sales
in fiscal 1996. The loss in the current year was primarily attributable to $89.0
million in charges taken in the third and fourth quarters. The loss in the prior
year was  primarily  attributable  to the $55.0  million in charges taken in the
second fiscal quarter.

         Interest  expense for fiscal 1997 was $30.4 million,  or 5.8% of sales,
compared to $19.9  million,  or 3.2% of sales for the prior  fiscal  year.  This
increase in interest expense was the result of the following:

     1.  Average debt increased due to refinancing the $58.0 million off balance
         sheet Tax Retention  Operating Lease facility into the revolving credit
         facility and higher average inventory levels;
     2.  The  re-negotiated  existing  credit  facility called for borrowings at
         LIBOR plus 2% (beginning May 29, 1996) and 3.0% (beginning December 15,
         1997)  contributing  to an overall 81 basis  point  increase in average
         interest rates; and
     3.  The accelerated  write-off of $5.3 million in deferred  financing costs
         in connection with the  re-negotiation of the Company's existing credit
         facility.

                                       14
<PAGE>
         The  Company had $100  million of  interest  rate  collars  which
impacted interest  expense by $15  thousand and $48  thousand,  in fiscal 1996
and fiscal 1997, respectively.

         The Company  recorded  an income tax expense of $0.5  million in fiscal
1997,  the result of writing off the  deferred  tax asset  recorded in the prior
year.  In fiscal  1996,  the  Company  recorded  an income tax  benefit of $17.9
million with an effective tax rate of 36.9%.

         In fiscal 1997,  the Company  posted a net loss of $111.3  million,  or
(21.1)% of sales,  compared to a net loss of $30.5  million,  or (4.9)% of sales
for the  prior  fiscal  year.  The net loss for the  fiscal  year was  primarily
attributable  to the $94.3  million of  charges  for store  closings,  inventory
write-downs  and other charges  incurred in the third and fourth fiscal quarters
with no federal  income tax  benefit,  resulting  in the full amount as a charge
after tax. In the prior year, the net loss was attributable to the $55.0 million
charge for  inventory,  non-recurring  and other  items  incurred  in the second
quarter of the prior year reduced by a federal income tax benefit,  resulting in
a net charge after tax of $34.6 million.


     Liquidity and Capital Resources

         The Company's primary capital requirements have been to support capital
investment for the opening of new stores, to purchase  inventory for new stores,
to  meet  seasonal  working  capital  needs,  and to  retire  indebtedness.  The
Company's  working  capital  needs have been  funded  through a  combination  of
external financing (including long-term debt and proceeds from the Company's IPO
in 1992, proceeds from the issuance of 4 1/4% Convertible  Subordinated Notes in
1993,  proceeds  from a two million  share stock  offering in 1994 and  mortgage
proceeds in 1996 and 1997),  internally  generated  funds and credit  terms from
vendors.  Historically,  the Company's  working capital needs peak in the fourth
quarter.

         During  fiscal 1998,  the Company  completed  the sale of 30 properties
totaling  $77.1  million.  Proceeds  were  used to reduce  bank debt and  retire
mortgage loans.  During fiscal 1997, the Company sold seven properties  totaling
$5.1 million. Proceeds were used to reduce bank debt. At end of fiscal 1998, the
Company had 16  properties  with an  estimated  value of $54.0  million held for
sale.  Eight of the 16 properties  worth an estimated $26.8 million,  were under
contract or letter of intent to be sold. With the filing of the bankruptcy these
sales were subject to Bankruptcy  Court  approval.  Two of these  contracts have
been  approved and one of the two sales has closed.  The proceeds  from the sale
was used to reduce  the DIP  facility  term  loans  consequently  lowing  future
interest  expense  and  debt  service  requirements.   Sales  of  the  remaining
properties,  if approved  by  Bankruptcy  Court,  will be used to reduce the DIP
facility term loans and mortgage debt  (assuming the  non-enforceability  of the
yield  maintenance  provision  and  pre-payment  penalties  in  certain  of  the
mortgages secured by such properties).

         Operating  activities  in fiscal 1998  provided  cash of $28.4  million
compared to a cash use of $34.5 million in fiscal 1997. An orderly  reduction in
inventory  levels in open stores plus the  liquidation  of  inventory  in the 18
stores (net) that closed  during  fiscal 1998 provided the majority of the cash.
In fiscal 1997,  excess  merchandise  purchases  resulting  from  implementation
issues with the Company's new merchandising  system and third party distribution
facility caused unplanned inventory increases and a high use of cash.

         Net cash of $71.1 million was provided by investing  activities  during
fiscal 1998  compared  to a net cash use of $6.0  million in fiscal  1997.  Cash
proceeds from the sale of property in fiscal 1998 were $77.1 million compared to
$5.1 million in fiscal 1997.

         Cash used in  financing  activities  was $76.0  million in fiscal  1998
compared to $35.9  million of cash  provided by financing  activities  in fiscal
1997.  In fiscal 1998 the Company  repaid debt from the sale of property and the
liquidation  of  inventory.  In fiscal 1997 the Company  borrowed on its working
capital facility to finance inventory increases.

         As of January 29,  1999,  the Company  had $67.1  million of  long-term
mortgage  obligations,  $98.9 million of borrowings  under its revolving line of
credit and $18.5 million of borrowings on its term loan. Both the revolving line

                                       15
<PAGE>
of credit and the term loan are  components of the Company's $150 million credit
facility  which was completed on July 24, 1998. On December 27, 1998 the Company
and certain of its subsidiaries filed petitions for reorganization under Chapter
11 of the Bankruptcy Code.  Thereafter,  no additional  amounts were drawn under
the credit facility agreement.  Temporary usage of cash collateral was permitted
by the  Bankruptcy  Court through  February 12, 1999. On February 11, 1999,  the
Company and its lenders  agreed to a $110 million  Senior Secured Super Priority
Debtor-In-Possession  Loan and Security Agreement (the "DIP facility").  The DIP
facility  contains  customary  events  of  default  and a number  of  covenants,
including  restrictions  on liens and sales of assets,  prohibition on dividends
and certain changes in control.  There are two financial covenants.  As of April
30, 1999, the Company was in compliance with all the DIP facility covenants.

         The DIP facility  bears  interest on revolving  loans at the  Company's
option, at the Reference Rate plus 0.5% or at LIBOR plus 2.75%.

         Also as of  January  29,  1999,  the  Company  had  $137.4  million  of
liabilities subject to compromise.  These liabilities relate to debt incurred or
existing prior to the petition date and are subject to settlement under terms of
a plan of reorganization.

         The  inventory  liquidation  of 17 stores  during the first  quarter of
fiscal  1999  and the  proceeds  from  the  sale of  property  held for sale are
expected to provide  cash for the  repayment  of secured  debt.  This  repayment
should materially reduce the Company's  interest expense in future periods.  The
Company  is  not  accruing   interest  on  its  $74.5  million  of   convertible
subordinated notes during the pendency of its Chapter 11 case.


     Year 2000 Compliance

         Introduction
         The "Year 2000 Problem" arose because many existing  computer  programs
use only  the last two  digits  to refer to a year.  Therefore,  these  computer
programs do not  properly  recognize a year that begins with "20" instead of the
familiar "19." If not corrected, many computer applications could fail or create
erroneous  results.  The problems created by using  abbreviated  dates appear in
hardware, operating systems and other software programs. The Company's Year 2000
("Y2K")  compliance  project is  intended  to  determine  the  readiness  of the
Company's  business for the Year 2000. The Company  defines Y2K  "compliance" to
mean that the computer code will process all defined  future dates  properly and
give accurate results.

         Description of Areas of Impact and Risk
         The Company has  identified  three areas where the Y2K problem  creates
risk to the Company.  These areas are: a) internal Information Technology ("IT")
systems;  b)  non-IT  systems  with  embedded  chip  technology;  and c)  system
capabilities  of third party  businesses  with  relationships  with the Company,
including product suppliers,  service providers (such as credit card processors,
telephone,  power,  security systems,  payroll  processing) and other businesses
whose failure to be Y2K compliant  could have a material  adverse  effect on the
Company's business, financial condition or results of operations.

         Plan to Address Year 2000 Compliance
         In the spring of 1997,  the  Company  developed  a plan to address  Y2K
readiness issues.  The plan included the identification of IT and non-IT systems
for compliance,  the readiness of the components and modification or replacement
of the components. Testing will be completed on each area before implementation.
Finally,  contingency  plans to address  potential risks that the Y2K compliance
project will not address need to be developed.

         State of Readiness
         IT Systems - In the spring of 1997,  the  Company  replaced  all of its
application  software from IBM, Microsoft and JDA Software Group (JDA). With the
implementation of one programming update from JDA, JumboSports will complete its
Y2K  compliance  in  key  financial,  information  and  operating  systems.  The
application of the JDA update will require thorough testing of every application
at JumboSports.  This testing is scheduled to be completed  before October 1999,
with the applications implemented during October 1999.

                                       16
<PAGE>




         Non-IT  Systems - The Company has also reviewed its non-IT  systems for
Y2K compliance. Areas for modification have be identified and are in process for
completion in late 1999.

         Third-Party  Business - The Company has obtained  from service  vendors
written statements of Y2K compliance and readiness. For critical vendors, if the
Company  does not receive a written  statement of  compliance,  the Company will
pursue  alternative  means of obtaining Y2K readiness  information,  through the
review of publicly available information published by such third parties.

         Cost of Project
         The overall cost of the Company's Y2K compliance  effort has and is not
expected  to be  material  to the  company's  consolidated  financial  position,
results of operations or cash flows.

         Contingency Plans and Risks
         The Company  believes that its approach to Y2K readiness is sound,  but
it is possible that some business  components  are not  identified,  or that the
testing  process does not result in analysis and remediation of all source code.
The Company's  contingency plan will address alternative providers and processes
to deal with  business  interruptions  that may be caused by internal  system or
third party providers failure to be Y2K compliant.

         The  failure to  correct a  material  Y2K  problem  could  result in an
interruption in, or failure of, certain business activities or operations.  Such
failure  could  materially  and  adversely  affect  the  Company's   results  of
operations,  liquidity  and  financial  condition.  In addition,  the  Company's
operating results could be materially  adversely  affected if it were to be held
responsible  for the  failure of  products  sold by the  Company to be Y2K ready
despite the Company's disclaimer of product warranties.


ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The Company does not believe there is material market risk.


ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

         The  information  called for by this item is set forth as an exhibit to
this Form 10-K.


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

         None


                                       17
<PAGE>
                                    PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

Directors as of April 29, 1999 are as follows:
<TABLE>
<CAPTION>
 Name                   Age    Occupation/Background
 <S>                    <C>    <C>
 Jack E. Bush           64     Chairman of the Board since December 5, 1997, Chief  Executive  Officer of 
                               the Company from December 16, 1997 to April 13, 1999,  and  President  from
                               February  17, 1999 to April 13,  1999.  Mr. Bush is  President  of Raintree
                               Partners,  Inc., a  management  consulting  firm.  He serves as Director of
                               Stage  Stores,  Inc.  and  Telequip  Company.   Previously,  he  served  as
                               President and Director of Michaels  Stores,  Inc. from 1991-1995.  Mr. Bush
                               is also  currently  Chairman of the Strategic  Planning  Board of Directors
                               of the College of Business and Public  Administration  at the University of
                               Missouri.

 Harold F. Compton      51     Director of the Company  since  December  1996.  Mr.  Compton is  President
                               and  Chief  Operating   Officer  of  CompUSA  Stores,   America's   largest
                               computer  superstore  retailer,  which he joined in 1994 as Executive  Vice
                               President/Operations.  Prior to that,  he  served  as  President  and Chief
                               Operating  Officer of Central  Electric,  Inc. from 1993-1994 and Executive
                               Vice President/Operations and Human Resources of Home Base from 1989-1993.

 R. Don Morris          59     Director  of  the  Company  since  March  1998.   Mr.  Morris   retired  as
                               Executive Vice  President/Chief  Financial Officer of Michaels Stores, Inc.
                               in March 1997.  Prior to 1990,  when he joined Michaels  Stores,  he served
                               as Director,  President  and Chief  Executive  Officer of  Frostcollection,
                               Inc. from 1988-1990.

 Samuel Northrop, Jr.   67     Director of the Company  since August 1996.  Mr.  Northrop  retired in July
                               1996 as Director of Commercial  Banking of Barnett Banks,  Inc., a position
                               he held since  1991.  He joined  Barnett in  November  1986 as Senior  Vice
                               President and Manager of the U.S. Banking Group.  While at Barnett,  he was
                               also a member of the Corporate Loan  Committee and the Management  Advisory
                               Council.  Prior to that,  he served in  various  management  capacities  at
                               Wachovia Bank N.A.

 Ronald L. Vaughn       52     Director of the Company since December 1996.  Dr. Vaughn is President of the
                               University of Tampa, a position he has held since January 1995.  Between
                               1984 and 1995, Dr. Vaughn  held numerous positions at the University including,
                               Dean of the College of Business, Dean of Graduate Studies and Professor.
</TABLE>


                                       18
<PAGE>


Executive officers are appointed by the Board of Directors and serve at
the  pleasure  of the  Board.  Executive  Officers  as of April 29,  1999 are as
follows:
<TABLE>
<CAPTION>
 Name                   Age    Position, Principal Occupation and Other Directorships
 <S>                    <C>    <C>
 Alfred F. Fasola, Jr.  49     Chief  Executive  Officer of the Company  since April 13, 1999.  Mr. Fasola
                               is  co-founder  of the  Taggart-Fasola  Group,  a financial  and  strategic
                               consulting  business.   From  1993-1995,   he  served  as  Chief  Executive
                               Officer of  Herman's  Sporting  Goods in  Carteret,  New  Jersey.  Due to an
                               overly  aggressive  payout to creditors  under a Chapter 11  reorganization
                               in 1995,  Herman's  was forced to re-enter  Bankruptcy  in 1996 and shortly
                               thereafter,  ceased  operations.  Prior to that,  he served as Chairman and
                               Chief Executive  Officer of Circle Express in  Indianapolis,  Indiana,  and
                               President of Purolator Corporation in Basking Ridge, NJ.

 Michael J. Worrall     51     President  of the  Company  since April 13,  1999.  Mr.  Worrall  served at
                               Chief  Information  Officer of Henry Silverman  Jewelers in El Paso, Texas,
                               from  1997-1998 and as Executive Vice  President of  Kuppenheimer  Menswear
                               in  Atlanta,  Georgia,  from  1996-1997.  Previously,  he  served as Senior
                               Vice  President  of  Strategy,  Planning  and  Business  Re-engineering  of
                               Herman's  Sporting  Goods  in  Carteret,  New  Jersey.  Due  to  an  overly
                               aggressive  payout to creditors under a Chapter 11  reorganization in 1995,
                               Herman's   was  forced  to   re-enter   Bankruptcy   in  1996  and  shortly
                               thereafter,  ceased  operations.  Prior to that, he worked in Great Britain
                               for 15 years.

 B. Robert Floum        62     Chief  Operating  Officer of the  Company  since  January  26,  1998.  From
                               1994-1998,  Mr. Floum served as a consultant for a number of  Florida-based
                               retailers.  Prior to 1994,  he served  as  President  and  Chief  Executive
                               Officer of Fisher Big Wheel in New  Castle,  Pennsylvania,  and Senior Vice
                               President of  Merchandising  of Roses Discount  Stores in Henderson,  North
                               Carolina.

 Barry Gold             56     Executive  Vice  President of  Operations,  Logistics  and Loss  Prevention
                               since  March  9,  1998.  Mr.  Gold  previously  served  as  Executive  Vice
                               President  of Stores  and  Operations  for L.  Luria and Son,  a  specialty
                               retailer,  from  1996-1998.  L. Luria and Son filed for protection under Chapter 11
                               of the Bankruptcy Code on August 13, 1997.  Prior to that he  served  as  Chief
                               Financial Officer of The Flax Art and Design  Company,  Inc. and Vice  Chairman/Chief
                               Operating Officer of Fisher Big Wheel.
</TABLE>

         Based  solely  on a  review  of  Forms 3 and 4 and  amendments  thereto
furnished to the Company pursuant to Rule 16(a)-3(e) during fiscal year 1998 and
Form 5 and  amendments  thereto  furnished to the Company with respect to fiscal
year 1998 and any written representation otherwise furnished to the Company, the
Company  believes that SEC filing  requirements  applicable to its Directors and
officers with respect to the Company's  fiscal year ended January 29, 1999, have
been fulfilled and that all such filings were made on a timely basis.


ITEM 11.  EXECUTIVE COMPENSATION.

         Directors Fees

         Directors of the Company each received, upon their first appointment to
the Board,  a one-time  option grant to purchase  10,000 shares of the Company's
Common  Stock at the fair market value of the Common Stock on the date of grant.
In addition,  for so long as the Director  were to remain a member of the Board,
such director would receive annual  compensation in the form of option grants to
purchase 1,000 shares of the Company's  Common Stock at the fair market value of
the Common Stock on the day preceding each Annual Meeting of Stockholders. These
options were to vest and become exercisable on the first anniversary of the date
of grant,  provided  the  Director  then  remained a member of the  Board.  This
incentive compensation has not been approved by the Bankruptcy Court.

                                       19
<PAGE>

         In  addition,  each of said  Directors  is paid an annual fee of 
$16,000  and  $1,500 for  attendance,  in person  or by  telephone,  at  each
Board  meeting,  plus  certain  expense  reimbursements  and  allowances.  The
Bankruptcy Court has approved this compensation.

         Executive Compensation

         Summary Compensation Table

         The following  table sets forth,  for the years ended January 29, 1999,
January  30,  1998 and  January  31,  1997,  the cash  compensation  paid by the
Company,  as well as other compensation paid or accrued for these years to those
persons who were at January 29, 1999, the Company's Chief Executive  Officer and
the  other  four  most  highly  compensated  officers  of  the  Company  ("Named
Officers").   See   discussion   under   Employment   Contracts  for  additional
information.
<TABLE>
<CAPTION>

                                                 Annual Compensation                   Long Term Compensation Awards
                                ----------------------------------------------     ------------------------------------
                                                                  Other Annual      Restricted    Stock       All other
Name and Principal Position     Year    Salary        Bonus       Compensation     Stock Awards  Options(#)     comp.(1)
---------------------------     ----    ------        -----       ------------     ------------  ----------   ----------
<S>                             <C>     <C>           <C>         <C>              <C>           <C>          <C>
Jack E. Bush                    1998    $380,500(2)   $ -0-       $ 174,000(3)     $   -0-         1,000      $  -0-
Chairman, Former                1997      69,479(2)     -0-            -0-             -0-       211,000         -0-
President and Former            1996       N/A  (4)     N/A            N/A             N/A          N/A          N/A
Chief Executive Officer(5)      

B. Robert Floum                 1998    $300,000      $ -0-       $ 186,950(3)     $   -0-          -0-       $   936
Chief Operating Officer         1997       N/A  (4)     N/A            N/A             N/A       200,000         N/A
                                1996       N/A  (4)     N/A            N/A             N/A          N/A          N/A

Raymond P. Springer             1998    $257,433      $218,909    $ 120,000(3)     $   -0-        50,000      $10,707
Former Executive Vice           1997     208,063        17,308(6)      -0-             -0-        30,000       24,980
President and Chief             1996     145,385        72,692(6)      -0-             -0-       150,000        1,954
Financial Officer (5)

Barry Gold                      1998    $167,223      $ -0-       $ 149,961(3)     $   -0-       100,000      $ 2,903
Executive Vice President        1997       N/A  (4)     N/A            N/A             N/A          N/A          N/A
Operations                      1996       N/A  (4)     N/A            N/A             N/A          N/A          N/A

Michael Henning                 1998    $139,713      $ 47,657     $   -0-         $   -0-        50,000      $10,376
Senior Vice President           1997     133,492         4,207(6)      -0-             -0-        20,000       11,255
Human Resources                 1996     108,173        27,043(6)      -0-             -0-       100,000        5,126

<FN>
------------
  (1) Includes Company  contributions and participant  forfeitures  allocated to
      the accounts of the Named  Officers in the  Company's  Profit  Sharing and
      401(k) Savings Plan and the Executive Deferred Compensation Plan, premiums
      paid by the  Company  for  insurance  policies  on the  lives of the Named
      Officers,  the benefits of which are payable to the designated beneficiary
      of each Named Officer and limited medical  reimbursements  paid to certain
      Named Officers.
(2)  Represents  amounts  paid  directly to Mr.  Bush and to Raintree  Partners,
     Inc., Mr. Bush's  management  consulting firm, and includes fees associated
     with Mr. Bush as a Board member.
(3)  Represents  amounts paid to Named Officer in compliance with Named Officers
     amended and restated  Employment  Agreements.  Amounts in  connection  with
     relocation expenses are included for Mr. Floum and Mr. Gold.
(4)  Mr.  Bush,  Mr.  Floum and Mr.  Gold  joined the  Company in January  1998,
     January 1998 and March 1998,  respectively,  and  accordingly,  received no
     compensation from the Company prior to that date.
(5)  Mr. Bush's and Mr. Springer's employment terminated on April 13, 1999.
(6)  Represents  a portion  of the Named  Officer's  minimum  guaranteed  bonus,
     pursuant to the terms of the Named Officer's employment agreement.
</FN>
</TABLE>
                                       20
<PAGE>
         Option Grants In Last Fiscal Year

         The following table contains information  concerning the grant of stock
options under the Company's  Stock  Incentive Plans to the Named Officers during
the last fiscal  year.  These stock  options may be subject to  modification  or
elimination as part of the reorganization proceedings.
<TABLE>
<CAPTION>

                                                                                  Potential Realizable Value at
                                                                                       Assumed Annual Rates of
                                                                                      Stock Price Appreciation for
                                         Individual Grants                                  Option Term (1)
                       ------------------------------------------------------     --------------------------------
                                    % of Total
                                     Options 
                                    Granted to                     
                       Options      Employees     Exercise or
                       Granted      In Fiscal      Base Price       Expiration
Name                     (#)          Year(2)       ($/share)(3)        Date             5%           10%
-------------------    --------     ----------    -------------     ----------       -------       -------
<S>                    <C>           <C>           <C>               <C>              <C>           <C>
Jack E. Bush             1,000(4)      *             1.063           6/17/08            669         1,694
Raymond P. Springer     30,000(5)     4.0%           1.625           4/15/08         30,660        77,700
                        20,000(5)     2.7%           1.813           2/17/08         22,800        57,780
Michael Henning         30,000(5)     4.0%           1.625           4/15/08         30,660        77,700
                        20,000(5)     2.7%           1.563           3/25/08         19,660        49,820
Barry Gold             100,000(6)    13.4%           1.813            3/3/08        114,000       288,900
<FN>
--------------
(1)  Gains are  reported  net of the option  exercise  price,  but before  taxes
     associated with exercise.  These amounts represent certain assumed rates of
     appreciation  only.  Actual  gains,  if any, on stock option  exercises are
     dependent on the future  performance  of the Common Stock and overall stock
     market conditions.  The amounts reflected in this table may not necessarily
     be achieved.
(2)  Reflected as a percentage  of total option  grants to all  employees  under
     both 1989 Stock  Incentive Plan and the 1996 Stock  Incentive Plan. A total
     of 356,600 option grants were made under the 1989 Stock  Incentive Plan and
     392,563 option grants were made under the 1996 Stock Incentive Plan.
(3)  All  options  were  originally  granted at the market  value on the date of
     grant.  The  exercise  price and tax  withholding  obligations  related  to
     exercise  may be paid by  delivery  of  already  owned  shares,  subject to
     certain conditions.
(4)  These  options  represent  Mr.  Bush's  annual  grant as a Director  of the
     Company.
(5)  All  options  granted in 1998 to the Named  Officer  vest over five  years,
     pursuant to the terms of the Named Officer's Employment  Agreement,  at the
     rate of 40% after  two years  from date of grant and 20% at the end of each
     subsequent year.
(6)  All options  granted in 1998 to the Named  Officer  vest over four years at
     the rate of 25% each year on the anniversary of the date of grant. .

         *  Represents less than 1%.
</FN>
</TABLE>

         Aggregated Option Exercises In Last Fiscal Year And Fiscal Year End 
Option Values

                  None

         Compensation Committee Interlocks and Insider Participation

         During the fiscal year ended  January  29,  1999,  Messrs.  Compton and
Morris  served  on the  Compensation  Committee.  Neither  of  them  are or were
formerly officers of the Company,  and there were no interlocks  between them or
any of the Company's executive officers.

         Employment Contracts

         On April 13, 1999, the Bankruptcy  Court approved the appointment of
Alfred F. Fasola,  Jr. as Chief Executive Officer of the Company and Michael J.
Worrall as President.  Mr. Fasola is to be paid a base annual  compensation  of
$174,000 and  is  entitled  to  a  performance  bonus  based  upon  sustained 

                                       21
<PAGE>
break-even performance  by the  Company  as defined  and to be agreed  upon by 
the Board of Directors (with Bankruptcy Court approval). Mr. Worrall is to paid 
a base annual compensation of $250,000 and is entitled to a performance bonus to
be determined on the same  basis  as Mr.  Fasola.  Both Mr.  Fasola  and Mr.  
Worrall  will be entitled to a success fee upon the sale,  reorganization  or  
liquidation of the Company on terms to be agreed upon by the Board of  Directors
to the extent that such compensation is approved by the Bankruptcy Court.

         On February 23, 1999 and April 22, 1999, the  Bankruptcy  Court entered
orders approving certain compensation  arrangements between the Company and Jack
E. Bush, who was on the Petition Date the Company's  Chairman,  Chief  Executive
Officer and President, and Raymond P. Springer, who was on the Petition Date the
Company's  Executive Vice President and Chief Financial Officer.  As a result of
these orders  Messrs.  Bush and Springer were  authorized to receive (a) regular
salary  payments and benefits from the Petition Date through April 13, 1999; (b)
prorated  daily  compensation  and benefits for up to an additional 45 days; and
(c) one year's salary in the form of a lump sum severance payment plus continued
insurance coverage for one year. Messrs.  Bush and Springer each received
a retention  bonus equal to six months'  base  compensation  before the Petition
Date.

         The  employment  agreements of Mr. Floum and Mr. Gold each terminate on
the latest of (a) the effective date of a plan of reorganization,  (b) dismissal
of the Chapter 11 proceedings or (c) December 31, 1999  ("agreement  termination
date").  Both Mr. Floum and Mr. Gold each received a lump sum retention bonus on
December  23, 1998 equal to six months of their  respective  base  compensation.
Each employment  agreement  provides that the retention bonus be refunded to the
Company if the respective executive voluntarily  terminates his employment prior
to the earlier of (a)  December 31, 1999,  (b) the  effective  date of a plan of
reorganization,  (c) the date his employment is involuntarily terminated, or (d)
the cessation of retail business  operations,  Chapter 7 conversion or dismissal
of the Chapter 11 case.  Additionally,  each executive is eligible for a success
bonus equal to six months of their respective base  compensation  payable on the
effective date of a plan of reorganization,  provided that (a) he remains in the
employment of the Company as of the effective date of a plan of  reorganization,
(b) the  plan is a  non-liquidating  plan,  and (c)  the  plan is  supported  by
majority vote of the official  committees.  Each  executive is also eligible for
severance  pay of one year's  annual base  compensation,  so long as he does not
voluntarily terminate his employment prior to the agreement termination date.

         Mr. Henning's employment agreement calls for a retention bonus equal to
three months' base  compensation  to be paid on the earlier of (a) the effective
date of a plan of reorganization  or (b) December 31, 1999,  provided he remains
in the employ of the Company.  Mr.  Henning is also eligible for a success bonus
equal to three month's base compensation payable on the effective date of a plan
of  reorganization.  The agreement further provides that Mr. Henning is eligible
for salary  continuation  payable  every two weeks until  alternative  permanent
employment is accepted,  not to exceed twelve  months,  should his employment be
involuntarily terminated by the Company.


                                       22
<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.


     To the best  knowledge of the Company based on  information  filed with the
Securities and Exchange  Commission  and  information  provided  directly to the
Company by the persons and entities named below,  the following table sets forth
the  beneficial  ownership of the Company's  Common Stock,  as of March 25, 1999
(unless otherwise noted), by each holder of more than 5% of the Company's Common
Stock and by each  Director  and  executive  officer of the  Company  and by the
Directors and executive officers as a group.

<TABLE>
<CAPTION>
                                                                                Shares
                                                                             Beneficially            Percent
Name and Address of Beneficial Owner         Position with Company             Owned (1)             of Class
------------------------------------         ---------------------           ------------            --------
<S>                                          <C>                             <C>                     <C>
Directors/Nominees:
-------------------
Jack E. Bush                                 Chairman of the Board             212,000(2)              1.03% 
6222 Raintree Court
Dallas, Texas

Harold F. Compton                             Director                          21,000(2)                *
14951 North Dallas Parkway
Dallas, Texas

R. Don Morris                                 Director                            -0- (2)                *
P.O. Box 988                                                                            
Mt. Vernon, Texas

Samuel Northrop, Jr.                          Director                          12,000(2)                *
8140 Mar del Plata
Jacksonville, Florida

Ronald L. Vaughn                              Director                          11,000(2)                *
401 W. Kennedy Blvd.
Tampa, Florida

Former Executive Officers:
--------------------------
Raymond P. Springer                           Former Executive Vice             32,000                   *
4701 W. Hillsborough Avenue                   President and Chief
Tampa, Florida                                Financial Officer

Other Executive Officers:
-------------------------
Alfred F. Fasola, Jr.                         Chief Executive Officer             -0-                    *
4701 W. Hillsborough Avenue
Tampa, Florida

B. Robert Floum                               Chief Operating Officer          200,000(2)                *
4701 W. Hillsborough Avenue
Tampa, Florida

                                       23
<PAGE>
Barry Gold                                    Executive Vice President/        100,000(2)                *
4701 W. Hillsborough Avenue                   Operations, Logistics and
Tampa, Florida                                Loss Prevention

Michael J. Worrall                            President                           -0-                    *
4701 W. Hillsborough Avenue
Tampa, Florida

Beneficial Owners in
Excess of 5% Ownership:
-----------------------
Investcorp S.A.                                ---                           2,793,914(3)             13.68%
37 rue Notre-Dame
Luxembourg

Dimensional Fund Advisors Inc.                 ---                           1,026,300 (4)             5.03%
1299 Ocean Avenue, 11th Floor
Santa Monica, California  90401

All current Directors and executive                                            556,000                 2.22%
officers as a group (9 persons)

     * Represents less than one percent
<FN>
------------------------

(1)  As used in this table,  beneficial ownership means the sole or shared power
     to vote,  or direct the voting of, a security,  or the sole or shared power
     to dispose, or direct the disposition of a security. The named stockholders
     have  sole  power  to  vote  and  dispose  of all  shares  shown  as  being
     beneficially owned by them, except as otherwise indicated.
(2)  Includes all stock options vested as of April 20, 1999.
(3)  As of January 29,  1999,  Investcorp  S.A.  does not hold any shares of the
     Company  directly.  Share  ownership  listed above includes  shares held by
     Investcorp's  indirect  wholly-owned  subsidiaries,   as  to  which  shares
     Investcorp  holds sole voting and investment  power.  Share  ownership also
     includes 2,793,914 shares held by various Cayman Islands corporations, none
     of which and none of the beneficial  owners of which own individually  more
     than 5% of the Company's shares but as to which Investcorp may be deemed to
     share  beneficial  ownership  as a result of certain  revocable  management
     contracts  between  Investcorp  and the  beneficial  owners of such  shares
     pursuant to which  Investcorp  has the  authority  to direct the voting and
     disposition of the shares.  Investcorp  owns no stock in the Cayman Islands
     corporations  that hold the  shares  subject to such  revocable  management
     contracts.
(4)  As of February 11, 1999, Dimensional Fund Advisors Inc. ("Dimensional"),  a
     registered  investment advisor,  is deemed to have beneficial  ownership of
     1,026,300  shares,  all of  which  shares  are  held in  portfolios  of DFA
     Investment Dimensions Group Inc., a registered open-end investment company,
     or in series of The DFA  Investment  Trust  Company,  a  Delaware  business
     trust,  or the DFA  Group  Trust  and the DFA  Participating  Group  Trust,
     investment  vehicles for qualified  employee  benefit  plans,  all of which
     Dimensional serves as investment manager.  Dimensional disclaims beneficial
     ownership of all such shares.
</FN>
</TABLE>


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         In connection with their respective employment agreements, and pursuant
to the terms  thereof,  during  fiscal  year 1996 the Company  loaned  $166,667,
$137,500 and $30,250 to each of Messrs.  Bebis (former  Chairman,  President and
Chief Executive  Officer),  Springer and Henning,  respectively,  to assist them
with the purchase of non-registered  shares of the Company's Common Stock. In 
lieu of incurring  the expense of  registering  Mr.  Bebis' shares as provided 
in his termination  agreement,  the Company accepted the shares,  valued at the
closing

                                       24
<PAGE>

price 90 days after Mr. Bebis' date of termination, plus cash in satisfaction of
the  outstanding  loan balance.  As of January 29, 1999, each of the outstanding
loans had been repaid in full.



                                     PART IV

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

(a)   Documents filed as part of this Annual Report on  Form 10-K:

     (1)  Financial Statements
                                                                            Page
     Reports of Independent Accountants......................................F-1
     Consolidated Balance Sheets.............................................F-3
     Consolidated Statements of Operations...................................F-4
     Consolidated Statements of Stockholders' Equity.........................F-5
     Consolidated Statements of Cash Flows...................................F-6
     Notes to the Consolidated Financial Statements..........................F-7

     (2) All schedules  have been included as an Exhibit or the  information  is
         included  elsewhere  in  the  financial  statements  or  notes  thereto
         incorporated by reference in Item 8 of this Annual Report on Form 10-K.

     (3)  Exhibits - See Exhibit  Index on page 26 and 27.


(b)   Reports on Form 8-K:

     On December 27, 1998,  JumboSports  Inc.,  a Florida  corporation,  and its
     subsidiaries  Guide  Series,  Inc.  and Property  Holdings  Company I filed
     Voluntary  Petitions for Relief (Case  Nos.98-22545-8C1,  98-22546-8C1  and
     98-22547-8C1,  respectively)  under  Chapter  11 of Title 11 of the  United
     States  in  United  States  Bankruptcy  Court for the  Middle  District  of
     Florida, Tampa Division reported on Form 8-K on January 14, 1999.


                                       25
<PAGE>


                                  EXHIBIT INDEX
Exhibit
Number        Description

      Financial Statements - see index on page 25. 
      Financial Statement Schedules - see index on page 25.
3.1   Articles of Incorporation of JumboSports Inc.  Incorporated by reference
      to the exhibits  included in the Company's  Annual Report on Form 10-K/A
      filed on November 16,1998.
3.2   Bylaws of  JumboSports  Inc.  Incorporated  by  reference  to the  
      exhibits included in the  Company's  Annual Report on Form 10-K/A filed on
      March 12, 1998. 
4.1   Specimen Common Stock  Certificate.  Incorporated by reference to
      the exhibits  included in the Company's  Annual Report on Form 10-K/A 
      filed on November 16,1998.
4.2   Specimen  of Debt  Security.  Incorporated  by  reference  to the  
      exhibits included in the  Company's  Annual  Report on Form 10-K/A filed
      on November 16,1998.
4.3   Indenture  between  JumboSports  Inc.  and  Barnett  Banks  Trust  
      Company, National  Association,  as Trustee.  Incorporated  by reference
      to exhibits included in the Company's  Annual Report on Form 10-K/A for 
      the fiscal year ended January 30, 1994.
4.4   Supplemental   Indenture  Agreement,   dated  February  14,  1997,  
      between JumboSports Inc. and The Bank of New York. Incorporated by 
      reference to the exhibits included in the Company's Form 8-B filed on 
      June 11, 1997.
4.5   Rights  Agreement,  dated  June 12,  1996,  between  JumboSports  Inc.
      and ChaseMellon  Shareholder  Services,  LLC.  Incorporated by reference
      to the exhibits included in the Company's Form 8-A filed on June 20, 1996.
4.6   Rights  Certificate.  Incorporated by reference to the exhibits included
      in the Company's Form 8-A filed on June 20, 1996.
10.1  1989 Stock Incentive  Plan, as amended through June 23, 1994.  
      Incorporated by reference to exhibits  included in the  Company's  
      Annual Report on Form 10-K for the fiscal year ended January 29, 1995.
10.2  Amendment to 1989 Stock  Incentive  Plan.  Incorporated by reference to
      the exhibits included in the Company's Form S-8 Registration Statement 
      filed on January 28, 1998 (Registration No. 333-45041).
10.3  1996 Stock  Incentive  Plan.  Incorporated  by  reference  to the  
      exhibits included in the Company's Form 8-B filed June 11, 1997.
10.6  Officers' Medical Reimbursement Plan. Incorporated by reference to 
      exhibits included in the Company's  Registration Statement on Form S-1 
      (Registration Statement No. 33-50098).
10.7  Amended and Restated  Credit  Agreement,  dated as of May 28,  1997,  
      among JumboSports,  each of the subsidiaries of JumboSports,  Barnett 
      Bank, N.A., NationsBank,  N.A.,  and each of the Lenders (as defined in 
      the Amended and Restated Credit Agreement).
10.8  Form of Stock Option  Agreement  pursuant to the 1989 Stock  Incentive 
      Plan for options granted to employees. Incorporated by reference to the 
      exhibits included in the  Company's  Annual  Report on Form 10-K/A filed
      on November 16,1998.
10.9  Form of Stock Option  Agreement  pursuant to the 1996 Stock  Incentive 
      Plan for options granted to Directors. Incorporated by reference to the 
      exhibits included in the  Company's  Annual  Report on Form 10-K/A filed
      on November 16,1998.
10.10 Employee  Stock  Purchase  Plan,  as amended  through  November  14, 
      1994. Incorporated  by reference  to exhibits  included in the  Company's
      Annual Report on Form 10-K for the fiscal year ended January 29, 1995.
10.11 Amendment  Agreement,  dated  January 30,  1998,  among  JumboSports  
      Inc., Barnett Bank, N.A., NationsBank,  N.A., and each of the lenders 
      (as defined in the Amendment Agreement). Incorporated by reference to 
      exhibits included in the  Company's  Form 8-K filed on  
      February  10, 1998.  
10.12 Loan and Security Agreement,  dated July 24, 1998, among JumboSports,  
      Inc. and Foothill Capital  Corporation,  Paragon Capital LLC, Congress
      Financial Corporation,  Foothill  Partners  III,  L.P.  and each of the 
      lenders  (as defined in the Amendment Agreement).  Incorporated by 
      reference to exhibits included in the Company's Form 8-K on 
      August 27, 1998.

                                       26
<PAGE>
                                  EXHIBIT INDEX

10.13 Senior Secured,  Super-Priority  Debtor-In-Possession Loan and Security 
      Agreement, dated February 12, 1999, among JumboSports Inc. and Foothill
      Capital  Corporation,  Congress  Financial  Corporation and each of the 
      lenders (as defined in the Agreement).
10.14 Amended and  Restated  Employment  Agreement  dated as of March 16, 1999
      between the Company and Jack E. Bush.
10.15 Amended and  Restated  Employment  Agreement  dated as of March 16,  1999
      between the Company and B. Robert Floum.
10.16 Amended  and  Restated  Employment  Agreement  dated as of March 16, 1999
      between  the  Company and Raymond P. Springer.
10.17 Amended and Restated  Employment  Agreement  dated as of March 16, 1999 
      between the Company and Barry Gold.
10.18 Amended  and  Restated  Employment  Agreement  dated as of March 16, 1999
      between  the  Company and Michael Henning.
12    Computation of Ratio of Earnings to Fixed Charges.
21    List  of  Subsidiaries.  Incorporated  by  reference  to  exhibits
      included  in the  Company's  Annual  Report  on Form  10-K for the
      fiscal year ended January 28, 1996.
23.   Consent of PricewaterhouseCoopers LLP
27    Financial Data Schedule (Edgar filing-only).
99    Schedule II - Valuation and Qualifying Accounts.

                                       27
<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, on April 29, 1999.

                                                JumboSports Inc.
                                                  (Registrant)



                                          By:   /s/  ALFRED F. FASOLA JR.
                                          Alfred F. Fasola, Jr.,
                                          Chief Executive Officer
                                          (Principal 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 date indicated above.

                                           By:   /s/ ALFRED F. FASOLA, JR.
                                           Alfred F. Fasola, Jr.,
                                           Chief Executive Officer
                                           (Principal Executive Officer)

                                           By:   /s/ MICHAEL J. WORRALL
                                           Michael J. Worrall, President

                                           By:  /s/  JEROME A. KOLLAR
                                           Jerome A. Kollar, Chief Financial
                                           Officer

                                           By:  /s/  JACK E. BUSH
                                           Jack E. Bush, Chairman of the Board
                                           of Directors

                                           By:   /s/ HAROLD F. COMPTON
                                           Harold F. Compton,  Director

                                           By:   /s/ R. DON MORRIS
                                           R. Don Morris, Director

                                           By:   /s/ SAMUEL NORTHROP, JR.
                                           Samuel Northrop, Jr.,  Director

                                           By:   /s/ RONALD L. VAUGHN
                                           Ronald L. Vaughn,  Director



                                       28

<PAGE>
               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


Board of Directors and Stockholders of JumboSports Inc.

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated statements of operations, of stockholders' equity and of cash flows
present fairly, in all material respects,  the financial position of JumboSports
Inc. and its  subsidiaries  (the "Company") at January 29, 1999, and January 30,
1998,  and the results of their  operations and their cash flows for each of the
three years in the period ended January 29, 1999, in conformity  with  generally
accepted   accounting   principles.   These   financial   statements   are   the
responsibility of the Company's management;  our responsibility is to express an
opinion on these  financial  statements  based on our audits.  We conducted  our
audits of these  statements  in  accordance  with  generally  accepted  auditing
standards which 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,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.

The accompanying  consolidated  financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated  financial statements,  on December 27, 1998,  JumboSports Inc. and
certain of its subsidiaries filed a voluntary petition for reorganization  under
Chapter 11 of the United States  Bankruptcy  Code,  thereby raising  substantial
doubt  about its ability to  continue  as a going  concern.  The Company has not
filed a plan of  reorganization  with the  Bankruptcy  Court.  The  accompanying
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of the petitions for reorganization.


PRICEWATERHOUSECOOPERS LLP


Tampa, Florida
April 23, 1999


                                      F-1
<PAGE>


                                JUMBOSPORTS INC.
                             (DEBTOR-IN-POSSESSION)
                           CONSOLIDATED BALANCE SHEETS

               (IN THOUSANDS EXCEPT FOR SHARE AND PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                January 30,              January 29,
                                                                   1998                     1999
                                                                -----------              -----------
<S>                                                             <C>                      <C>
ASSETS                 
 Current assets:
  Cash and cash equivalents                                      $     345                $  23,809
  Accounts receivable, (net of allowance for doubtful
    accounts of 299 & 292 respectively)                              4,654                    3,066
  Inventories                                                      185,047                  121,586
  Property under contract for sale                                  78,801                   10,248
  Prepaid expenses and other assets                                  3,819                    1,527
  Income tax receivable                                              1,556                      447
  Prepaid inventory                                                                           3,900
                                                                 ---------                ---------
        Total current assets                                       274,222                  164,583
                                                                 ---------                ---------

 Property held for sale                                            28,712                    32,456
 Property and equipment, net                                      145,747                    94,357
 Other assets:
    Cost in excess of fair value of net assets acquired, net       10,803                    10,462
    Other                                                           7,065                     6,109
                                                                 --------                 ---------                  
       Total other assets                                          17,868                    16,571
                                                                 --------                 ---------
 Total assets                                                   $ 466,549                 $ 307,967
                                                                 ========                 =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 Current liabilities:
  Current portion of long-term debt                             $   1,008                 $     893
  Accounts payable                                                 26,443                     3,468
  Accrued expenses                                                 13,717                     7,108
  Accrued non-recurring charges                                    32,984
  Accrued reorganization items                                                               13,310
  Other                                                             4,101                     2,724
                                                                 --------                 ---------
       Total current liabilities                                   78,253                    27,503

  Other long-term liabilities                                       4,241                     1,267
  Revolving credit agreement                                      174,037                    98,934
  Credit facility term loan                                                                  18,471
  Long-term debt less current maturities                           86,770                    67,224
  Convertible subordinated notes                                   74,750
  Liabilities subject to compromise                                                         139,633
                                                                 --------                 ---------
       Total liabilities                                          418,051                   353,032
                                                                 --------                 ---------

 Commitments and contingencies (Notes 3 and 7)

 Stockholders' equity:
  Common stock, $.01 par value, 100,000,000 shares 
   authorized,  20,386,155 and 20,420,001 
   shares issued and outstanding, respectively                        204                      204
 Additional paid-in capital                                       149,809                  149,760
 Accumulated deficit                                             (101,515)                (195,029)
                                                                 --------                 --------
       Total stockholders' equity (deficit)                        48,498                  (45,065)
                                                                 --------                 --------
 Total liabilities and stockholders' equity                      $466,549                 $307,967
                                                                 ========                 ========
</TABLE>

See Notes To The Consolidated Financial Statements.

                                       F-2
<PAGE>

                                JUMBOSPORTS INC.
                             (DEBTOR-IN-POSSESSION)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                    (IN THOUSANDS EXCEPT FOR PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                      Fiscal          Fiscal           Fiscal
                                                                       1996            1997             1998
                                                                     --------         --------        --------
    <S>                                                              <C>              <C>             <C>
    Sales                                                            $624,019         $528,634        $362,395
    Cost of sales including buying
       and occupancy costs                                            505,062          453,509         282,251
                                                                     --------         --------        --------
    Gross profit                                                      118,957           75,125          80,144

    Selling, general and administrative expenses                      124,918          112,489          78,911
    Proceeds from a settlement of legal proceedings                                                     (1,000)
    Loss on disposition of assets, closed store expenses,
       and other charges                                               22,568           43,055          15,200
                                                                     --------         --------        --------
    Loss before provision (benefit) for income taxes,
       reorganization items and interest expense                      (28,529)         (80,419)        (12,967)
    Interest expense, net                                              19,890           30,395          22,366
                                                                     --------         --------        --------
    Loss before provision (benefit) for
       income taxes and reorganization items                          (48,419)        (110,814)        (35,333)
    Reorganization items                                                                                58,344
                                                                     --------         --------        --------
    Loss before income taxes                                          (48,419)        (110,814)        (93,677)
    Provision (benefit) for income taxes                              (17,875)             483            (163)
                                                                     --------         --------        --------
    Net loss                                                         $(30,544)       $(111,297)       $(93,514)
                                                                     ========         ========        ========

    Basic and diluted loss per common share                            $(1.53)         $(5.47)          $(4.58)
</TABLE>


See Notes To The Consolidated Financial Statements.

                                      F-3

<PAGE>


                                JUMBOSPORTS INC.
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIENCY

                      (IN THOUSANDS EXCEPT FOR SHARE DATA)

<TABLE>

                                                                       Additional
                                                 Common Stock            paid-in         Accumulated
                                             Shares       Par Value      capital     earnings (deficit)     Total
                                          ----------      ---------    ----------    ------------------     -----
<S>                                       <C>             <C>          <C>              <C>                 <C>
Balance, January 28, 1996                 19,769,059      $     198    $   147,006      $    40,326         $ 187,530
    Issuance of common stock                 570,350              5          1,600                              1,605
    Tax benefit of exercise of options                                       1,033                              1,033
    Net loss                                                                                (30,544)          (30,544)
                                          ----------      ---------    -----------      -----------          --------

Balance, January 31, 1997                 20,339,409            203        149,639            9,782           159,624
    Issuance of common stock                  46,746              1            157                                158
    Tax benefit of exercise of options                                          13                                 13
    Net loss                                                                               (111,297)         (111,297)
                                          ----------      ---------    -----------      -----------          --------
 
Balance, January 30, 1998                 20,386,155           204        149,809          (101,515)           48,498
                                          ----------      ---------    -----------      -----------          --------  
    Issuance of common stock and
     cancellation of non-registered
     stock                                    33,846                          (49)                                (49)
    Net loss                                                                                (93,514)          (93,514)
                                          ----------      ---------    -----------      -----------          --------

Balance, January 29, 1999                 20,420,001      $     204    $  149,760       $  (195,029)         $(45,065)
                                          ==========      =========    ===========      ===========          ========
</TABLE>



See Notes To The Consolidated Financial Statements.


                                      F-4
<PAGE>
                                JUMBOSPORTS INC.
                             DEBTOR-IN-POSSESSION)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                           Fiscal            Fiscal          Fiscal
                                                                            1996              1997            1998
                                                                           ------            ------          -------
<S>                                                                       <C>            <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                  $(30,544)      $(111,297)        $(93,514)
Adjustments to reconcile net income (loss) to net cash provided by
     (used in) operating activities:
       Depreciation                                                          8,656           9,840            6,869
       Gain (loss) on asset sales                                             (478)             11
       Amortization of cost in excess of the fair value of
          net assets acquired                                                  342             342              342
       Deferred loan cost and other amortization                             1,048           1,456              677
       Deferred loan cost write off                                                          5,345
       Loss on disposed assets  and other charges                           22,568          43,055           15,200
       Reorganization charges                                                                                58,344
       Decrease (increase) in deferred tax asset                            (1,586)          1,586
       Decrease in deferred income tax liability                            (4,388)
       Decrease (increase) in accounts receivable                            2,589          (2,316)           1,588
       Decrease in inventories                                              35,144          16,043           63,461
       Decrease (increase) in prepaid expenses and other assets             (2,000)            (77)           1,924
       Increase in prepaid inventory                                                                         (3,900)
       Decrease (increase) in income tax receivable                        (11,386)          9,830            1,108
       Decrease (increase) in other assets                                  (1,818)            391              107
       Increase (decrease) in accounts payable                              (7,278)        (10,607)          14,292
       Decrease in accrued expenses                                           (133)         (3,281)          (1,062)
       Increase (decrease) in other current liabilities                       (300)          5,100          (37,066)
       Increase in deferred rent and other long term liabilities             2,380              82             (310)
       Increase in income taxes payable                                        398                              303
                                                                           -------         -------           ------
          Net cash provided by (used in) operating activities               13,214         (34,497)          28,363
                                                                           -------         -------           ------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Capital expenditures                                                  (15,236)        (11,164)          (6,041)
     Sale leaseback proceeds                                                 2,150
     Net collections under note receivable                                      31              16              106
     Cash proceeds from sale of property                                     1,220           5,143           77,051
                                                                           -------         -------           ------
          Net cash provided by (used in) investing activities              (11,835)         (6,005)          71,116
                                                                           -------         -------           ------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from sale of common stock, net                                 1,600             158               29
     Tax benefit of options exercised                                        1,033              13
     Net payments (borrowings) under stock purchase plan                      (482)            132              301
     Proceeds from mortgage financing                                       13,039          72,425
     Net borrowings under revolving credit agreements                       24,595          42,467              378
     Net repayments under revolving credit agreements                      (35,660)        (72,425)         (75,481)
     Borrowings under term loan                                                                              30,683
     Repayments under term loan                                                                             (12,212)
     Repayments of long term debt                                             (578)           (746)         (17,289)
     Loan and other financing costs                                         (3,572)         (6,121)          (2,424)
                                                                           -------         -------           ------
          Net cash provided by (used in) financing activities                  (25)         35,903         ( 76,015)
                                                                           -------         -------           ------

     Net increase (decrease) in cash and cash equivalents                    1,354          (4,599)          23,464
     Cash and cash equivalents, beginning of period                          3,590           4,944              345
                                                                           -------         -------           ------
     Cash and cash equivalents, end of period                             $  4,944     $       345         $ 23,809
                                                                           =======         =======           ======

Supplemental Disclosure Cash Flow Information Cash paid during year for:
       Interest (net of amounts capitalized)                              $ 19,482     $    24,997         $ 20,931
       Income taxes                                                       $     40     $        44         $     13
</TABLE>

See Notes To The Consolidated Financial Statements.

                                      F-5
<PAGE>


                                JUMBOSPORTS INC.
                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(IN THOUSANDS EXCEPT FOR SHARE, PER SHARE DATA AND AS OTHERWISE NOTED)

Note 1 - Summary of Significant Accounting Policies

     CHAPTER 11
         On December 27, 1998 (the "Petition Date"),  after  experiencing a poor
holiday  season and with  increased  pressure  being  applied  by the  Company's
lenders and suppliers,  JumboSports Inc. and certain of its  subsidiaries  filed
voluntary  petitions for reorganization  under Chapter 11 of the Bankruptcy Code
in the United States  Bankruptcy  Court for the Middle  District of Florida (the
"Bankruptcy  Court").  These related proceedings are being jointly  administered
under the caption "In re.:  JumboSports  Inc.,  d/b/a  Vacations  Travel,  f/k/a
Sports & Recreation, Inc., and f/d/b/a/ Sports Unlimited, Guide Series, Inc. and
Property   Holdings  Company  I"  Case  Nos.   98-22545-8C1,   98-22546-8C1  and
98-22547-8C1,  pursuant  to an  order of the  Bankruptcy  Court.  The  following
subsidiaries were not included in the bankruptcy filings and are not material to
the Company's  consolidated  financial statements:  Nationwide Team Sales, Inc.,
Retail Process Management,  Inc., Sports & Recreation, Inc., Sports & Recreation
Holdings of PA, Inc. and Construction Resolution, Inc.

         The  bankruptcy  petitions  were  filed in order to  preserve  cash and
permit the Company an opportunity to reorganize while working to restructure its
indebtedness. Pursuant to the Senior-Secured Super Priority Debtor-In-Possession
Loan and Security  Agreement (the "DIP facility") dated February 12, 1999, among
JumboSports  Inc.,  as Borrower,  various  financial  institutions,  as Lenders,
Foothill  Capital  Corporation,  as Agent  and  Congress  Financial  Corporation
(Southern),  as Co-Agent,  the lenders have agreed to provide up to $110 million
in post-petition financing to the Company.

         As a  result  of  the  Chapter  11  filings,  absent  approval  of  the
Bankruptcy  Court,  the Company is  prohibited  from paying,  and  creditors are
prohibited from attempting to collect claims or debts arising pre-petition.  The
consummation  of a plan of  reorganization  is the  principal  objective  of the
Company's Chapter 11 cases. The plan of reorganization  will set forth the means
for satisfying  claims,  including the  liabilities  subject to compromise,  and
interests in the Company and its debtor subsidiaries. The consummation of a plan
of  reorganization  for the Company  and its debtor  subsidiaries  will  require
approval of the Bankruptcy Court.

         The Company expects to propose a plan of reorganization  for itself and
the other filing  subsidiaries.  The Bankruptcy  Court has granted the Company's
request to extend its exclusive right to file a plan of  reorganization  through
June 1,  1999.  The  Company  intends  to  request  a further  extension  of the
exclusivity   period  while  management  works  on  implementing  new  operating
strategies that are intended to improve operating  performance.  There can be no
assurance  that the Bankruptcy  Court will grant such further  extension or that
management's  new  strategies  will  produce  the  desired  results.  After  the
expiration of the exclusivity period, creditors of the Company have the right to
propose their own plans of reorganization. A plan of reorganization, among other
things, may result in material dilution or elimination of the equity of existing
stockholders  as a  result  of  the  issuance  of  equity  to  creditors  or new
investors.

         At this time,  it is not possible to predict the outcome of the Chapter
11 filing,  in general,  or its effects on the business of the Company or on the
interests of creditors or stockholders.  The Company's  independent  accountants
have issued a report expressing doubt about the Company's ability to continue as
a going  concern.  See the  Consolidated  Financial  Statements  of the  Company
beginning on page F-1.

         The Company does not plan to hold annual  stockholder  meetings  during
the pendency of its Chapter 11 case.

         The  accompanying  financial  statements  have been prepared on a going
concern  basis,  which  contemplates  continuity of  operations,  realization of
assets and  liquidation  of  liabilities  in the  ordinary  course of  business.

                                      F-6
<PAGE>

However, as a result of the Chapter 11 filing and circumstances relating to this
event,  including the Company's  leveraged  financial  structure and losses from
operations, such realization of assets and liquidation of liabilities is subject
to substantial  doubt. While under the protection of Chapter 11, the Company may
sell or otherwise dispose of assets,  and liquidate or settle  liabilities,  for
amounts other than those reflected in the financial statements.  Further, a plan
of reorganization  could materially change the amounts reported in the financial
statements, which do not give effect to all adjustments of the carrying value of
assets or  liabilities  that might be  necessary as a  consequence  of a plan of
reorganization.

         The appropriateness of using the going concern basis is dependent upon,
among other things, confirmation of a plan of reorganization,  future profitable
operations,  the  ability to comply with the terms of the DIP  facility  and the
ability to generate sufficient cash from operations to meet obligations.

     LEGAL PROCEEDINGS
         The  Company  is from  time  to time  involved  in  routine  litigation
incidental  to the conduct of its  business.  The Company  believes that no such
currently pending routine litigation to which it is a party will have a material
adverse effect on its financial condition or results of operations.

         On Sunday,  December  27,  1998,  JumboSports  Inc.  and certain of its
subsidiaries filed for reorganization under Chapter 11 of the Bankruptcy Code in
the United States  Bankruptcy  Court for the Middle  District of Florida.  These
related  proceedings are being jointly  administered  under the caption "In re.:
JumboSports Inc., d/b/a/ Vacations Travel, f/k/a Sports & Recreation,  Inc., and
f/d/b/a Sports Unlimited,  Guide Series,  Inc. and Property Holdings Company I",
Case Nos 98-22545-8C1, 98-22546-8C1 and 98-22547-8C1. The following subsidiaries
were not included in the bankruptcy filings: Nationwide Team Sales, Inc., Retail
Process  Management,  Inc.,  Sports &  Recreation,  Inc.,  Sports  &  Recreation
Holdings of PA, Inc. and Construction Resolution, Inc.

         In connection  with the Bankruptcy  filing,  all  pre-petition  actions
against the Company have been stayed.

         A  complaint  was filed on March 23,  1999,  in the  Bankruptcy  Court,
"LaSalle  National  Bank,  Trustee  for JP Morgan  Commercial  Mortgage  Finance
Corporation  Pass-through  Certificate  Series  1997-C5,  acting by and  through
AMRESCO  Management,  Inc., its Special  Servicer" v.  JumboSports  Inc.,  which
alleges that  JumboSports did not have the right to terminate  certain Trusts of
which  JumboSports was the sole  beneficiary  and sole settlor.  The Trusts held
bare legal title to real estate  ("the  Property")  and pledged the  Property as
security for loans.  The  plaintiff is seeking a judicial  declaration  that the
Property in question is not property of JumboSports,  the Debtor's  estate,  and
that the Plaintiff  may proceed  against the Property as if it were not property
of the Debtor's estate. The Plaintiff further seeks a judicial  declaration that
the  Trusts  are  separate  legal  entities,  that  the  Trusts  have  not  been
terminated,  that  the  termination  is not  valid,  that  there  is no right to
terminate  the Trusts  except in accordance  with  applicable  Delaware law, the
Trust  Agreements,  and the relevant  loan  documents and that there has been no
transfer of the  Property  to the  Debtor.  Management  is  currently  unable to
predict  the  outcome  of this case or the  impact of an  adverse  ruling on its
reorganization  efforts.  The Company expects to file its written  responses and
any claim for affirmative relief by April 30, 1999.

     ORGANIZATION
         On  January  31,  1997,  JumboSports  Inc.  and its  subsidiaries  (the
"Company"),  previously Sports & Recreation,  Inc.,  operated 85 retail sporting
goods outlets in 29 states. In fiscal 1997 the Company announced the closings of
26 stores.  On January 31, 1998, the Company operated 59 stores in 23 states. In
fiscal 1998 the Company  opened two new stores and  announced  the closing of 19
stores. On January 30, 1999, the Company will operate 42 stores in 18 states.

     PERIODS PRESENTED
         In fiscal 1996, the Company changed to utilizing a 52 or 53 week fiscal
year ending on the Friday closest to the end of January,  as compared to a 52 or
53 week  fiscal year  ending on the Sunday  closest to the end of January.  This
change  in  fiscal  year  caused  fiscal  year 1996 to be a 52 week and five day
period.  The  financial  statements  presented  are for the 52 week and five day
period  ended  January 31, 1997  ("fiscal  1996"),  for the 52 week period ended
January 30, 1998  ("fiscal  1997") and for the 52 week period ended  January 29,
1999 ("fiscal 1998").

                                      F-7
<PAGE>

     PRINCIPLES OF CONSOLIDATION
         The  consolidated   financial   statements   include  the  accounts  of
JumboSports Inc. and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated.  

     BASIS OF ACCOUNTING
         The use of  estimates  is  inherent  in the  preparation  of  financial
statements in accordance with generally accepted accounting principles.  Actual
results can differ from these estimates.

     CASH EQUIVALENTS
         The Company considers all highly liquid  investments with a maturity of
three months or less at the time of purchase to be cash equivalents.

     INVENTORIES
         Inventories are stated at the lower of first-in,  first-out (FIFO) cost
or market for fiscal  1996 and for  fiscal  1997 at the lower of cost  (computed
using the FIFO  retail  method) or market.  The Company  believes  that the FIFO
retail method provides improved information for the operation of its business in
a manner  consistent  with the method  used widely in the retail  industry.  The
cumulative  effect  of the  change to the FIFO  retail  method  was  immaterial.
Proforma  effects  of the  change for prior  periods  is not  determinable.  The
Company considers cost to include the direct cost of merchandise,  plus internal
costs  associated  with  merchandise   procurement,   storage,   handling,   and
distribution.  Selling, general and administrative costs capitalized into ending
inventory were $4,128 and $4,237 in fiscal 1997 and fiscal 1998, respectively.

     PROPERTY AND EQUIPMENT
         Property is recorded at cost and includes interest on funds borrowed to
finance construction.  Capitalized interest was approximately $135, $221 and $37
in fiscal 1996,  fiscal 1997 and fiscal  1998,  respectively.  Depreciation  and
amortization  are provided  using the  straight-line  method over the  estimated
useful  service  lives of the  related  assets.  Costs and  related  accumulated
depreciation  on assets retired or disposed of are removed from the accounts and
any gains or losses resulting therefrom are credited or charged to operations.

     INCOME TAXES
         The  Company  provides  for federal and state  income  taxes  currently
payable  as well as for those  deferred  because of timing  differences  between
reporting  income and expenses for financial  statement  purposes and income and
expenses for tax  purposes.  Work  Opportunity  Tax credits  were  recorded as a
reduction of income taxes.

         The Company uses the  provisions  of Statement of Financial  Accounting
Standards No. 109 (SFAS 109),  "Accounting for Income Taxes".  SFAS 109 requires
an asset and liability  approach in accounting for income taxes. Under the asset
and liability  method,  deferred tax assets and  liabilities  are recognized for
future tax  consequences  attributable  to  differences  between  the  financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective  tax bases.  Deferred tax assets and  liabilities  are measured using
enacted  tax  rates to apply  to  taxable  income  in the  years in which  those
temporary  differences  are expected to be recovered or settled.  The  Company's
differences  relate  primarily to the  difference in carrying  values of certain
assets and  liabilities  for book and tax reporting and the deferred  income tax
asset resulting from the Company's  non-recurring  restructuring  charges. Under
SFAS 109, the effective rate on deferred tax assets and  liabilities of a change
in tax rates is  recognized as income or expense in the period that includes the
enactment date.

     ADVERTISING COSTS
         Advertising  costs are expensed the first time advertising takes place.
Included in selling, general and administrative expenses for fiscal 1996, fiscal
1997  and  fiscal  1998  are  $13,309,  $17,498  and  $10,778  respectively,  of
advertising expenses.

                                      F-8
<PAGE>

     DEFERRED LOAN CHARGES
         Deferred  loan  charges  represent  fees  paid in  connection  with the
acquisition of certain of the Company's debt.  These charges are being amortized
using the interest  method over the term of the related debt.  Net deferred loan
costs were  $2,217,  $3,140 and $2,234 in fiscal  1996,  fiscal  1997 and fiscal
1998, respectively.

     IMPAIRMENT OF ASSETS
         SFAS  121,  "Accounting  for  Impairment  of  Long-Lived  Assets  to be
Disposed of", requires that long-lived assets and certain intangibles to be held
and used by the Company be reviewed for  impairment.  In conducting  its review,
management  considers,  among other things,  its current and expected  operating
cash flows  together  with a judgment  as to the fair  value the  Company  could
receive upon sale of its investment.  Based on this review, the Company recorded
a $5.2 million pre-tax charge as part of the $22.6 million charge it took in the
second  quarter of fiscal  1996.  In fiscal 1997 and 1998 the  Company  recorded
charges of $21.2 million and $8.6 million,  respectively,  for the write-down to
net realizable values for closing stores.

         Although,  the Company adopted SFAS 121 in fiscal 1996, the Company did
not realize an  impairment  of  long-lived  assets  until the second  quarter of
fiscal 1996 because of the corporate  philosophy change from rapid expansion and
growth to individual  store  profitability  and contribution  measurements.  The
change in philosophy came about due to a management change during February 1996.
New management  changed the focus  concentrating on building  infrastructure  in
order to support successful and profitable store expansion.  To accomplish this,
third  party  consulting  groups  were  retained  to  build a real  estate  site
selection  model  projecting  revenues based on the Company's  customer base and
demographics for the existing and future store sites. With the developed model's
information,  the  Company  used the revenue  projections  to  determine  if the
potential  future sites under  development at the time, would meet the Company's
minimum return on  investment.  This allowed the Company to segregate the assets
to be held and used,  and to be disposed of. The analysis  completed  during the
second fiscal quarter of 1996 showed that the impairment was for sites that were
not opened and charges pertaining to SFAS 121 were recognized  accordingly.  The
Company  has  completed  the  analysis  on  a  periodic  basis,   and  has  made
determinations  to close stores and impair the assets  relating to those stores,
as evidenced in fiscal 1997.

     COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED
         Goodwill, which represents the excess of purchase price over fair value
of net assets  acquired,  is amortized on a  straight-line  basis over a 40 year
period.  Accumulated  amortization was $2,862 and $3,204 as of January 30, 1998,
and January 29, 1999, respectively.

     FAIR VALUES OF FINANCIAL INSTRUMENTS
         The  carrying  value  of  the  Company's  cash,  receivables,  accounts
payable,  revolving credit agreement,  and long term debt approximate their fair
values.  The fair value of the convertible  subordinated notes was approximately
$31,000 and $4,900 on January 30,  1998,  and  January 29,  1999,  respectively,
based upon current market rates.

     TOTAL INTEREST EXPENSE AND RISK MANAGEMENT INSTRUMENTS
         Total interest  expense  incurred was $29,092,  $30,928 and $24,790 for
fiscal  1996,  fiscal  1997 and  fiscal  1998,  respectively.  The  Company,  in
connection  with its  revolving  credit  facility,  had entered into $100,000 of
interest rate collar  agreements.  These agreements qualify for hedge accounting
and are amortized to interest expense. The $100 million of interest rate collars
impacted  interest  expense by $15, $48 and $8 in fiscal  1996,  fiscal 1997 and
fiscal 1998, respectively. Interest not accrued on the Senior Subordinated Notes
from the Petition Date to January 29, 1999 was $265.

         The Company's $100 million of interest rate collar  agreements  expired
by June 1998.


                                      F-9
<PAGE>
     EARNINGS PER COMMON SHARE
         Earnings per common shares is  calculated  in accordance  with SFAS No.
128, "Earnings Per Share," and is based on the weighted average number of common
shares outstanding during each year as follows:

                                             Weighted Average
              Year                          Shares Outstanding
           ---------------------------------------------------
            Fiscal 1996                         19,984,993
            Fiscal 1997                         20,363,299
            Fiscal 1998                         20,404,857

     ACCOUNTING PRONOUNCEMENTS
          In 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive 
Income", which is effective for periods ending after December 15, 1998.  This
statement establishes standards for computing and presenting income which 
includes translation adjustments.  In 1997, the FASB issued SFAS No. 131, 
"Disclosures about Segments of an Enterprise and Related Information", which is
also effective for periods ending after December 15, 1998.  This statement 
establishes additional disclosure requirements for business segments.

          In 1998 the FASB issued SFAS No. 133 "Derivative Financial Instruments
and Hedging Activities", which is effective for periods ending after June 15, 
1999.  This statement establishes standards for disclosing and valuing 
off balance sheet risk instruments.

          None of the above statements are applicable to the Company in the 
current reporting period.

Note 2 - Property and Equipment
<TABLE>
<CAPTION>
                                                                                                  Estimated
                                                             January 30,          January 29,       Useful
                                                                 1998                 1999      Life(in Years)
                                                             -----------          -----------   --------------
       <S>                                                   <C>                  <C>               <C>
       Land                                                  $    90,570          $    49,555
       Buildings                                                 105,617               59,126       15 - 39
       Furniture, fixtures and equipment                          40,445               23,022        3 - 10
       Leasehold improvements                                     44,085               31,630       15 - 39
       Assets held under capital lease                             2,182                6,412
       Construction in-process                                     6,726
                                                             -----------          -----------
               Total property and equipment, cost                289,625              169,745
       Less accumulated depreciation and amortization             36,365               32,684
                                                             -----------          -----------
               Total property and equipment, net                 253,260              137,061
       Less property under contract for sale                      78,801               10,248
       Less property held for sale                                28,712               32,456
                                                             -----------          -----------
               Property and equipment, net                   $   145,747          $    94,357
                                                             ===========          ===========
</TABLE>
Note 3 - Revolving Credit Agreement

         On July 24, 1998, the Company  entered into a new  five-year,  $150,000
secured  revolving loan and term loan agreement ("the Loan facility").  Proceeds
of the loans were used to retire the  existing  $180 million  secured  revolving
credit  facility  that was  scheduled  to  mature on May 31,  1999,  and to fund
on-going working capital requirements. During the term of the Loan facility, the
Company is restricted  from making any  distribution  or declaring or paying any
dividends  (in  cash or  other  property,  other  than  capital  stock)  on,  or
purchasing, acquiring, redeeming or retiring any of the Company's capital stock,
of any class, whether now or hereafter  outstanding;  provided however, that the
Company is permitted to redeem  shares of its capital  stock in an amount not to
exceed $200 thousand in the aggregate. Other restrictions include limitations on
additional indebtedness, disposals of assets, change of control, investments and
capital expenditures. There are no financial performance covenants.

         The term loans  consist  of a Tranche A and a Tranche B. The  Tranche A
term loan was initially  funded at $20.5 million and the Tranche B term loan was
initially  funded at $10.2.  Interest on the Tranche A term loan  accrues at the
Reference Rate (the variable rate of interest most recently announced by Norwest
Bank  Minnesota,  N.A. as it "base rate") plus 1.50%.  Interest on the Tranche B
term loan accrues at 12.5%. Total principal  installments of $511 are to be paid
monthly commencing with October 1, 1998, and continuing on the first day of each
succeeding month.
                                      F-10
<PAGE>

         The Company is required to prepay the term loans with the Net  Proceeds
from  the  sale  of  the  Real  Property  Collateral  pursuant  to a  prescribed
allocation as set forth in the loan agreement.  All prepayments of principal are
applied ratably to principal  installments  in order of their  maturity.  Due to
prepayments,  future  principal  installment  obligations  have  been  satisfied
through October 1, 2000.

         Availability  under the  Tranche A advances  is limited to the lower of
$125 million  less  Tranche A term loans and an amount based on a  predetermined
formula  which  includes a  provision  for up to 80% of  eligible  accounts  and
approximately 70% of eligible inventory. Interest accrues on Tranche A advances,
at the  Company's  option,  based  upon the  Reference  Rate plus .50%  (8.0% at
January  29,  1999) or the  Eurodollar  Rate  (LIBOR or other  Eurodollar  rates
selected by Agent) plus 250 basis points.

         Anytime that no Tranche A availability  exists,  Tranche B advances may
be requested by the  Company.  Availability  on Tranche B advances is limited to
the lesser of $15 million and an amount based on a  predetermined  formula which
includes a  provision  for  approximately  10% of eligible  inventory.  Interest
accrues on Tranche B advances at the Reference Rate plus 3.0%.

         The Loan  facility  also  includes  a  letter  of  credit  subfacility.
Commitments under the letter of credit  subfacility are limited to the lesser of
$10 million or  availability  under the revolving line of credit  (Tranche A and
Tranche B). At January 29,  1999,  outstanding  commitments  under the letter of
credit subfacility were $1.4 million.

         The Agreement also contains a provision for early  termination,  at the
option of the  Company,  with a payment of an early  termination  premium to the
lender.

         On December 27, 1998,  the Company filed a petition for  reorganization
under Chapter 11 of the Bankruptcy Code in the United States  Bankruptcy  Court.
Thereafter, no additional amounts were drawn under the Loan facility. On January
8, 1999, the  Bankruptcy  Court entered a Preliminary  Order  Granting  Debtor's
Emergency  Motion for Authority to Use Cash Collateral  effective as of December
28, 1998. At a hearing on January 21, 1999,  the Company  announced to the Court
an agreement  had been reached  between the Company and its secured  lenders for
debtor-in-possession  financing  ("the DIP  facility") and that a motion to seek
approval of such financing  would soon be filed with the Court.  The Company was
then granted authority to continue the use of cash collateral subject to certain
restrictions  through February 12, 1999, when it was anticipated that the motion
seeking approval of the DIP financing would be heard in court.

         At January 30, 1998, the Company had a $180 million  secured  revolving
credit  facility  which  matured  on May  31,  1999.  During  the  term  of this
agreement,  the  Company  was  restricted  from  declaring  or  paying  any cash
dividends,  making any other  distributions on account of any class of its stock
(other than stock splits or stock dividends) or redeeming,  purchasing, retiring
or otherwise  acquiring  directly or indirectly any shares of its stock,  except
for  fractional  shares in connection  with stock splits or stock  dividends and
shares  issued to employees to exercise  outstanding  options.  Interest on this
borrowing accrued,  at the Company's option,  based upon the lender's prime rate
plus 200 basis  points  (10.50%  at  January  30,  1998) or LIBOR plus 300 basis
points  (8.62% at January 30, 1998).  Interest on advances  under the prime rate
was payable quarterly in arrears. Interest on LIBOR rate advances was fixed and,
at the Company's option, was payable in arrears on 30, 60 or 90 day periods. The
revolving credit facility was collateralized by real and personal property.  The
availability  under the revolving  credit  facility was the lower of $180,000 or
the borrowing  base.  The borrowing  base was a calculation  based upon eligible
assets: real estate, inventories and equipment. At January 30, 1998, the Company
had $174,037 outstanding and $920 available under this agreement.

         In conjunction  with the revolving  credit  facility,  the Company also
entered into a letter of credit  sub-facility.  Commitments  under the letter of
credit are  limited to the lesser of $10 million or the  availability  under the
revolving line of credit. At January 30, 1998, outstanding commitments under the
letter of credit facility were $1.0 million.

                                      F-11
<PAGE>

         In  conjunction  with the revolving  credit  facility,  the Company has
entered into $100 million of interest rate collar  agreements.  These agreements
hedge interest rate fluctuations by setting floor rates and ceiling rates on a 
notional amount of $100 million.  The Company has $50 million of agreements with
floor rates of 5.23% and ceiling rates of 8.00% and $50 million of agreements 
with floor rates of 5.75% and ceiling rates of 7.50%.  These agreements 
terminated on various dates in calendar year 1998.


Note 4 - Long-Term Debt
<TABLE>
<CAPTION>
                                                                                 January 30,           January 29,
                                                                                    1998                  1999
                                                                                 -----------           -----------
<S>                                                                              <C>                     <C>
Obligations under real estate capital leases for two store  facilities with
 interest  imputed at  approximately  13.06%  and  13.20%  per annum.  The
 agreements require monthly
 payments of $31 including interest through September 2011.                         $2,772               $   -
Mortgage obligations for thirty store facilities with interest
 ranging from 8.30% to 8.99% per annum.  The agreements
 require monthly payments of $573 including interest with
 various dates of maturity from November 2007 through
 June 2009                                                                          85,006                68,117
                                                                                    ------                ------
Total debt                                                                          87,778                68,117
 Less current maturities                                                             1,008                   893
                                                                                    ------                ------
Total long-term debt                                                               $86,770               $67,224
                                                                                    ======                ======
</TABLE>

     Excluding liabilities subject to compromise,  future minimum payments under
the mortgage obligations during the fiscal years subsequent to January 29, 1999,
are as follows:

  1999                                                  $ 6,870
  2000                                                    6,870
  2001                                                    6,870
  2002                                                    6,870
  2003                                                    6,870
  Thereafter                                             88,238
                                                        -------
  Total                                                 122,588

     Less amount representing interest                   54,471
                                                        -------
     Present value of future minimum lease payments      68,117
     Less current maturities                                893
                                                        -------
     Total long-term debt                               $67,224
                                                        =======


Note 5 - Subordinated Debt

         During  fiscal  1993,   the  Company   issued  $74,750  in  convertible
subordinated  notes  with  interest  at  4.25%.  The notes  require  semi-annual
interest payments  beginning May 1, 1994,  through November 1, 2000, the date of
maturity. The notes are convertible into common stock of the Company at any time
on or before November 1, 2000, unless previously redeemed, at a conversion price
of $25.50 per share, subject to adjustment in certain events.

         The notes are subordinated to all secured  indebtedness and parri passu
with all  unsecured  indebtedness  and have  been  reclassified  as  liabilities
subject to compromise (see Note 6).

                                      F-12

<PAGE>

Note 6 - Liabilities Subject to Compromise

         Liabilities  subject to compromise are subject to future adjustments on
Bankruptcy  Court  actions and  further  developments  with  respect to disputed
claims. Liabilities subject to compromise are as follows:

         Convertible subordinated notes plus accrued interest        $ 75,253
         Accounts payable                                              37,268
         Rejected leases and other miscellaneous claims                12,044
         Obligations under capital leases                               6,602
         Accrued expenses                                               6,262
         Deferred liabilities                                           2,204
                                                                     --------
         Total                                                       $139,633
                                                                     ========

         Liabilities  subject to  compromise  under  reorganization  proceedings
include  substantially  all unsecured debt as of the petition date.  Pursuant to
the provision of the Bankruptcy  Code,  payment of these  liabilities may not be
made except pursuant to a plan of reorganization or Bankruptcy Court order while
the  Company  continues  to operate as debtors in  possession.  The  Company has
recorded an  estimated  liability  for certain  leases and  contracts  that have
either been rejected or the Company anticipates rejecting.


Note 7 - Commitments and Contingencies

     TAX RETENTION OPERATING LEASE
         On May 10, 1995,  the Company  entered into a Tax  Retention  Operating
Lease  Agreement  (the  "TROL"),  whereby an owner trust was formed for the sole
purpose of acquiring and/or  constructing  properties which will later be leased
to the Company as retail  store  locations.  The TROL had an original  aggregate
facility  commitment  of  $70,000.  However,  effective  October 10,  1995,  the
aggregate facility commitment under the TROL agreement was increased to $85,000.
Interim rental  payments were due under the agreement for the properties  opened
within the first two years from the date of the TROL's  inception,  based upon a
blended interest rate being (i) the greater of the NationsBank prime rate or the
Federal Funds rate,  plus 50 basis points,  or (ii) the  appropriate  Eurodollar
Rate plus a variable  margin (112.5 to 150 basis points)  determined  based upon
certain  financial  ratios  of the  Company.  On  June 4,  1996,  the  TROL  was
refinanced  and $58,058,  the utilized  commitment,  was  incorporated  into the
Company's  revolving  credit  facility.  Accordingly,  this transaction has been
excluded from the accompanying  Consolidated  Statement of Cash Flows for fiscal
1996.

         In fiscal 1996,  the Company  utilized the TROL  facility for new store
construction on three of the five stores opened.  The total commitment  utilized
through  June 6,  1996,  was  $58,058.  The  purpose  of the TROL was to provide
off-balance  sheet  financing  of  new  store  site  and  development  costs  at
attractive rates.

     OTHER OPERATING LEASES
         The Company has leases on 30 store  facilities (18 opened stores and 12
closing stores),  corporate office  facilities and two warehouses with unrelated
parties.  These leases have terms ranging from five to 20 years, with options to
renew ranging from two to four additional five-year terms. Additionally, certain
store leases  provide for  contingent  rent computed as a percentage of sales in
excess of a specified amount.  Contingent rent of $104, $81 and $34 was incurred
for fiscal 1996, fiscal 1997 and fiscal 1998, respectively.

         In  addition to the  facility  leases,  the  Company  has entered  into
various leases for store fixtures,  transportation equipment and data processing
equipment under operating lease agreements with terms ranging from three to five
years.

                                      F-13

<PAGE>

         Rent expense under all operating  lease  agreements  including the TROL
for each of the fiscal periods presented is as follows:

                1996                                   $  14,136
                1997                                      12,935
                1998                                      12,478

         Excluding leases rejected or identified to be rejected,  future minimum
lease payments under non-cancelable operating lease agreements during the fiscal
years subsequent to January 29, 1999, are as follows:

                1999                                   $   9,436
                2000                                       7,104
                2001                                       6,094
                2002                                       5,597
                2003                                       4,880
                Thereafter                                35,025
                                                       ---------
                Total                                  $  68,136
                                                       =========

     NEW STORE CONSTRUCTION
         The Company had previously  utilized one construction  agent as general
contractor for substantially  all of its new store facilities.  The agent worked
solely  for the  Company.  Current  and  future  construction  is  subject  to a
competitive bidding process.


Note 8 - Income Taxes

         Income tax expense (benefit) consists of the following:
<TABLE>
<CAPTION>

                                      Fiscal            Fiscal          Fiscal
                                       1996              1997            1998
                                    ---------          --------        -------
       <S>                          <C>                <C>              <C>
       Current                      $(10,875)          $(1,103)         $(163)
       Deferred                       (7,000)            1,586              0
                                    ---------          --------        -------
                                    $(17,875)          $   483          $(163)
                                    =========          ========        =======
</TABLE>

                                      F-14
<PAGE>
         The following is a schedule of the  significant net deferred income tax
assets and liabilities as January 30, 1998 and January 29, 1999:
<TABLE>
<CAPTION>
                                                                 January 30,                   January 29,
                                                                    1998                          1999
                                                                 -----------                   ---------- 
<S>                                                               <C>                          <C>
Net Current Deferred Income Tax Asset:
     Non-recurring charges not deductible for
         tax reporting until paid                                 $ 21,525                     $ 21,046
     Inventory basis difference between tax and
         financial reporting                                          (788)                        (342)
     Accrued expenses not deductible for tax
         reporting until paid                                        2,684                        2,025
     Other                                                              74                           77
                                                                  --------                      -------
Total current deferred income tax asset, net                        23,495                       22,806
                                                                  --------                      -------
Net Non-Current Deferred Income Tax Asset (Liability):
     Accelerated tax depreciation                                   (6,304)                      (7,873)
     Tax benefit carryovers                                         24,352                       61,356
     Accrued expenses not deductible for tax reporting
         until paid                                                    715                          659
     Other                                                              92                           79
                                                                  --------                      -------
Total non-current deferred income tax asset (liability), net        18,855                       54,221
                                                                  --------                      -------
Valuation allowance                                                (42,350)                     (77,027)
                                                                  --------                      -------
     Total net deferred tax asset                                 $   -                        $   -
                                                                  ========                      =======
</TABLE>
         At January 29,  1999,  the Company had tax net  operating  loss ("NOL")
carryforwards of $158,656 for federal income tax purposes and $185,016 for state
income tax purposes. The federal NOL will expire, if unused, in years 2011, 2012
and 2013 and the state NOL's will expire,  if unused,  in the years 2001 through
2018.

         For the year ending January 29, 1999, the Company  recorded a valuation
allowance of $77,027 to offset the deferred tax assets in excess of the deferred
tax liabilities.

         The Company's  income tax expense  differed from the statutory  federal
rate of 34%, as follows:
<TABLE>
<CAPTION>
                                                                    Fiscal           Fiscal         Fiscal
                                                                     1996             1997           1998
                                                                    ------           ------         ------
<S>                                                               <C>             <C>             <C>
Income taxes (benefits) using the federal statutory rate          $(16,462)       $(37,677)       $(31,850)
Increase in taxes resulting from:
     State taxes, net of federal benefit                            (1,937)         (4,388)         (3,911)
     Goodwill amortization                                             130             130             130
     Change in valuation allowance                                                  42,350          35,510
     Targeted jobs tax credit                                                                            1
     Other differences, net                                            394              68             (43)
                                                                  --------        --------        --------
Total                                                             $(17,875)       $    483        $   (163)
                                                                  ========        ========        ========
</TABLE>
Note 9 - Employee Benefit Plans

         The Company's  qualified  profit  sharing and 401(k)  savings plan (the
"Plan") covers all employees meeting certain eligibility requirements.  The Plan
permits each participant to reduce his or her taxable  compensation  basis by up
to 15% and have the  amount  of such  reduction  contributed  to the  Plan.  The
Company  makes a matching  contribution  of 50% of the first 6% of  compensation
deferred  by each  participant.  In  addition,  in any  year,  the  Company  may
contribute to the Plan additional  amounts  determined by the Company's Board of
Directors at its sole discretion. Salary reduction contributions are immediately
vested in full; matching and discretionary contributions begin to vest after the
participant's   first  year  of  service  and  become  fully  vested  after  the
participants fourth year of service.  During fiscal 1996, 1997 and 1998, expense
under the Plan was approximately $62, $64 and $145, respectively.
                                      F-15
<PAGE>

         The Company's  Employee Stock Purchase Plan ("ESPP")  allows  employees
meeting  certain  eligibility  requirements  to purchase  Company stock at a 15%
discount from the fair market value of the stock price.  The plan was terminated
by the Company in the fourth quarter of fiscal 1998.

         The Company's key employee  non-qualified  deferred  compensation  plan
allows the  employee to defer  compensation  and earn  interest at a rate of 10%
annually.  Interest  expense for fiscal 1997 was $23. The plan was terminated by
the Company in the first quarter of fiscal 1998.


Note 10 - Loss on Disposition of Assets, Closed Stores Expenses
          and Other Charges

         In the second  quarter  of fiscal  1996 the  Company  recorded  
one-time  charges  of $55.0  million.  The components are as follows
 (in millions):

   Cost of Sales:
     Inventory write-down for shrink
      and obsolete and slow moving merchandise               $32.4
                                                             -----

   Non-recurring and other charges:
     Disposition of and impairment of
      underperforming assets                                  11.4
     Charges for certain loss contingencies                    3.0
     Other charges                                             8.2
                                                             -----
                                                              22.6
                                                             -----
       Total                                                 $55.0
                                                             =====

         The inventory  write-down for obsolete and slow moving  merchandise and
excess  shrinkage of $32.4 million was  comprised of a $24.3 million  charge for
the write-down of inventory below cost and an additional $8.1 million charge for
merchandise  inventory shrinkage.  The Company recorded the inventory write-down
to correctly state the value of discontinued, obsolete and slow moving inventory
at a net  realizable  market value.  The inventory for which these reserves were
established  was sold  during  fiscal  1996.  Throughout  the year,  the Company
accrued inventory  shrinkage at 1.1% of sales based on prior years'  experience.
The excess shrinkage  recorded at year-end is believed to be attributable to the
inventory  clearance sales and the fact that the Company had taken its first SKU
level  inventory.  The  establishment  of  these  reserves  did  not  result  in
additional cash payments.

         The $11.4 million charge for impairment of  underperforming  assets was
attributable  to the  write-off of  undesirable  retail sites and  impairment of
other sites of $5.2 million and the write-off of assets as the result of 
organizational changes of $6.2 million.  The write-off of committed retail sites
was for new store projects that were deemed undesirable.  The sites were deemed
committed based on proforma operating income projections.  The operating income
projections revealed sites which, in the opinion of new management, would not 
achieve or maintain the Company's minimum requirements for return on investment.
The charge for  impairment  of other  sites was for  nearly-completed  retail  
sites that were also deemed  undesirable  based on proforma  operating  income 
projections.  The impairment was determined based on the net realizable  sale 
value of the sites.  The  establishment  of these  reserves did not result in 
additional  cash  payments.

         Charges  for certain  loss  contingencies  relate to the  October  1996
submission  of  settlement  with no  admission  of liability to the court by the
Company and the  plaintiffs in two pending class action suits.  The class action
suits asserted claims under the federal  securities laws and alleged the Company
artificially  inflated the price of its common  stock  during the class  period,
July 14, 1994 through  March 13, 1995. By the terms of the  settlement,  a class
was  certified  by the court and prorata  payments  in the total  amount of $6.3
million were made to the class members submitting  claims. Of this amount,  $2.9
million  was funded by the  Company and the  remainder  funded by the  Company's
insurance carrier.

                                      F-16
<PAGE>

         Other  charges were  attributable  to costs  incurred for severance and
related  charges  of $1.8  million,  employee  benefit  program  charges of $4.3
million and other  charges of $2.1  million.  Cash payments of $0.9 million were
paid in fiscal 1996 and an additional $0.9 million of cash payments will be made
in future periods.

         In the third and fourth  quarters of fiscal 1997, the Company  recorded
non-recurring  charges of $94.3 million  related to store  closings,  excess and
slow moving inventory,  severance, outdated technology and the write-off of debt
costs in connection with the Company's  revolving line of credit. The components
are as follows (in millions):

 Cost of Sales:
  Mark-down of slow moving and excess inventory                 $ 17.9
  Additional shrinkage                                             9.5
  Write-down for inventory liquidation of closing stores          17.6
                                                                ------
                                                                  45.0
 Non-recurring and other charges:
  Charges related to store closings                               40.0
  Other charges                                                    4.0
                                                                ------
                                                                  44.0
 Interest:
  Write-off of deferred debt costs                                 5.3
                                                                ------
  Total                                                         $ 94.3
                                                                ======

         The  markdown  of  excess  inventory  of  $17.9  million  was  taken to
correctly  state the value of  merchandise  at the lower of cost or market.  The
primary  cause for this  charge  was due to  problems  experienced  in  athletic
footwear and apparel;  both categories  were impacted by distribution  problems,
overly  aggressive   purchasing  and  soft  sales.  The  Company  took  physical
inventories in each of its stores at year-end.  Throughout the year,  management
had estimated  shrinkage at 2.2% of sales.  This estimate was based on the prior
year's actual  shrinkage of 2.8% and the industry  average of 1.5%. The year-end
physical inventories resulted in a total shrinkage of 4.0% or approximately 1.8%
above  the  accrual.  The  additional  shrinkage  is  believed  to be  primarily
attributable to  implementation  issues in connection with the new merchandising
systems and problems encountered with the new distribution facility. In February
1997,  the  Company  changed the  inventory  distribution  method and  inventory
systems.  The Company  transitioned the majority of merchandise flow from direct
delivery to stores,  to a third party managed cross dock  facility.  The initial
start-up of the cross dock facility caused significant  product delays.  Because
of these  delays,  the  Company  experienced  lost  inventory,  poor  sales  and
overstocks,  resulting in higher shrinkage and increased  markdowns to alleviate
seasonal and fashion  oriented  inventory  levels.  In October 1997, the Company
terminated  its  relationship  with the  third-party  distribution  manager  and
returned to a merchandise  flow direct to the Company's  stores.  By fiscal year
end,  inventory levels returned to normal, and the Company expects gross margins
to return to historical  levels in 1998. The Company installed new financial and
inventory  systems from JDA Software Group (JDA).  The systems were installed to
enhance  inventory  control  information  and  support the  existing  and future
corporate  infrastructure.  As with any new system, conversion issues arose, but
the issues were timely  corrected.  The new systems  gave the Company  real-time
information to manage and control inventory levels.  Many of the  aforementioned
causes have been addressed and management is focused on reducing and controlling
shrinkage during fiscal 1998. Additionally,  the Company will be taking physical
inventories throughout the year to better estimate the proper shrinkage accrual.
The  Company  recorded  the  inventory  write-down  of $17.6  million  for store
closings inventory  liquidation based on the net realizable value of liquidating
inventory at 26 stores  anticipated to close from January 1998 through May 1998.
The  establishment of the  aforementioned  reserves did not result in additional
cash payments in fiscal 1997.

         The $40.0 million of charges  related to store  closings  represent the
establishment  of reserves of $29.1 million for the  write-down of closed stores
property  and  equipment  to net  realizable  value,  $6.7  million for expenses
attributable  to the  closing  stores and $4.2  million  for lease  reserves  at
closing  locations.  The  establishment  of these  reserves  did not  result  in
additional cash payments in fiscal 1997, but resulted in payments of $7.5 
million in fiscal 1998.

                                      F-17

<PAGE>
         Other charges of $4.0 million are for severance agreements attributable
to the  administrative and management  workforce  reductions in January 1998 the
establishment of reserves for outdated information communications technology and
other miscellaneous  charges.  Cash payments of $0.5 million were made in fiscal
1997 and $2.5 million of cash payments were made in fiscal 1998.

         The  Company  accelerated  the  write-off  of  deferred  debt  costs in
connection with the renegotiation of the Company's credit facility in the amount
of $5.3  million.  The  deferred  debt  costs  were loan  fees and  legal  costs
associated with the Company's  former $185.0 million  revolving  credit facility
which was  revised  on  January  30,  1998,  and  subsequently  refinanced.  The
write-off  of  deferred  debt costs were for cash  payments  of $3.0  million in
fiscal 1997,  $1.0 million in non-cash  payments and an additional  $1.3 million
for cash payments to be made in fiscal 1998.

         In the second  quarter of fiscal  1998,  the  Company  recorded a $15.2
million charge for the loss on disposition of assets and closed store  expenses.
The components are as follows (in millions):

 Loss on disposition of assets and closed store expenses:
 Loss on disposition of real estate                                 $  8.6
 Loss on disposals of closed store fixtures and equipment              2.9
 Closed store expenses                                                 3.7
                                                                     -----
 Total                                                               $15.2
                                                                     =====

         The $8.6 million loss on disposition of real estate represents the loss
on sale of 16 properties comprised of closed stores and excess parcels. The $2.9
million loss on disposal of closed store fixtures  relates to the excess loss on
the disposition of the 28 stores closed since 1997. Both the loss on real estate
and loss on closed  store  fixtures  did not result in cash  payments.  The $3.7
million  charge for  closed  store  expenses  relates  primarily  to the loss on
inventory  and  expenses of two closed  stores  which  closed  during the second
quarter of 1998,  located in the Texas  cities of San Antonio  and El Paso.  The
balance relates to additional charges for prior closed store lease and severance
reserves. These charges may result in future cash payments.

         The following  represents reserve accounts created by the $55.0 million
in charges  recorded in 1996 and the $94.3  million in charges  recorded in 1997
and the $15.2 million in charges in 1998 (in thousands):
<TABLE>
<CAPTION>

                                            1/31/97                           1/30/98                          1/29/99
Reserve              Initial                Ending                            Ending                           Ending 
Description          Addition  Reductions   Balance   Additions  Reductions   Balance    Additions   Reductions  Balance
----------------------------------------------------------------------------------------------------------------------
<S>                  <C>       <C>          <C>       <C>        <C>          <C>        <C>         <C>         <C>
Markdown of slow 
  moving and 
  excess inventory                                    $17,928.5  $16,100.0    $1,828.5             $1,828.5
Write-down for 
  inventory 
  liquidation of 
  closing stores                                       17,538.2    7,348.7    10,189.5   $1,465.0  11,654.5
Expenses attributable 
  to closing stores                                     6,687.7                6,687.7      935.0   7,455.9      $166.8
Closing store equipment
  reserve                                               5,011.5                5,011.5    2,886.4   7,882.2        15.7
Closed store leases                                     4,221.5      188.9     4,032.6      850.1   3,041.6     1,841.1
Other charges - 
 severance & outdated
 communications
 technology          $1,800.0   $841.7      $958.3      3,543.6      720.4     3,781.5      487.3   3,327.2       941.6
Disposition and 
 impairment of
 under-performing
 assets               9,228.7  2,253.7     6,975.0                 5,522.3     1,452.7    8,576.2  10,026.8         2.1
                     --------  -------     -------     -------    --------    --------   --------  --------     -------
Reserve Totals      $11,028.7 $3,095.4    $7,933.3    $54,931.0  $29,880.3   $32,984.0  $15,200.0 $45,216.7    $2,967.3
                     ========  =======     =======     =======    ========    ========   ========  ========     =======
</TABLE>

                                      F-18

<PAGE>

Note 11 - Reorganization Items

         As a result of the Chapter 11 filings,  the  Company has  recorded  the
following reorganizational charges (in millions):

              Loss on disposition of real estate                        $24.4
              Loss on disposals of closed store
                  fixtures and equipment                                  6.4
              Closed store expenses                                       8.9
              Lease rejection damages                                     9.1
              Restructuring charges                                       7.8
              Retention and severance pay                                 1.8
                                                                        -----
              Total                                                     $58.4
                                                                        =====

         The $24.4 million loss on  disposition  of real estate  represents  the
write-down to net  realizable  value of the 8 closing store  properties  held in
fee, the write-off of leasehold  improvements on the 9 closing store  properties
held under lease and certain  other  capitalized  and deferred  costs.  The $6.4
million loss on disposals of closed stores fixtures and equipment represents the
write-down to net  realizable  value of fixtures and equipment of the 17 closing
stores.  Both the  loss on the real  estate  and the  loss on the  fixtures  and
equipment will not result in cash  payments.  The $8.9 million charge for closed
store expenses relates primarily to the loss on inventory ($7.0 million) and the
expenses  to be  incurred  in the 17  closing  stores  during  the  going out of
business sales ($1.9 million).  The $7.8 million  restructuring  charges include
legal and  professional  fees incurred or paid prior to the petition  date,  the
write-off of loan costs  previously  incurred in  connection  with the Company's
pre-petition working capital facility,  certain capitalized inventory costs, and
uncollectible  receivables  from vendors.  Certain  leases on equipment and real
estate will be rejected or modified in connection with the Company's  efforts to
reorganize. The $9.1 million of lease rejection damages is the Company's current
estimate of expected loss associated with the rejection of these leases.  A $1.8
million  charge  was  recorded  to  recognize  certain  retention  payments  and
severance  pay in  connection  with  the  Company's  initiatives.  Of the  $58.4
million,  $2.0 million was paid in cash in FY 1998, and up to an additional $4.5
million  may result in future cash  payments.  The  remainder  of the charges is
non-cash.

         The following  represents  reserve amounts created by the $58.4 million
of reorganization items (in millions):

              Loss on disposition of real estate                       $  0.6
              Closed store expenses                                       8.9
              Restructuring charges                                       2.5
              Retention and severance pay                                 1.3
                                                                        -----
              Total                                                     $13.3
                                                                        =====


Note 12 - Stockholders' Equity

         The Company's  Stock Option Plan was  established on September 14, 1989
(the "1989 Plan"). The 1989 Plan provides that options be granted to certain key
employees  and  directors at exercise  prices equal to not less than 50% of fair
market value on the date the option is granted.  In June 1997, the  stockholders
of the Company  approved an amendment to the 1989 Plan  increasing the number of
shares that may be issued thereunder as 1,000,000 shares. All options granted to
date have been at fair  market  value on the date of the grant.  Prior to Fiscal
1996, options granted to key employees  generally became  exerciseable after one
year in 25%  increments  per year and  expire  10 years  from the date of grant.
Options  granted to key  employees in Fiscal 1996 and forward  generally  become
excerciseable  at 40% after two years and 20% per year  thereafter and expire 10
years from the date of grant.  Options  granted to  directors  generally  become
fully  exerciseable  after one year and  expire 10 years from the date of grant.
The Company has reserved  3,212,212 shares for distribution under the 1989 Plan.
Options to purchase  968,347  shares were granted to key employees and directors
thereunder as of January 29, 1999.

                                      F-19
<PAGE>

         In March of 1996,  the Company  adopted an additional  stock  incentive
plan,  the 1996 Stock  Incentive  Plan, for issuance of stock options to Company
employees who are not subject to the reporting  requirements of Section 16 under
the Exchange Act (the "1996 Plan"). One million shares are reserved for issuance
under the 1996 Plan,  and  options to  purchase a total of 781,450  shares  were
granted to employees thereunder,  as of January 29, 1999. Vesting provisions are
similar under both the 1989 Plan and the 1996 Plan. All options  granted to date
have been at fair  market  value on the date of the  grant.  Options  granted to
employees  generally  become  exerciseable  after one year in 25% increments per
year and expire 10 years from the date of grant.

         Effective  January 30, 1998,  the Company  adopted SFAS No. 128,  
"Earnings Per Share," which  established new standards for computing and  
presenting  EPS. Upon adoption,  the Company  restated its EPS for 1996 to 
conform with SFAS No. 128.  The computations under SFAS No. 128 are summarized
 below:
<TABLE>
<CAPTION>

                                  Fiscal 1996                 Fiscal 1997                  Fiscal 1998
                                             Per                          Per                            Per
                                   Average  Share              Average   Share              Average     Share
                          Loss     Shares   Amount     Loss     Shares   Amount      Loss    Shares     Amount
                          ------------------------     ------------------------      --------------------------
<S>                     <C>        <C>     <C>      <C>         <C>      <C>       <C>        <C>      <C>  
EPS: Basic
  Income available to
  common shareholder    $(30,544)  19,985  $(1.53)  $(111,297)  20,363   $(5.47)   $(93,514)  20,405   $(4.58)
                        ========   ======  =======  ==========  ======   ======    ========   ======   ======

Effect of Dilutive 
 Securities
  Options               $   -        -              $   -         -                $   -        -          
 Convertible 
  subordinated notes        -        -                  -         -                    -        -        
                        --------   ------  -------  ----------  ------   ------    --------   ------   ------
Total Dilution              -        -(1)               -         -(1)                 -        -(1)       
                        --------   ------  -------  ----------  ------   ------    --------   ------   ------            

EPS: Diluted
 Income available to common
  stockholders with assumed
  conversions          $(30,544)  19,985   $(1.53)  $(111,297)  20,363   $(5.47)   $(93,514)  20,405  $(4.58)
                        ========   ======  =======  ==========  ======   ======    ========   ======   ======
<FN>
       (1)  Not reported under GAAP as conversion would be anti-dilutive.
</FN>
</TABLE>
                                      F-20
<PAGE>
A summary  of stock  option  activity  related  to the 1989 and 1996 Plans is as
follows:
<TABLE>
<CAPTION>
                                                                                        Weighted Avg.
                                                                   Option Price            Option
                                              Shares                 Per Share              Price
                                            ---------             -------------         -------------
<S>                                         <C>                   <C>                     <C>
Outstanding January 29, 1996                1,845,791             $3.95 - 29.33           $  11.08
     Granted                                1,317,204              4.38 -  9.75               6.65
     Exercised                               (376,618)             3.95 -  5.00               4.62
     Canceled or surrendered                 (677,709)             6.75 - 29.33              16.45
                                            ---------             -------------           --------
Outstanding January 31, 1997                2,108,668             $3.95 - 29.33           $   7.74
                                            =========             =============           ========
Exercisable at January 31, 1997               701,323             $3.95 - 29.33           $   9.15
                                            =========             =============           ========

Outstanding February 1, 1997                2,108,668             $3.95 - 29.33           $   7.74
     Granted                                1,145,700              1.00 -  6.75               3.20
     Exercised                                (19,085)                3.95                    3.95
     Canceled or surrendered               (1,145,393)             3.44 - 26.08               6.64
                                            ---------             -------------           --------
Outstanding January 30, 1998                2,089,890             $1.00 - 29.33           $   5.89
                                            =========             =============           ========

Outstanding January 31, 1998                2,089,890             $1.00 - 29.33           $   5.89
     Granted                                  749,163             $0.50 - 1.813               1.69
     Exercised
     Canceled or surrendered               (1,089,256)            $0.50 - 29.33               9.40
                                            ---------             -------------           --------
Exercisable at January 29, 1999             1,749,797             $0.50 - 26.08          $    1.90
                                            =========             =============           ========
</TABLE>
The  following  table  further  summarizes  information  about the 1989 and 1996
Plans:
<TABLE>
<CAPTION>
                                                 Weighted           Weighted                        Weighted
                             Number               Average            Average          Number         Average
    Range of               Outstanding           Remaining          Exercise        Exercisable     Exercise
  Exercise Prices          at 1/29/99         Life (in years)        Price          at 1/29/99        Price
  ---------------          -----------        ---------------       --------        -----------     -------
  <S>                      <C>                     <C>              <C>               <C>           <C>
  $ 0.50 to $1.25            462,500               9.0              $  1.15              0          $   0
  $ 1.38 to $1.81          1,204,251               8.3                 1.78           193,491          1.81
  $ 3.44 to $8.88             64,321               8.2                 5.58            31,000          7.42
  $11.50 to $26.08            18,725               4.6                15.91            17,725         16.15
  ---------------          -----------        ---------------       --------        -----------     -------
  $ 0.50 to $26.08         1,749,797               8.4              $  1.90           242,216       $  3.58
  ===============          ===========        ===============       ========        ===========     =======
</TABLE>
         In October  1995,  the  Financial  Accounting  Standards  Board  issued
Financial  Accounts Standard No.123,  "Accounting for Stock Based  Compensation"
("SFAS 123") which is effective for fiscal years  beginning  after  December 15,
1995.  As  permitted by SFAS 123, the Company has elected to continue to account
for its stock  based  plans under APB No. 25,  "Accounting  for Stock  Issued to
Employees".

         If the Company had elected to recognize  compensation expense for stock
options  based on the  fair  value at grant  date,  consistent  with the  method
prescribed  by SFAS 123,  net  income  and  earnings  per share  would have been
reduced to the proforma amounts shown below:
<TABLE>
<CAPTION>
                              Fiscal                Fiscal             Fiscal
                               1996                  1997               1998
                              ------                ------             ------
   <S>                       <C>                  <C>                 <C>  
   Net loss
     As reported             $(30,544)            $(111,297)          $(93,514)
     Proforma                $(33,437)            $(112,193)          $(93,514)

   Loss per share
     As reported               $(1.53)               $(5.47)            $(4.58)
     Proforma                  $(1.67)               $(5.51)            $(4.58)
</TABLE>
                                      F-21
<PAGE>

         The proforma amounts were determined using the Black-Scholes  Valuation
Model with the following key assumptions:  (i) a discount rate of 7.0%, 5.6% and
5.1% for 1996, 1997 and 1998,  respectively;  (ii) a volatility factor initially
based on the average  trading  price for the prior 18 months;  (iii) no dividend
yield; and (iv) an average expected option life of four years.

         On February 17, 1998 the Company  re-priced all options  outstanding at
January  30, 1998 for active  employees  to an  exercise  price of $1.8125,  the
market  closing  price on that date.  The number of options  this  impacted  was
876,221 with previous market value grant prices ranging from $3.44 to $26.08.

         In 1997,  680,000  options were  canceled for  executive  officers (Mr.
Bebis and Mr. Wittman) who terminated  their  employment  with the Company.  The
balance of the options  canceled in 1997 were for other employees who terminated
service with the Company. The grants in fiscal 1997, were primarily to Mr. Bush,
200,000 options,  and Mr. Floum,  200,000 options.  The balance of option grants
were to incoming management personnel.

         In  conjunction  with a change in  management  in fiscal 1996,  236,500
outstanding  options  with  exercise  prices  ranging from $11.67 to $29.33 were
canceled and reissued at the then market value of $5 per share. The options vest
immediately  and  expire 5 years from the date of grant.  Additionally,  300,000
options  were issued with an exercise  price of $4.38,  the market  value on the
date of grant. The options vest 40% on the second anniversary of the date of the
grant and 20% each year  thereafter and expire 10 years after the date of grant.
In addition to the above  option  activity  and as result of the  February  1996
management change, options were canceled and reissued to new management.


Note 13 -Subsequent Events

         On  February  11,  1999,  the  Bankruptcy  Court  granted a motion  for
authority to obtain debtor-in-possession  financing.  Proceeds from the 18 month
DIP facility are being used to finance the on-going working capital needs of the
Company,  to pay fees and expenses  incurred in connection with the DIP facility
agreement,  to pay all amounts due under the pre-petition  credit agreement,  to
replace  the letter of credits  issued and  outstanding  thereunder,  and to pay
certain other costs and bankruptcy  related claims and charges as allowed by the
Bankruptcy Court.

         During  the  term  of  the  DIP  facility  agreement,  the  Company  is
restricted from making any distribution or declaring or paying any dividends (in
cash or other property, other than capital stock) on, or purchasing,  acquiring,
redeeming or retiring any of the Company's capital stock, of any class,  whether
now  or  hereafter  outstanding.   Other  restrictions  include  limitations  on
additional  indebtedness,   disposal  of  assets,  change  of  control,  capital
expenditures and investments; provided, however, that the Company may make loans
to its  subsidiaries,  Nationwide Team Sales, Inc. in an aggregate amount not to
exceed $1.25 million. Additionally, the Company agreed to achieve certain levels
of earnings before interest, taxes, depreciation, amortization and restructuring
charges  ("EBITDAR") on a cumulative  quarterly  basis  beginning with the first
quarter of fiscal 1999 and each succeeding quarter thereafter through the end of
fiscal 1999 and on a rolling 12 months basis thereafter  through the duration of
the agreement.

         The  DIP  facility  provides  for a  term  loan  of $25  million  and a
revolving loan credit facility of $85 million  including a $10 million letter of
credit  subfacility.  The term loan  consists  of a  Tranche A and a Tranche  B.
Tranche A was  initially  funded at $9.7 million with a total  commitment of $10
million.  The Tranche B term loan was initially funded at $15 million.  Interest
on the Tranche A term loan accrues at the Reference Rate plus 1.75%. Interest on
the Tranche B term loan accrues at 12.75%. Total principal  installments of $417
thousand are to be paid monthly commencing with August 1, 1999 and continuing on
the first day of each  succeeding  month.  The Company is required to prepay the
term  loans  with the net  proceeds  from the sale of Real  Property  Collateral
pursuant to a prescribed  allocation in the loan  agreement.  All prepayments of
principal will be ratably applied to principal installments in the inverse order
of maturity. Availability under the revolving loan credit facility is limited to
the lesser of $85  million or amounts  based on a  predetermined  formula  which
includes a provision for up to 80% of Eligible Accounts and approximately  74.5%
of Eligible  Inventory.  Commitments under the letter of credit  subfacility are
limited to the lesser of $10 million or availability under the revolving line of
credit.

                                      F-22
<PAGE>

         The Company incurred  approximately  $1.3 million in fees in connection
with the new DIP facility  agreement.  Interest on the term loans and  revolving
advances and fees on the letters of credit are payable monthly in arrears.

     The  Agreement  also  contains a provision  for early  termination,  at the
option of the  Company,  with a payment of an early  termination  premium to the
lenders if exit financing is provided by a third party.


Note 14 - Quarterly Financial Information (Unaudited)

         Summarized  quarterly financial data for fiscal 1998 and fiscal 1997 is
as follows:
<TABLE>
<CAPTION>
                                    First            Second          Third         Fourth
                                    -----            ------          -----         ------
<S>                              <C>                <C>           <C>              <C>
1998
Net sales                        $ 86,544           $ 86,837      $ 87,075         $101,939
Gross profit                       20,260             19,924        17,115           22,845
Non-recurring & other charges                          5,200
Reorganization items                                                                 58,344
Net loss                           (6,037)           (19,248)       (6,873)         (61,356)
Basic and diluted loss
     per common share:
Net loss                         $  (0.30)          $  (0.94)     $(  0.34)        $  (3.00)
                                 ========           ========      ========         ========


1997
Net Sales                        $130,134           $136,225      $129,945         $132,330
Gross profit                       30,654             33,605         9,302            1,564
Non-recurring & other charges                                       18,472           24,583
Net loss                           (1,505)            (1,879)      (45,763)         (62,150)
Basic and diluted loss
     per common share:
Net loss                         $  (0.07)          $  (0.09)     $  (2.26)        $  (3.05)
                                 ========           ========      ========         =========
</TABLE>
                                      F-23