SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                             ----------------------

                                    FORM 10-K



 X       Annual  report  pursuant  to  Section  13 or  15(d)  of the  Securities
---      Exchange Act of 1934 [Fee Required]

         For the fiscal year ended November 2, 1996

---      Transition  report  pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934 [No Fee Required]

              For the transition period from _________ to _________

                         Commission file number 0-24902

                      CENTRAL TRACTOR FARM & COUNTRY, INC.

                    Delaware                             42-1425562
           (State of incorporation)              (I.R.S. Employer I.D. No.)

                              3915 Delaware Avenue
                           Des Moines, Iowa 50316-0330
                                 (515) 266-3101
                          (Address and telephone number
                         of principal executive offices)

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

           Securities registered pursuant to Section 12(g) of the Act:
   Common Stock, par value $0.01 (quoted on The Nasdaq National Market System)

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

         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   based  on  the  closing  price  on  January 29,  1997  was
approximately $50,247,411.

         As of  January 6, 1997  10,670,892  shares of the  registrant's  Common
Stock were outstanding.



<PAGE>

<TABLE>
<CAPTION>


                      CENTRAL TRACTOR FARM & COUNTRY, INC.

                                    INDEX TO

                           ANNUAL REPORT ON FORM 10-K

                         FOR YEAR ENDED NOVEMBER 2, 1996



                                                                                           Page
PART I
<S>          <C>                                                                          <C>
 
Item 1.       Business.................................................................      1
Item 2.       Properties...............................................................      7
Item 3.       Legal Proceedings........................................................      8
Item 4.       Submission of Matters to a Vote of Security-Holders......................      8
                                                                                            
PART II                                                                                     
                                                                                            
Item 5.       Market for Registrant's Common Equity and Related Stockholder Matters....      9
Item 6.       Selected Financial Data..................................................     10
Item 7.       Management's Discussion and Analysis of Financial Condition 11                
                 and Results of Operations.............................................     11
Item 8.       Financial Statements and Supplementary Data..............................     15
Item 9.       Changes in and Disagreements With Accountants on Accounting and               
                 Financial Disclosure..................................................     15
                                                                                            
PART III                                                                                    
                                                                                            
Item 10.      Directors and Executive Officers of the Registrant.......................     16
Item 11.      Executive Compensation...................................................     18
Item 12.      Security Ownership of Certain Beneficial Owners and Management...........     22
Item 13.      Certain Relationships and Related Transactions...........................     23
                                                                                            
PART IV                                                                                     
                                                                                            
Item 14.      Exhibits, Financial Statement Schedules and Reports on Form 8-K..........     24
                                                                                               
</TABLE>




<PAGE>



     References  herein to "fiscal" years are references to Central Tractor Farm
& Country, Inc.'s 52- or 53-week fiscal year, which ends on the Saturday nearest
October 31 in that year.

ITEM 1. BUSINESS

Overview

     Central Tractor Farm & Country, Inc., a Delaware corporation (the "Company"
or "CT"), is an agricultural  specialty retailer with 112 stores (as of December
31,  1996)  serving  the  agricultural,  hardware  and  related  needs  of rural
consumers,  especially part-time and full-time farmers, hobby gardeners, skilled
tradespersons and do-it-yourself  ("DIY") customers.  CT was founded in 1935 and
has established itself as a market leader in the agricultural  specialty market,
having strong name  recognition and a loyal customer base. The Company's  stores
offer a wide  selection  of  agricultural  products  such as  tractor  parts and
accessories,  specialty  hardware  and  paint,  lawn  and  garden  items,  rural
automotive  parts and accessories,  workwear,  pet supplies and general consumer
merchandise.  The  Company  has also  established  national  visibility  for its
products  and  services  through  its  catalog  operation,  which  has an annual
circulation of approximately 550,000.

Big Bear Farm Stores Acquisition

     In May  1996,  the  Company  acquired  31 retail  stores  and  certain  net
operating assets from Big Bear Farm Stores, Inc. ("Big Bear"), a privately owned
specialty retailer,  for $5.7 million. The Company is converting these locations
to  the  CT  format  at  an  additional   investment  (including  inventory)  of
approximately $6.3 million.
 As of December  31,  1996,  14  locations  had  already  been  converted  at an
approximate cost of $3.3 million;  the 17 remaining  locations will be converted
at an  estimated  cost of $3.0  million.  Management  believes  this  conversion
process  will be  completed  by the  Spring  of 1997.  With  locations  in Iowa,
Minnesota and Wisconsin,  the Big Bear stores added geographic diversity to CT's
Northeastern focus.

The Acquisition

     On November  27,  1996,  JWC  Acquisitions  I, Inc.  ("JWCAC")  an indirect
subsidiary  of  J.W.  Childs  Equity  Partners,  L.P.  ("Childs")  entered  into
agreements (the "Securities Purchase") with certain affiliates of Butler Capital
Corporation  (collectively,  "BCC") and with certain  members of CT's management
(the "Management  Shareholders") pursuant to which JWCAC agreed to purchase at a
price of $14.00 per share 100% of BCC's  shares and  approximately  36.4% of the
Management  Shareholders' Shares,  representing  approximately 64.0% and 1.4% of
the  Company's  outstanding  common  stock,  respectively   (collectively,   the
"Securities  Purchases").  In connection  with the  execution of the  Securities
Purchase Agreements,  JWCAC, its parent corporation CT Holding, Inc. ("Holding")
and Childs entered into an agreement and plan of merger (the "Merger Agreement")
with the  Company,  pursuant  to which  JWCAC  will be merged  with and into the
Company (the "Merger") for merger  consideration of $14.25 per share (the "Merge
Consideration").

     As of January 2, 1997,  JWCAC had consummated the Securities  Purchases and
paid related  expenses  utilizing  $65.4 million of cash equity  contributed  to
JWCAC by Holding and $35.1  million of borrowings  under an interim  margin loan
facility  (the  "Margin  Loan  Facility")  provided  by a group of lenders  with
NationsBank,  N.A. ("NationsBank"),  as administrative agent, and Fleet National
Bank ("Fleet"),  as co-agent.  Holding funded its equity contribution by issuing
$10.0 million of preferred  stock (the  "Preferred  Stock") and $55.4 million of
common stock, of which $60.3 million was purchased by Childs and its affiliates.
In connection with the Securities Purchases, the Company entered into a new term
loan  (the  "New Term  Loan")  and a new  revolving  credit  facility  (the "New
Revolving   Credit   Facility")  with  Fleet,  as   administrative   agent,  and
NationsBank, as co-agent,  (collectively,  the "New Credit Facility") and used a
portion of such facility to refinance existing debt of the Company,  including a
$16.0 million  convertible note held by BCC. In connection with the Merger,  (i)
the  Company  will  become the wholly  owned  subsidiary  of  Holding,  (ii) the
Management  Shareholders  will exchange $3.9 million in equity securities of the
Company  for equity  securities  of Holding  and (iii) the  shareholders  of the
Company  (other  than  JWCAC,   persons  pursuing  dissenters'  rights  and  the
Management

                                        1

<PAGE>



Shareholders) will receive the Merger Consideration. CT has filed a registration
statement  with the  Securities  and Exchange  Commission  for a $100.0  million
Senior  Note  offering.  The  proceeds of the  offering  will be used to pay the
Merger Consideration,  repay the Margin Loan Facility, pay down a portion of the
revolving  borrowings  under the New Credit  Facility  and pay related  fees and
expenses.

Expansion Plan

     Since the beginning of fiscal 1993, the Company has increased the number of
its retail  stores from 47 to 112.  From fiscal 1993 through  fiscal  1994,  the
Company  opened ten new stores,  acquired one store and closed three stores.  In
fiscal 1995, the Company opened 10 new stores and acquired one store.  In fiscal
1996,  the  Company  opened 14 new stores and  acquired 31 stores from Big Bear.
Subsequent to fiscal 1996, the Company has opened one new store.

     The Company  plans to open an  additional 31 stores in the next three years
through further  penetration of the  Northeastern  and Midwestern  United States
markets and through  expansion into the Southeastern  United States.  Management
intends  to  achieve  this  growth  through  new store  openings  and  selective
acquisitions.  The Company  expects to open one additional  store in fiscal 1997
and complete the conversion of the remaining 17 Big Bear stores to the CT format
by the Spring of 1997.  On a  preliminary  basis,  the  Company  has  identified
potential new markets outside of its existing  markets that management  believes
are attractive  candidates  for one or more new CT stores,  The number of actual
new CT store  openings  in the next three years may differ  materially  from the
Company's  current  projections  if the Company makes a major  acquisition or is
unable  to  find  attractive  store  locations  to rent  at  reasonable  prices,
negotiate  acceptable lease terms or acquire small regional farm store chains at
reasonable prices.

     The  Company  seeks to locate  stores in high  traffic  shopping  districts
whenever  possible in order to attract  customers who prefer to do much of their
shopping at one time and place. As with its existing stores, the Company intends
to lease its new stores.  The  estimated  cash  required to open a new,  leased,
large prototype store is $850,000 and the estimated cash required to open a new,
leased,  small  prototype  store  averages  $600,000  (in each  case,  including
inventory  net of accounts  payable and  excluding  an average of  approximately
$125,000  in  pre-opening  expenses).  Of  these  estimated  cash  expenditures,
approximately half is used for initial inventory (net of accounts payable),  and
the   balance  is  used  for   capital   expenditures,   principally   leasehold
improvements, fixtures and equipment. CT stores typically generate positive cash
flow in their first year of operation.

     The Company also intends to continue to opportunistically relocate existing
CT stores.  These  relocations  reflect,  in most cases,  the  expiration  of an
existing  lease coupled with an  opportunity  to move to a more  demographically
and/or  physically  attractive  site.  The Company  relocated  two stores during
fiscal 1996.


                                        2

<PAGE>

Retail Stores

     CT stores focus on agricultural  and  agricultural  related  products.  The
Company  segments  its  merchandising  mix into  seven key  product  categories:
agricultural  products  (including  tractor  parts and  accessories),  specialty
hardware,  lawn and garden  products,  which are  available  in several  product
categories,   represent   approximately  8%  of  total  store  sales.   Sale  of
agricultural and related products represent  approximately 60% of CT's total net
sales.  The growth and  percentage of total store sales for each retail  product
category for fiscal 1994,  fiscal 1995,  and fiscal 1996,  and a description  of
each product category, are set forth below:
<TABLE>
<CAPTION>
                                                                Fiscal Year
                                               --------------------------------------------

                                                  1994             1995              1996
                                                  ----             ----              ----
  <S>                                          <C>              <C>               <C>
   Agricultural (including tractor parts          21.6%            23.2%             24.0%
      and accessories)
   Specialty Hardware                             21.2%            21.6%             20.6%
   Lawn & Garden                                  20.2%            19.3%             19.6%
   Workwear                                        7.7%             7.3%              8.4%
   Rural Automotive Parts & Accessories           16.8%            16.0%             14.8%
   Pet Supplies                                    4.9%             5.4%              6.3%
   General Consumer                                7.6%             7.2%              6.4%
                                                   ----            -----              ----
                                                 100.0%           100.0%            100.00%
                                                 ======           ======            =======
</TABLE>

     Agricultural  Products.  CT stores'  agricultural  product line consists of
     approximately 6,000 stock keeping units ("SKUs") supplying the needs of the
     part-time  and  full-time  farmer,  including  tractor  parts,  tillage and
     harvesting  parts,  fencing  materials  and animal  health  supplies.  This
     product  line  consists  largely of  consumable  products  and other  items
     requiring  replacements on a regular basis. This product line accounted for
     $47.1  million,  $55.9  million and $67.3  million of the  Company's  total
     revenue in fiscal years 1994,  1995 and 1996,  respectively.  CT emphasizes
     consumable  agricultural  supplies  that are  purchased  frequently  by its
     customers and does not sell heavy equipment such as tractors or combines.

     Specialty Hardware. CT's speciality hardware line consists of approximately
     9,000 SKUs with an  emphasis on products  with  agricultural  applications.
     These  products  accounted  for $46.4  million,  $51.9  million,  and $57.9
     million of the Company's total revenue in fiscal years 1994, 1995 and 1996,
     respectively.  CT stores carry a broad range of high-quality  hardware with
     an emphasis on recognized  branded  professional  products,  including hand
     tools,  power  tools,  mechanical  tools,  electrical  products,  including
     outdoor lighting,  security lighting and motors,  welders, air compressors,
     generators,  paints,  (as  well as a  competitively-priced  private-  label
     brand), plumbing supplies and heating/energy  equipment,  including stoves,
     space heaters and fans.

     Lawn  and  Garden  Products.  CT's  lawn and  garden  products  consist  of
     approximately 2,000 SKUs,  including lawn and garden tools,  nursery stock,
     fertilizers,  lawn fencing and weed killers.  These products  accounted for
     $44.2  million,  $46.3  million and $54.8  million of the  Company's  total
     revenue in fiscal years 1994, 1995 and 1996, respectively. To differentiate
     itself from other  retailers,  CT also  stocks a  selection  of lawn mowers
     ranging  from  competitively  priced  items to  full-featured  riding  lawn
     mowers.  CT assembles and tests the lawn mowers and sells a full assortment
     of parts for follow-up  service  needs.  CT stores offer  seasonal  bedding
     plants, trees and shrubs in their garden centers.

     Workwear.  CT's  workwear  products,  including  products  sold  under  the
     Carhartt,  Walls and Iron Age brand names,  are targeted at the specialized
     needs of its outdoor-oriented customers who require high quality functional
     apparel.  This  product  category  consists  of  approximately  2,000 SKUs,
     including premium quality insulated outerwear, overalls, flannel shirts and
     work jeans. These products accounted for $16.8 million,  $17.6 million, and
     $23.5 million of the Company's  net sales in fiscal years 1994,  1995,  and
     1996,

                                        3

<PAGE>



     respectively.  The Company has been  expanding its workwear line in its new
     stores to include  quality non-insulated  workwear,  bib overalls,  twill
     pants and hunting clothing.

     Rural  Automotive  Parts and  Accessories.  CT's rural automotive parts and
     accessories consist of approximately 3,000 SKUs, including a core selection
     of  automotive  parts,   batteries  and  accessories  for  rural  vehicles,
     primarily for pick-up trucks and tractors. The products accounted for $36.6
     million,  $38.4 million and $41.4 million of the Company's total revenue in
     fiscal  years 1994,  1995 and 1996.  CT also stocks a small  assortment  of
     general  automotive  items as a convenience to its customer,  including oil
     and  lubrication  products  and  anti-freeze.  In  addition  to brand  name
     products,  certain of the Company's  automotive  products are offered under
     CT's own private label.

     Pet  Supplies.  CT's pet  supplies  consist of  approximately  1,000  SKUs,
     including dog and cat foods,  wild bird feed,  and rabbit  supplies.  These
     products account for $10.6 million, $13.0 million, and $17.7 million of the
     Company's net sales in fiscal years 1994, 1995, and 1996, respectively. The
     pet supplies sold by CT include economically priced large sizes, such as 50
     pound bags of dog food.  Certain of these items are sold under CT's private
     label. CT has been expanding its pet supplies product category.

     General Consumer Products.  CT's general consumer products line consists of
     approximately  1,000 SKUs,  including farm replicas and  collectible  toys,
     hunting accessories, camping items and outdoor living needs. These products
     accounted  for $16.6  million,  $17.2  million,  and $17.8  million  of the
     Company's net sales in fiscal years 1994, 1995, and 1996, respectively.  CT
     stores also offer seasonal  merchandise such as charcoal grills and coolers
     in the summer.

Store Operations

     The  Company  utilizes  large and small  store  formats  in order to enable
management to enhance CT's return on  investment in light of varying  population
density. The Company's small stores average 11,000 square feet of indoor selling
space and had average comparable store sales of $2.5 million in fiscal 1996. The
large stores  average 22,000 square feet of indoor selling space and had average
comparable  store sales of $4.4 million in fiscal 1996.  Small stores  generally
carry a smaller  selection of workwear and seasonal and other  general  consumer
products than large stores. In addition,  the Company looks for store sites that
have 15,000 to 20,000 square feet of outdoor selling space. This outdoor selling
space is  primarily  used for  displaying  lawn and  garden  products,  fencing,
tractor accessories and livestock watering and feeding equipment.

     Both CT  prototype  stores are designed to provide  customers  with ease in
locating  desired  products  and are clean and  colorful  in order to provide an
overall  enjoyable  shopping  environment.  The use of  informative  directional
signing adds to the ease of the customer's shopping experience. Plan-o-grams are
utilized to set merchandise  assortments in the seven core product categories to
ensure  uniformity  of  presentation,  ease of shopping  for the customer and to
facilitate inventory management, replenishment and restocking.

     The agricultural  products department is prominently featured in each store
and is identified by the parts desks. The parts desk is the focal point for CT's
new and used tractor parts  program.  In addition , the parts desk enables CT to
offer a high  level  of  customer  service,  ranging  from  answering  technical
questions  regarding  various  products to the special  ordering of hard to find
parts. Each parts desk is managed by the store's agricultural product specialist
who has access to the CT catalog and other  inventory  sources to quickly obtain
needed parts.

     Each store is managed by a store manager who is responsible for all aspects
of the store operations,  including the hiring and training of store associates,
work  scheduling,  inventory  control,  expense  control,  customer  service and
associate  morale.  Typically,  the store  manager is  supported by an assistant
manager and core department heads, along with an average of 18 sales associates.
Store operations are coordinated  through nine district managers each of whom is
currently responsible for eleven to fifteen retail stores. In addition, the

                                        4

<PAGE>



Company has developed and implemented consistent store standards,  processes and
best practices for the chain.


     The Company has established an internal store  management  training program
which focuses training on store operations,  systems,  financial matters,  human
resources  and  sales.  To  support  the  Company's  planned  expansion  and its
management training programs, the Company has implemented a long-range personnel
plan that provides for internal promotions,  coupled with recruitment of college
graduates and hiring of  individuals  with  previous  retail  experience.  Store
associates receive training which emphasizes  customer service,  sales,  product
knowledge and store procedures.  All CT store operations' management,  including
district  managers,  store managers and assistant managers are compensated based
on job performance,  and participate in an incentive program,  which is based on
the store/district exceeding a targeted level of profitability. The Company also
has  established an incentive  program for all store  associates that focuses on
sales and profitability.

Other Operations

     The CT catalog offers a broad  assortment of new, used and rebuilt  tractor
parts and  agricultural  componentry,  including  approximately  20,000 SKUs. In
fiscal 1996,  catalog sales were $7.3 million.  The catalog will be  distributed
nationally  to  approximately  550,000  households  in  rural  and  agricultural
communities  in fiscal  1997.  The  breadth of this  distribution  provides  the
Company with name recognition among  agricultural  consumers in areas outside of
its core geographical  markets.  As a consequence,  the Company anticipates some
customer familiarity with the Company when it expands into new areas.

     The Company also sells tractor parts and other items, on a wholesale basis,
to other agricultural  retailers and distributors.  In recent years, the Company
has been  reducing  the number of products  offered and the number of  customers
served by this unit. In fiscal 1996, the Company's  wholesale business generated
sales of $5.4 million.

Purchasing and Distribution

     The Company  maintains a staff of six merchandise  buyers,  each of whom is
responsible for specific product categories,  at its headquarters in Des Moines,
Iowa. The purchasing and inventory  control  process is controlled  centrally by
the Company's point of sale ("POS") and automatic replenishment systems. See "--
Corporate Offices and Management Information Systems." The Company purchases its
merchandise from approximately  1,500 vendors,  none of which accounted for more
than 10% of the Company's  purchases  during fiscal 1996. The Company  generally
maintains  multiple  sources of supply for its products in order to minimize the
risk of supply disruption and to improve its negotiating  position.  The Company
has no long-term contractual commitments with any of its vendors.

     The  Company  operates  a 135,000  square-foot  distribution  center in Des
Moines, Iowa and a 155,000 square-foot distribution center in Youngstown,  Ohio,
from which it currently  supplies the majority of its retail  stores'  inventory
needs.  The Des  Moines  facility  is used to handle the small part items and to
receive  purchases  sourced from vendors located in the Midwest.  The Youngstown
facility serves primarily as a flow-through distribution station.  Approximately
35% of total purchases,  consisting  mainly of high volume commodity are shipped
by  vendors  directly  to  individual  store  locations.  Merchandise  from  the
distribution centers is shipped to each store through supply orders generated by
an  automated   replenishment   system.  The  Company  transports  most  of  its
merchandise to each store once a week from both the distribution centers through
a major  contract  carrier.  The  contract  carrier's  truck fleet  delivers all
warehouse  shipments and most of the truckloads of merchandise  which is shipped
directly from vendors to store locations.

     The  Company  expects  that its  current  distribution  facilities  will be
sufficient to accommodate its planned expansion through fiscal 1999.


                                        5

<PAGE>



Corporate Offices and Management Information Systems

     To facilitate the Company's expansion plan and to maintain consistent store
operations,  CT has centralized specific functions of its operations,  including
accounting,  the development of policies and procedures,  store layouts,  visual
merchandise  presentation,  inventory  management,  merchandise  procurement and
allocations,  marketing and advertising,  human resources and real estate.  This
centralization   effectively  utilizes  the  experience  and  resources  of  the
Company's senior management and provides a high level of consistency  throughout
the chain.

     The  Company  has  invested   considerable   resources  in  its  management
information and control systems, which were developed beginning in 1981 and have
been  expanded  and  improved  yearly.  These  systems  provide  support for the
purchase and distribution of merchandise and help to improve the manner in which
CT stores, the corporate offices and distribution  centers are operated.  All CT
stores  (including  all of the acquired Big Bear stores) use the  Company's  POS
system to capture sales  information  at the SKU level.  Through the POS system,
the Company can monitor customer  purchases and inventory levels with respect to
every item of  merchandise  in each store  daily.  The company  has  implemented
scanning  capabilities in the receiving process of its distribution  centers and
currently plans to expand this to the picking and shipping  process.  Electronic
Data  Interchange  ("EDI")  is used to send  purchase  orders to  certain of its
largest  suppliers.  CT  intends to expand  its use of EDI will be  expanded  to
communicate  invoicing,  shipments  and sales  activity  to and from most  major
suppliers.

     The Company also has an automated inventory replenishment system which uses
POS information, and facilitates the timely replenishment of both the stores and
the  warehouses.  The sales and  inventory  information  used in this  system is
updated on a daily basis.  This system also provides for minimum stocking levels
for lower volume items  enabling CT to carry a large number of SKUs at a minimum
of inventory carrying expense.

Competition

     The Company faces  competition  primarily from other chain and single-store
agricultural  specialty  retailers,   general  merchandise  retailers  and  home
centers.  Some of these  competitors have  substantially  greater  financial and
other resources than the Company.

     Currently,  most of the  Company's  stores do not  compete  directly in the
markets of other agricultural  specialty retail chains.  However,  the Company's
expansion  plans  will  likely  result in new  stores  being  located in markets
currently  served by one or more of these chains,  and there can be no assurance
that these chains,  certain of which have announced  expansion  plans,  will not
expand  into the  Company's  markets.  Expansion  by the  Company  into  markets
currently  served  by its  competitors  or  expansion  by  competitors  into the
Company's markets could have material adverse effect on the Company's  business,
financial condition or results of operation.

     In  addition,  the Company  competes in over 90% of its markets  (which the
Company  defines as a 30 mile radius  around a store) with  general  merchandise
retailers  and/or home centers and expects these  retailers to be in many of the
markets  targeted for expansion.  The Company  believes that its merchandise mix
and  level  of  customer  service  successfully  differentiate  it form  general
merchandise  retailers and home center,  and as a result the Company has to date
been able to operate  profitably  despite  competition from general  merchandise
retailers and home centers.  However,  in the past certain  general  merchandise
retailers  and home  centers  have  modified  their  product  mix and  marketing
strategies  in a apparent  effort to compete more  effectively  in the Company's
markets. There can be no assurances that these efforts will not continue or that
the Company will continue to be able to compete successfully against current and
future competition.

Advertising and Promotions

     The Company's primary advertising occurs through the bi-weekly distribution
of approximately 2.5 million color circulars  distributed as newspaper  inserts,
at CT stores and by direct mail. In order to focus its marketing

                                        6

<PAGE>



on  the  many  farmers  in  CT's  markets,   the  Company  also   advertises  in
geographically  zoned  editions  of  leading  farming  industry  magazines.   In
addition,  the Company runs  periodic  special  events  promoted  through  local
flyers, circulars and radio advertising.

Seasonality

Unlike many specialty retailers, the Company has historically generated positive
operating  income in each of its four  fiscal  quarters.  However,  because  the
Company is an agricultural  specialty retailer,  its sales necessarily fluctuate
with the seasonal needs of the agricultural  community.  The Company responds to
this  seasonality by attempting to manage  inventory  levels (and the associated
working capital requirements) to meet expected demand, and by varying its use of
part-time employees. Historically, the Company's sales and operating income have
been  highest  in the  third  quarter  of each  fiscal  year due to the  farming
industry's  planting season and the sale of seasonal  products.  Working capital
needs are highest during the second quarter. The Company expects these trends to
continue for the foreseeable future.

Employees

     As of November 2, 1996, CT had approximately 2,492 employees (approximately
1,171 in full-time and approximately 1,321 in part-time positions).  The company
believes its relations with its employees is good.

ITEM 2. PROPERTIES

     As of December 31, 1996,  the Company had 112 retail  stores  located in 16
states as follows:

                          State                 Number of Stores

                          New York                     22
                          Iowa                         21
                          Pennsylvania                 17
                          Minnesota                    12
                          Virginia                      7
                          Ohio                          6
                          Kentucky                      5
                          Maryland                      4
                          Indiana                       4
                          Wisconsin                     4
                          Tennessee                     3
                          Missouri                      2
                          New Jersey                    2
                          Delaware                      1
                          Massachusetts                 1
                          Vermont                       1
                                                      ---

                          Total                       112

     All of the  Company's  112  stores,  its  corporate  headquarters  and  two
distribution  centers are  leased.  The  Company's  corporate  headquarters  are
located  adjacent to its  distribution  center in Des Moines,  Iowa. The Company
generally  negotiates  retail store leases with an initial term between five and
seven years,  with two or three renewal periods of five years each,  exercisable
at the Company's  option.  In fiscal 1996,  the Company paid an average of $5.03
per square foot in retail  store  occupancy  expenses,  including  rent,  taxes,
common area charges,  repairs and  maintenance.  Rent expenses  generally do not
vary based on sales,  and  generally  increase  10-15% at the  beginning of each
option period.


                                        7

<PAGE>



     The Company leases its corporate  offices and distribution  facility in Des
Moines and 16 of its stores from the former owner of the Company  prior to 1988,
and certain of his family members and affiliates.  The Company believes that, on
average,  the rental rates and other terms of these leases are no less favorable
to the Company  than could have been  obtained  from other third party  lessors.
Each of these  leases is due to expire by their  terms on or before  fiscal 2006
subject to options to renew exercisable at the discretion of the Company.

ITEM 3. LEGAL PROCEEDINGS

     The Company has been notified by the U.S.  Environmental  Protection Agency
that it may have  potential  liability  for cleanup  costs  associated  with the
cleanup of a dumpsite near  Owensburg,  Kentucky.  To date, the only articles of
waste  identified  as possibly  once  belonging to the Company are certain empty
battery  acid  containers.  The  Company  also  has been  notified  that it is a
fourth-party  defendant  of a  Superfund  action  pending in the  United  States
District  Court . The action alleges the Company  contributed  retail and office
waste  which may have  contained  hazardous  substances  to a landfill  in Adams
County, Pennsylvania. The Company believes that any liability it might have as a
result of these actions would be as a de minimis contributor and will not have a
material  effect on the Company's  financial  position,  liquidity or results of
operations.

     The  Company  is not a party to any other  legal  proceedings,  other  than
routine  claims and  lawsuits  arising in the ordinary  course of business.  The
Company does not believe that such claims and lawsuits,  individually  or in the
aggregate,  will  have a  material  adverse  effect on the  Company's  business.
Compliance with federal,  state and local laws and regulations pertaining to the
discharge  of  materials  into the  environment,  or  otherwise  relating to the
protection of the  environment,  has not had, and is not  anticipated to have, a
material effect upon the capital expenditures,  earnings or competitive position
of the Company.

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

     None




                                        8

<PAGE>



                                     PART II


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

     Central  Tractor Farm & Country Common Stock,  par value $.01 per share, is
traded on the NASDAQ National  Market System under the symbol CTFC.  Stock price
quotations are printed daily in major  newspapers.  As of January 7, 1996, there
were  approximately  1,000  stockholders  of record of  Central  Tractor  Farm &
Country Common Stock.

     The Company has not paid any cash  dividends on the Common Stock.  Although
the  Company  may  pay  limited  cash   dividends  on  the  Common  Stock  after
consummation of the Acquisition,  the Company's ability to pay cash dividends is
restricted by the New Credit Facility.

Quarterly Common Stock Prices

                 First             Second          Third            Fourth
                 Quarter           Quarter         Quarter          Quarter
                 -----------------------------------------------------------
1996     High    $11.25            $16.25          $14.63            $12.50
         Low     $ 6.75            $10.50          $11.75            $ 9.13

1995     High    $17.25            $16.00          $13.25            $12.00
         Low     $14.25            $12.00          $ 9.75            $ 8.50


                                        9

<PAGE>



ITEM 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>

                                                                  Fiscal Year End
                               ---------------------------------------------------------------------------------
                               November 2,      October 28,       October 29,     October 30,        October 31,
                                  1996             1995              1994             1993              1992
                               -----------      -----------       -----------     -----------        -----------
                                                       (In thousands, except share data)
<S>                            <C>              <C>               <C>             <C>                <C>

Net sales                       $293,020          $251,703         $231,064         $202,589          $198,055
Income from continuing             8,744             8,185            5,181            3,270             1,464
   operations

Income per share from           $   0.80          $   0.74         $   0.66         $   0.42          $   0.19
   continuing operations

Number of stores at end              111                66               55               50                47
   of period (1)

Comparable store sales               222               224              240              218               210
   per square foot of indoor
     selling space (2)

Comparable store sales              1.0%            (1.6%)            10.0%             4.2%              5.4%
   increases(decreases)(3)

Balance Sheet Data (at
   end of period)
    Working capital             $ 63,803          $ 62,496         $ 50,442         $ 37,055          $ 34,167
    Total Assets                 159,238           149,977          139,416          113,241           111,446
    Long-term debt, less          17,341            16,862           16,959           37,536            37,881
      current portion (4)
    Stockholders' equity          90,063            81,277           75,735           24,287            22,840
<FN>

(1)      Net of three store closings in fiscal 1994.
(2)      Comparable sales per square foot of indoor selling space and calculated
         by dividing  store sales by total  indoor  selling  square  footage for
         stores open and operated by CT at least twelve months in the period.
(3)      Percentage  change  in store  sales as  compared  to sales for the same
         stores  for the prior year for stores  open and  operated  by CT for at
         least twelve months in each year. The 1.0% increase in comparable store
         sales in 1996 has been  adjusted to reflect a comparable  52 week year.
         Comparable store sales grew 2.9% without such adjustment.
(4)      Excluding,  in  fiscal  1995  and  prior  years,  long-term  debt  from
         discontinued   o  perations.   See  footnote   (10)  in  the  Notes  to
         Consolidated Financial Statements.



                                       10

<PAGE>



ITEM 7.  MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

     The following discussion and analysis of financial condition and results of
operation should be read in conjunction with the selected consolidated financial
data and the consolidated  financial statements of the Company and related notes
thereto.



Results of Operations

     The following table sets forth, for the periods indicated, certain items in
the Company's Statement of Income expressed as a percentage of net sales:

                                               Fiscal Year Ended
                                 -------------------------------------------
                                   November 2,   October 28,    October 29,
                                      1996          1995           1994
                                 -------------  ------------    ----------

Net sales                           100.0%         100.0%         100.0%
Gross profit                         29.3           29.5           30.1
Selling, general and
  administrative expenses            23.3           23.2           23.6
Amortization of intangibles           0.3            0.3            0.4
                                   ------          -----          -----
Operating income                      5.7            6.0            6.1
Interest expense                      0.6            0.5            2.1
                                   ------          -----          -----
Income (loss) before income tax       5.1            5.5            4.0
Income taxes                          2.1            2.3            1.8
                                   ------          -----          -----
Income (loss) from continuing
  operations                          3.0%           3.2%           2.2%
                                   ======          =====          ===== 


Fiscal 1996 Compared to Fiscal 1995

     Net Sales for the fiscal year ended  November 2, 1996 were $293.0  million,
an increase of $41.3 million,  or 16.4%, as compared to net sales for the fiscal
year ended  October  28,  1995 of $251.7  million.  This  increase  was due to a
comparable store sales increase of approximately 1.0% (net of sales attributable
to an extra  (53rd) week in fiscal  1996),  sales  during  such extra week,  the
opening  of 14 new  stores in fiscal  1996,  a full year of  operations  for the
eleven new stores  opened in fiscal 1995 as compared to a partial year for those
stores  during  fiscal  1995 and the  acquisition  of the Big Bear stores in May
1996.  The increase in comparable  store sales was primarily due to a comparable
store  sales  increase  of 13.8%  during  the fourth  quarter of fiscal  1996 as
compared to the fourth quarter of fiscal 1995. This increase in comparable store
sales  during the fourth  quarter  was the result of normal  weather  conditions
during fiscal 1996 as compared to unusual and severe drought  conditions  during
fiscal 1995.

     Gross  profit for  fiscal  1996 was $85.8  million,  an  increase  of $11.4
million, or 15.3%, as compared to $74.4 million for fiscal 1995. Gross profit as
a percentage of sales was 29.3% for fiscal 1996, as compared to 29.5% for fiscal
1995.  This  decrease  is  primarily  attributable  to the sale of lower  margin
products  in the Big  Bear  stores  prior to  their  conversion  to the CT store
format.

     Selling,  general, and administrative  expenses for fiscal 1996, were $68.2
million,  an increase of $9.9 million,  or 17.0%, for fiscal 1995. This increase
was due  primarily to costs  related to new store  openings and costs related to
stores acquired and operated in the Big Bear acquisition.  Selling, general, and
administrative  expenses as a percentage  of sales  increased to 23.3% in fiscal
1996 as compared to 23.2% in fiscal 1995. This

                                       11

<PAGE>



increase is attributable to higher selling,  general and administrative expenses
as a  percentage  of sales at the new Big Bear  stores,  partially  offset  by a
decrease in selling,  general and  administrative  expenses as a  percentage  of
sales at CT's existing  stores.  Management  expects that the  completion of the
conversion  of the Big Bear stores to the CT store format will improve  selling,
general and administrative expenses as a percentage of sales.

     Amortization of intangibles was $0.9 million for fiscal 1996 and 1995.

     Operating  income for fiscal 1996, was $16.7  million,  an increase of $1.5
million,  or 9.5%, as compared to fiscal 1995.  Operating income as a percentage
of sales decreased to 5.7% in fiscal 1996 from 6.0% in fiscal 1995. The decrease
resulted from the factors affecting sales,  gross profit,  and selling,  general
and administrative expenses discussed above.

     Interest  expense  for fiscal  1996 was $1.7  million,  an increase of $0.4
million, or 27.7% as compared to $1.3 million for fiscal 1995. This increase was
primarily due to an increase in interest related to short-term  borrowings under
the Company's line of credit agreement.

     Income tax expense  related to continuing  operations  for fiscal 1996, was
$6.2 million,  an increase of $0.5  million,  or 8.8% as compared to 5.7 million
for fiscal 1995.  Income taxes as a percentage of pretax  earnings were 41.7% in
fiscal 1996 as compared to 41.1% in fiscal 1995. This increase was primarily due
to the effect of a reduction of prior year over accrual in fiscal 1995.

Fiscal 1995 Compared to Fiscal 1994

     Net Sales for the fiscal year ended  October 28, 1995 were $251.7  million,
an increase of $20.6  million,  or 8.9%, as compared to net sales for the fiscal
year ended  October 29, 1994 of $231.1  million.  This  increase  was due in the
opening of eleven new stores in fiscal  1995 and a full year of  operations  for
the eight new stores  opened in fiscal  1994,  partially  offset by a comparable
store sales  decrease of 1.6% and the closing of three stores  during the latter
part of fiscal 1994. The 1.6% decrease in comparable store sales was primarily a
result of unusual  and severe  drought  conditions  throughout  fiscal  1995 and
generally  unfavorable  economic  conditions in the Northeast  where most of the
Company's retail stores were located.

     Gross  profit  for  fiscal  1995 was $74.4  million,  an  increase  of $4.9
million, or 6.9% as compared to $69.5 million for fiscal 1994. Gross profit as a
percentage  of sales was 29.5% for fiscal 1995,  as compared to 30.1% for fiscal
1994.  The  decrease in gross  profit  percentage  was  primarily  the result of
increased  promotional  sales in fiscal 1995 at a lower gross margin,  which was
offset by improvement in distribution costs.

     Selling  general  and  administrative  expenses  for fiscal 1995 were $58.3
million,  an increase of $3.8 million,  or 6.9%, as compared to $54.5 for fiscal
1994.  This increase was due  primarily to increased  costs related to new store
openings,  partially  offset by a reduction in costs due to the closing of three
stores in fiscal 1994 and a reduction in incentive  compensation costs. Selling,
general and administrative  expenses as a percentage of sales decreased to 23.2%
in fiscal 1995, as compared to 23.6% in fiscal 1994,  reflecting the decrease in
incentive  compensation  expenses as a percentage of sales  partially  offset by
higher selling,  general and administrative expenses as a percentage of sales in
new stores.

         Amortization  of intangibles  was $0.9 million for fiscal 1995 and $0.8
million for fiscal 1994.

     Operating  income for fiscal  1995 was $15.2  million,  an increase of $1.0
million,  or 7.5%, as compared to $14.2 for fiscal 1994.  Operating  income as a
percentage  of sales  decreased to 6.0% in fiscal 1995 from 6.1% in fiscal 1994.
The decrease  resulted  from the factors  affecting  sales,  gross  profit,  and
selling, general and administrative expenses discussed above.


                                       12

<PAGE>



     Interest  expense  for fiscal  1995 was $1.3  million,  a decrease  of $3.5
million,  or 72.7%  as  compared  to $4.8  million  for  fiscal  1994.  This was
primarily due to the reduction in long-term debt resulting from the debt prepaid
with the proceeds from the initial public offering completed in October 1994.

     Income tax expense  related to  continuing  operations  for fiscal 1995 was
$5.7 million,  an increase of $1.5 million or 36.3%, as compared to $4.2 million
for fiscal 1994.  Income taxes as a percentage of pretax  earnings were 41.1% in
fiscal 1995 as compared to 44.8% in fiscal 1994. This decrease was primarily due
to the  effect of a  proportionately  lower  amount of  non-deductible  goodwill
amortization and a reduction of prior year over accrual.

     Discontinued   operations  represent  the  results  of  operations  of  the
Company's former subsidiary,  Herschel Corporation ("Herschel"),  a manufacturer
and  distributor of  non-original  equipment  sickle bar cutting parts,  tractor
parts,  tillage  and other  agricultural  componentry.  Discontinued  operations
generated  net income of $0.8 million in fiscal 1995,  as compared to a net loss
of $0.7 million in fiscal 1994.  The sale of  Herschel,  which was  completed on
December 6, 1995, resulted in an estimated net loss on the sale of $3.4 million,
net of an  income  tax  benefit  of $0.7  million,  which was  reflected  in the
Company's financial statements for fiscal 1995.

Liquidity and Capital Resources

     In  addition  to  cash to  fund  operations,  CT's  primary  on-going  cash
requirements  are those  necessary  for the Company's  expansion and  relocation
programs, including inventory purchases and capital expenditures.  The Company's
primary  sources of liquidity  are funds  provided from  operations,  borrowings
pursuant  to the  Company's  revolving  credit  facilities  and short term trade
credit.

     On November 2, 1996, the Company had working  capital of $63.8 million,  an
increase of $1.3  million,  as compared to working  capital of $62.5  million on
October 28, 1995. This increase resulted primarily from an increase in inventory
and a decrease in borrowings  under the  Company's  revolving  credit  facility,
partially  offset by a decrease in the net assets of Herschel and an increase in
accounts  payable.  On November 2, 1996, the Company's  inventories  were $107.2
million,  an increase of $13.3 million,  as compared to $93.9 million at October
28, 1995. This increase reflected inventory for new stores and inventory for the
stores  acquired in the Big bear  acquisition.  The  increase in  inventory  was
funded  with cash from  operations,  short-term  trade  credit and  proceeds  of
approximately  $13.5  million  from  the  sale of the net  assets  of  Herschel,
including the repayment of approximately $2.1 million in advances.

     Continuing  operation  of the  Company  (before  payment  of income  taxes)
generated  $10.3  million of net cash in fiscal  1996,  used $1.1 million of net
cash in fiscal 1995 and generated  $0.6 million of net cash in fiscal 1994.  The
increase in net cash  generated  in fiscal  1996,  as  compared to fiscal  1995,
resulted  primarily  from a smaller  increase  in  inventory  and an increase in
income from continuing  operations  before income taxes,  partially  offset by a
reduction  in  accounts  payable in fiscal  1996,  as compared to an increase in
fiscal 1995.  The decrease in net cash  generated in fiscal 1995, as compared to
fiscal  1994,  resulted  primarily  from an increase  in income from  continuing
operations before income taxes.

     The Company's  capital  expenditures were $8.8 million and $6.3 million for
fiscal 1996 and 1995,  respectively.  The majority of capital  expenditures were
for store fixtures,  equipment and leasehold  improvements  for new and existing
stores.  The  Company  expects its  capital  expenditures  for fiscal 1997 to be
approximately  $5.3 million in connection with renewal and replacement  costs at
existing stores and distribution centers,  conversion of the Big Bear stores and
the opening of two new stores.

     The Company completed the acquisition of 31 store locations and certain net
operating  assets of Big Bear on May 31, 1996. The stores are being converted to
the CT format with a  projected  completion  in April 1997.  The Big Bear stores
average  11,000 square feet and fit the  Company's  small store  prototype.  The
total investment in the 31 stores including acquisition cost, additional capital
investments  and working  capital needs and  conversion  costs is expected to be
approximately $12.0 million.  In addition,  the conversion process requires each
store to be closed  for  approximately  three  weeks.  The  acquisition  and the
additional investments made to date were funded with cash

                                       13

<PAGE>



form operations and borrowings  under the Company's  revolving  credit facility.
The  Company  anticipates  utilizing  the New  Credit  Facility  and  cash  from
operations to fund the additional investments.

     The Company's  former  revolving  credit  facility  contained a commitment,
expiring  February 1, 1998,  to provide  revolving  loans of $25.0  million from
November  1 through  May 31 of each year and $12.0  million  from June 1 through
October 31 of each year.  At November 2, 1996 and October 28, 1995,  the Company
had $3.7 million and $6.8 million, respectively, of borrowings outstanding under
such revolving  credit  facility.  The maximum amount of borrowings  outstanding
during fiscal 1996 and 1995 was $11.9 million and $15.6  million,  respectively.
On December 23, 1996,  such  revolving  credit  facility was replaced by the New
Credit  Facility,  which  consists of an $8.0 million.  five-year term facility,
which was fully funded,  and a $30.0 million  revolving credit  facility,  under
which  $17.3  million  was  outstanding  as of December  23,  1996.  The Company
anticipates  that  approximately  $1.8  million of the  proceeds of the offering
described below will be used to repay revolving  borrowings under the New Credit
Facility.

     The New Credit Facility will mature on December 31, 2001.  Borrowings under
the New  Credit  Facility  will  bear  interest  at rates  based  upon  prime or
Eurodollar rates plus an applicable margin.  Loans under the New Credit Facility
will be guaranteed by any and all future subsidiaries of the Company and will be
secured by security  interests in substantially all of the assets of the Company
and its subsidiaries, as well as the capital stock of the Company.

     The Company is party to an agreement  and plan of merger  pursuant to which
it is to become the wholly owned subsidiary (the  "Acquisition")  of CT Holding,
Inc.  ("Holding"),  an indirect subsidiary of J.W. Childs Equity Partners,  L.P.
Holding is a holding company with no significant assets or operations other than
through its investment in the Company. Part of the financing for the Acquisition
will be raised by an offering of $100 million of debt  securities  (the "Notes")
to be made by the Company. After the closing,  Holding's primary source of funds
will be dividends  and other  advances and  transfers of funds from the Company.
The Company's ability to make dividends and other advances and transfer of funds
will be  subject to the terms of the New  Credit  Facility,  the Notes and other
agreements to which the Company becomes a party from time to time. The Notes and
the New Credit  Facility permit the Company  (subject to certain  conditions) to
pay cash dividends to Holding in an amount  sufficient to permit Holding to fund
certain expenses incurred in the ordinary course of business.

     The Company  anticipates  that its  principal  uses of cash  following  the
Acquisition will be working capital requirements,  debt service requirements and
capital expenditures,  as well as expenditures  relating to acquisitions.  Based
upon current and anticipated levels of operations, the Company believes that its
cash flow from operations,  together with amounts available under the New Credit
Facility,  will  be  adequate  to  meet  its  anticipated  requirements  in  the
foreseeable  future for  working  capital,  capital  expenditures  and  interest
payments.  The  Company  expects  that  if  it  were  to  pursue  a  significant
acquisition,  it would arrange prior to the  acquisition  any additional debt or
equity financing  required to fund the acquisition.  No discussions with respect
to any significant acquisition are ongoing.

     There  can be no  assurance,  however,  that the  Company's  business  will
continue  to  generate  sufficient  cash flow form  operations  in the future to
service its debt,  and the Company may be required to refinance all or a portion
of its existing debt or to obtain additional  financing or to reduce its capital
spending.  There can be no assurance that any such refinancing would be possible
or that any  additional  financing  could be obtained.  The  inability to obtain
additional financing could have a material adverse effect on the Company.

Seasonality

     Unlike many specialty  retailers,  the Company has  historically  generated
positive operating income in each of its four fiscal quarters.  However, because
the  Company  is an  agricultural  specialty  retailer,  its  sales  necessarily
fluctuate with the seasonal  needs of the  agricultural  community.  The Company
responds to this  seasonality by attempting to manage  inventory levels (and the
associated working capital requirements) to meet expected demand, and by varying
its use of part-time employees.  Historically, the Company's sales and operating
income  have been  highest in the third  quarter of each  fiscal tear due to the
farming industry's planting season and the sale of seasonal

                                       14

<PAGE>



products.  Working  capital  needs are highest  during the second  quarter.  The
Company expects these trends to continue for the foreseeable future.

Inflation

Management  does not believe its  operations  have been  materially  affected by
inflation.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Included at pages F-1 through F-20.

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

     None.


                                       15

<PAGE>


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The  following  table sets forth the name,  age and position of each of the
Company's  directors,   directors  designate  expected  to  assume  office  upon
consummation  of the  Acquisition,  executive  officers  and  other  significant
employees.  All of the Company's  officers are elected annually and serve at the
discretion of the Board of Directors.

</TABLE>
<TABLE>
<CAPTION>

     Name                  Age              Positions
    <S>                   <C>        <C>

     James T. McKitrick    51         President, Chief Executive Officer, Director
     Dean Longnecker       49         Executive Vice President, Finance, Secretary, Director
     John W. Childs        55         Director Designate
     Jerry D. Horn         59         Director Designate
     Steven G. Segal       36         Director Designate
     Adam L. Suttin        29         Director Designate
     Jeffrey D. Swartz     36         Director Designate
     William E. Watts      43         Director Designate
     George D. Miller      54         Senior Vice President, Merchandising
     Denny Starr           43         Senior Vice President, Finance
     Jeffrey A. Stanton    44         Vice President, Human Resources
     David E. Enos         36         Vice President, Management Information Systems
     Daniel Cunningham     60         Vice President, New, Used and Rebuilt Tractor Parts
     Jack P. Feichtner     50         Vice President, Advertising and Marketing
     Glenn S. Kraiss       63         Director (1)
     Daryl L. Lansdale     55         Director (1)
     Francis J. Palamara   70         Director (1)
<FN>

(1)  It is anticipated the Messrs. Kraiss, Lansdale and Palamara will resign 
     upon consummation of the Acquisition.
</FN>
</TABLE>

     James T. McKitrick President and Chief Executive Officer joined the Company
in July 1992. He has over 30 years  experience in retailing,  including 20 years
at Kmart Corporation. Prior to joining CT, Mr. McKitrick was President and Chief
Executive Officer of Builder's  Emporium,  a  California-based  home improvement
center chain.  Previously,  he was with Ames Department Stores from 1987 through
1990, were he held the positions of Executive Vice President,  Chairman of Zayre
Discount  Store  Division,  and  President and Chief  Executive  Officer of G.C.
Murphy  Division,  a $900 million variety store chain. Mr. McKitrick also served
as President  and Chief  Executive  Officer of Warehouse  Club,  Inc.  from 1986
through 1987 and Executive Vice President of  Merchandising  for T.G.&Y.  Stores
Company from 1984 through 1986. From 1963 through 1984, Mr.
McKitrick was with the Kmart Corporation.

     Dean Longnecker,  Executive Vice President of Finance, has held his current
position  since 1985. He joined CT in 1980 as  Controller.  Mr.  Longnecker  was
employed at Payless  Cashways 1973 until 1980,  most  recently as Treasurer.  He
received a B.S. from Iowa State University in 1970 and C.P.A. in 1972.

     John W. Childs has been  President of J.W.  Childs  Associates,  L.P. since
July 1995. Prior to that time, he was an executive at Thomas H. Lee Company from
May 1987, most recently holding the position of Senior Managing Director.  He is
a director of Big V  Supermarkets,  Inc.,  Cinnabon,  Inc., The Edison  Project,
Inc., Personal Care Group, Inc., and Select Beverages, Inc.

     Jerry  D.  Horn  has  been  Chairman  of the  Board  of  General  Nutrition
Companies,  Inc., a 3,000 store vitamin and nutritional  supplement retail chain
operating under the GNC name, since October 1991 and, prior to that, held

                                       16

<PAGE>



various  positions with its predecessor  since 1985. Mr. Horn is also a director
of Chadwick-Miller, Inc. and Cinnabon, Inc. and Managing Director of J.W. Childs
Associates, L.P. since July 1995.

     Steven G. Segal has been a Managing  Director  of J.W.  Childs  Associates,
L.P.  since July 1995.  Prior to that time, he was an executive at Thomas H. Lee
Company  from  August  1987,  most  recently  holding  the  position of Managing
Director. He is a director of Big V Supermarkets,  Inc., Cinnabon, Inc. and Fitz
and Floyd, Inc.

     Adam L. Suttin has been a Vice President of J.W.  Childs  Associates,  L.P.
since  July  1995.  Prior to that  time,  he was an  executive  at Thomas H. Lee
Company from August 1989, most recently holding the position of Associate. He is
a director of Personal Care Group, Inc.

     Jeffrey D. Swartz has been Chief  Operating  Officer of  Timberland  Co., a
manufacturer and marketer of branded  footwear and apparel,  since May 1991, and
has worked for that company in various positions since June 1986.

     William E. Watts has been President, Chief Executive Officer and a Director
of General Nutrition Companies, Inc. since October 1991 and, prior to that, held
various positions with its predecessor since 1984.

     George D. Miller, Senior Vice President,  Merchandising,  joined CT in June
1996.  Previously,  he was Vice  President,  Merchandising,  with Home  Base,  a
California-based  home  improvement  center  chain from 1993 through  1996.  Mr.
Miller was employed by Sears,  Roebuck & Company from 1968  through  1993,  most
recently as Senior Merchandise Manager. He received B.S. and M.B.A. degrees from
Indiana University.

     Denny Starr,  Senior Vice President,  Finance joined the Company in October
1989 as Assistant  Controller.  He previously served as Assistant  Controller of
The Witten Group,  from 1986 through 1989, a holding  company with operations in
manufacturing, real estate and finance. He was an Audit Manager with McGladrey &
Pullen from 1982 until 1986.  Mr. Starr received his B.A. from the University of
Iowa in 1982 and C.P.A. in 1982.

     Jeffery A. Stanton has served as Vice President, Human Resources since June
1992.  Previously,  he was employed by R.R.  Donnelly & Sons and  Meredith/Burda
Corporation  from 1985  through  1992,  as well as  Reichardt's  Inc.  from 1972
through 1985, a specialty retailer. Mr Stanton received a B.B.A. degree from the
University of Iowa in 1972 .

     David E. Enos, Vice President,  Management  Information  Systems/Logistics,
has  held  his  current  position  since  1990.  Mr.  Enos  joined  CT in  1981.
Previously,  he was  employed at  Meredith/Burda  Corporation  from 1979 through
1981. He received an A.A.S. degree in Data Processing from DMACC in 1979.

     Daniel Cunningham, Vice President, Used and Rebuilt Tractor Parts joined CT
in 1958. Mr. Cunningham has held several positions within the Company, including
store  operations,  mail  order  and  the  Company's  tractor  parts  area.  Mr.
Cunningham was promoted to his current position in 1991.

     Jack P. Feichtner,  Vice President Advertising and Marketing,  joined CT in
July 1995. He was previously with Kmart Corporation for 27 years, where his most
recent position was Director, Advertising.

     Glenn S. Kraiss has served as a director for CT since May 1996.  Mr. Kraiss
joined the Walgreen  Company in 1950 and is currently  Executive Vice President,
Store Operations. Mr. Kraiss held several management positions with the Walgreen
Company prior to being assigned to his current position in 1978.

     Daryl L. Lansdale has served as a director since May 1995. Mr. Lansdale has
been the  President  and Chief  Executive  Officer of Lil'  Things,  a specialty
retailer,  since 1996.  He was  previously  employed by  Scotty's,  Inc., a home
improvement  retail company from 1988 until 1996,  most recently as Chairman and
Chief Executive Officer.  Mr. Lansdale served as a President and Chief Executive
Officer of the Southwest Division of Lone Star Hardware, Inc. from 1987 to 1988.
From 1976 to 1987, Mr. Lansdale was employed by the Central Home Center Division
of W.R.

                                       17

<PAGE>
 
Grace and  Company,  where his most  recent  position  was  President  and Chief
Executive Officer. Mr. Lansdale also serves as a director on other companies.

     Francis J.  Palamara  has served as a director of the Company  since August
1994 and is a member of the Audit Committee and the Compensation Committee.  Mr.
Palamara joined ARAMARK,  a diversified  service company,  in 1981 and served as
its Executive Vice President-Finance  until 1988 and as a member of the Board of
Directors from 1981 to 1992. Mr Palamara  served as Executive Vice President and
Chief Operating Officer of the New York Stock Exchange from 1972 to 1978. He was
Executive Vice  President of Pittson  Company from 1971 to 1972 and from 1978 to
1981,  when he also  served on the Board of  Directors.  Mr.  Palamara is on the
board of directors of Gintel Funds, XTRA Corporation, a transportation equipment
leasing company, and the Glenmede Funds.

 ITEM 11. EXECUTIVE COMPENSATION

         Summary Compensation Table

     The  following  table  sets  forth  compensation  earned  for all  services
rendered to the Company  during  fiscal 1994,  fiscal 1995,  and fiscal 1996, as
applicable,  by the Company's chief executive  officer,  the two other executive
officers who were employed by the Company as such at the end of fiscal 1996, the
one former  executive  officer  that served as such  during  fiscal 1996 but who
resigned  subsequent  to the  end  of  fiscal  1996  (collectively,  the  "Named
Executives").
<TABLE>
<CAPTION>
                                                                                   Long-Term
                                                                                  Compensation
                                                Annual Compensation                  Awards
                                    -------------------------------------------  --------------
                                                                                   Number of
                                                                                   Securities      All Other
Name and Principal                     Fiscal      Salary(1)         Bonus         Underlying     Compensation
Position at November 2, 1996            Year          ($)             ($)           Options           ($)
----------------------------        ------------ --------------  --------------  --------------  -------------- 
<S>                                    <C>          <C>             <C>            <C>             <C>
James T. McKitrick                      1996         365,000         91,250            --             9,863(2)
  President, Chief                      1995         350,000         70,000            --             4,357(2)
   Executive Officer                    1994         325,000         162,500         158,939          9,953(2)
Dean Longnecker                         1996         234,000         58,500            --             5,131(2)
  Executive Vice                        1995         225,000         45,000          15,000           4,152(2)
   President, Finance                   1994         196,686         147,890         4,565            7,524(2)
George D. Miller (3)                    1996         108,462         15,190          60,000           5,128(4)
 Senior Vice                            1995            --             --              --               --
   President, Merchandising             1994            --             --              --               --
Don Walter (5)                          1996         155,000         12,480            --             5,213(2)
  Senior Vice                           1995         153,750         24,800            --            29,570(6)
   President, Operations                1994         115,433         46,500          26,850          17,460(4)

<FN>
(1)  Includes  compensation  deferred at the Named Executive's election under the Company's Profit Sharing Plan.

(2)  Represents amounts contributed by the Company during each fiscal year, as applicable, to the Named Executive's Profit Sharing 
     Plan account.

(3)  Mr. Miller joined the Company in May 1996.

(4)  Represents payments or reimbursement of certain moving and relocating expenses.

(5)  Mr. Walter resigned his position with the Company effective December 1, 1996.

(6)  Represents  amounts  contributed by the Company during each fiscal year, as applicable,  to the Named Executive's  Profit 
     Sharing Plan account and also represents  payments  or  reimbursement  of certain  moving and  relocating expenses.
</FN>
</TABLE>

Option Grants in Last Fiscal Year

     The table below shows  information  regarding  grants of stock options,  if
any, made to the Named Executives during fiscal 1996. The amounts shown for each
of the Named Executives as potential  realizable values are based on arbitrarily
assumed  annualized  rates of stock price  appreciation  of five percent and ten
percent over the full term

                                       18
<PAGE>

of the  options,  pursuant to  applicable  Securities  and  Exchange  Commission
("SEC") regulations.  Actual gains, if any, on option exercises are dependent on
the future performance of the Common Stock and overall stock market conditions.

<TABLE>
<CAPTION>
                                                          Individual Grants
                      ------------------------------------------------------------------------------
                                                                                                       Potential Realizable Value
                                                                                                               at Assumed
                                                                                                              Annual Rates of
                                                                                                                Stock Price
                                           % of Total                                                       Appreciation for
Name                      Number            Options                                                            Option Term
                            of             Granted to          Exercise or                         --------------------------------
                         Options          Employees in          Base Price          Expiration            5%                10%
                         Granted          Fiscal Year           ($/Share)              Date              ($)                ($)
                      -------------  ------------------   ------------------   -----------------   ----------------   ------------
<S>                    <C>                 <C>                 <C>                <C>                 <C>              <C>
George D. Miller        60,000              73%                 13.25               5-29-06            499,800           1,267,200
<FN>
(1)  Such options become exercisable at the rate of 12,000 shares on each anniversary of the original date of grant. The latest 
     date on which this option may be exercised is May 28, 2006.
</FN>
</TABLE>

Aggregated Option Exercises in Last Fiscal Year-End Option Values

     The following table  summarizes for each of the Named  Executives the total
number and value of unexercised  options,  if any, held at November 2, 1996. For
this purpose, the value of unexercised,  in-the-money options at fiscal year-end
is the  difference  between the exercise price and the closing sale price of the
underlying  Common  Stock on November 2, 1996.  There can be no  assurance  that
these values will be realized. No options were exercised during fiscal 1996.
<TABLE>
<CAPTION>
                                            Number of Securities
                                                 Underlying                 Value of Unexercised
                                             Unexercised Options            In-the-Money Options
                                             at Fiscal Year-End             at Fiscal Year-End(1)
                                        -----------------------------  -------------------------------
                                         Exercisable   Unexercisable     Exercisable    Unexercisable
Name                                      (Number)       (Number)            ($)             ($)
----                                    ------------- ---------------  --------------- --------------- 
<S>                                        <C>             <C>            <C>               <C>
James T. McKitrick......................    206,517         180,663        1,708,189         583,444
Dean Longnecker.........................      4,565          15,000               --              --
George D. Miller........................         --          60,000               --              --
Don Walter..............................     12,410          14,440               --              --
<FN>
(1)  In-the-money options for which the fair market value of the underlying securities exceeds the exercise or base price of 
     the option.
</FN>
</TABLE>

Employment Arrangements with Executive Officers

     Mr.  McKitrick  is  currently  employed as  President  and Chief  Executive
Officer pursuant to an employment agreement dated September 16, 1994. Under this
agreement,  Mr. McKitrick  currently  receives a salary of $365,000,  subject to
increases  determined  annually by the  compensation  committee (which increases
must at least equal  increases in the consumer  price index).  In addition,  Mr.
McKitrick is eligible  for an annual bonus of up to 60% of his salary,  based on
financial targets and non-quantitative performance objectives established by the
compensation  committee at the beginning of each fiscal year. If his  employment
is  terminated  by the  company  other  than for  cause of  because  of death or
disability,  or because the Company either removed him or failed to elect him as
President and Chief Executive Officer, the Company will pay to Mr. McKitrick his
base salary (reduced by compensation  received from other  businesses)  from the
date of termination  to the later of November 1, 1997 and the first  anniversary
of such  termination.  Pursuant to the employment  agreement,  Mr. McKitrick was
granted an option to acquire,  at an exercise  price equal to the initial public
offering price, up to 112,512 shares of Common Stock on the seventh 

                                       19
<PAGE>

anniversary of the original date of grant,  with  accelerated  vesting in fiscal
1996 through 1998 EBIT targets are met. Mr McKitrick's employment agreement also
contains certain confidentiality and non-competition requirements .

     Mr. Longnecker is employed as Executive Vice President, Finance pursuant to
an agreement dated  September 16, 1994.  Under this  agreement,  Mr.  Longnecker
currently receives a salary of $234,000,  subject to salary increases

determined annually by the compensation committee (which increases must at least
equal  increases in the consumer price index).  in addition,  Mr.  Longnecker is
eligible  for an annual  bonus of up to 48% of his  salary,  based on  financial
targets  and  non-quantitative   performance   objectives   established  by  the
compensation committee at the beginning of the fiscal year. If his employment is
terminated  by the  Company  other  than  for  cause  of  because  of  death  or
disability, or because the Company either removed him or failed to retain him as
Executive Vice president,  Finance,  the Company will pay to Mr.  Longnecker his
base salary (reduced by compensation  received from other  businesses)  from the
date  of  termination  to  the  first  anniversary  of  such  termination.   Mr.
Longnecker's  employment  agreement also contains  certain  confidentiality  and
non-competition provisions.

     Mr. Miller is employed as Senior Vice President,  Merchandising pursuant to
an agreement  dated May 6, 1996.  Under this  agreement,  Mr.  Miller  currently
receives a salary of $175,000,  subject to salary increases  determined annually
by the compensation  committee (which increases must at least equal increases in
the consumer  price  index).  in addition,  Mr. Miller is eligible for an annual
bonus  of up to  48%  of  his  salary,  based  on  financial  targets  and  non-
quantitative performance objectives established by the compensation committee at
the beginning of the fiscal year. If his employment is terminated by the Company
other than for cause of because of death or  disability,  or because the Company
either  removed  him  or  failed  to  retain  him  as  Senior  Vice   President,
Merchandising,  the Company will pay to Mr.  Miller his base salary  (reduced by
compensation received from other businesses) from the date of termination to the
later  of May 28,  1998  and the  first  anniversary  of such  termination.  Mr.
Miller's  employment   agreement  also  contains  certain   confidentiality  and
non-competition provisions.

     Additionally,  as part of the  Acquisition,  on January  2, 1997,  James T.
McKitrick and G. Dean Longnecker sold to JWCAC, for 14.00 per share,  81,810 and
64,489  shares,  respectively,  of the Company's  outstanding  common stock,  in
accordance with the terms of the Securities  Purchase Agreements entered into at
the same time as the Merger  Agreement.  Additionally,  the Securities  Purchase
Agreements  provide  that at the  closing  of the  Merger,  Mr.  McKitrick  will
exchange  outstanding options to purchase 183,935 shares of Company common stock
having an aggregate exercise price of $0.6 million for options to acquire shares
of Holding  common  stock valued at $2.6  million and that Mr.  Longnecker  will
exchange  71,429  shares of Company  common  stock for shares of Holding  common
stock valued at $1.0 million.  The Securities  Purchase  Agreements also contain
provisions  regarding  the  continued   employment  of  Messrs.   McKitrick  and
Longnecker in their  current  capacities  after the Merger (the "New  Employment
Agreements").

     Mr.  McKitrick's  New  Employment  Agreement  provides for a base salary of
$385,000,  and Mr. Longnecker's provides for a base salary of $250,000,  subject
in each case to annual  increases as determined by the Board of Directors (which
increases  must  at  least  equal   increases  in  the  consumer  price  index).
Additionally,  Messrs.  McKitrick  and  Longnecker  are eligible for annual cash
bonuses if the Company  achieves  certain  operation  cash flow  targets,  which
bonuses  are  not  subject  to any  ceilings  contained  in the  New  Employment
Agreements.

     Mr.  McKitrick's New Employment  agreement  provides for severance payments
equal to his base salary for 18 months if his  employment is  terminated  (other
than in the case of death, disability or for cause) or if he is not reelected as
President and Chief  Executive  Officer,  reduced by any  compensation he should
earn during such 18- month period from other  businesses.  Mr.  Longnecker's New
Employment  Agreement  provides for severance  payments equal to his base salary
for 12 months if his employment is terminated  (other than in the case of death,
disability or for cause) or if he is not reelected as Executive Vice  President,
Finance,  not subject  however,  to reduction for any  compensation  earned from
other businesses.

     The New Employment Agreements also contemplated that Messrs.  McKitrick and
Longnecker will participate  along with other management  personnel in two stock
option plans of Holding involving 4.5% of Holding's outstanding common stock and
common stock equivalents on a fully diluted basis, respectively.  Allocations of
options among the  management  group are to be made in the first instance by the
Chief  Executive  Officer of the 
                                       20

<PAGE>

Company,  subject  to  ratification  by  Holding's  Board  of  Directors.   Such
allocations have not been made as of the date of this Prospectus. The management
stock options will be subject to vesting based on the Company's  achievement  of
certain operating cash flow targets.

     Additionally,  the  New  Employment  Agreements  contemplate  that  Messrs.
McKitrick and Longnecker will receive additional stock options which vest if the
Company is sold within six years after the effective  time of the Merger and the
realized value of the common equity of the original  investment group in Holding
should  equal of exceed ten times the value  thereof at the time of the  Merger.
Mr. McKitrick's and Mr.  Longnecker's  options under this program are to acquire
an  aggregate  number of shares of common  stock of  Holding  equal to 1.25% and
0.75%,  respectively,  of the total  outstanding  common  stock and common stock
equivalents of Holding on a fully diluted basis.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers  and  directors,  and  persons  who own  more  than  ten  percent  of a
registered  class  of the  Company's  equity  securities,  to  file  reports  of
ownership and changes in ownership with the SEC. Officers, directors and greater
than ten percent  shareholders  are  required by SEC  regulation  to furnish the
Company  with copies of such  reports.  SEC  regulations  require the Company to
disclose failures known to it to file such reports on a timely basis. Based upon
material  provided to the Company,  Mr.  Mckitrick  failed to report on a timely
basis one transaction entered into by his wife.

                                       21

<PAGE>



ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  sets  forth  information  regarding  the  beneficial
ownership  of the Common Stock as of January 2, 1997 by each person known to the
Company  to be the  beneficial  owner of more than five  percent  of the  Common
Stock, each director and director designate of the Company, each Named Executive
and all  directors  and  executive  officers  of the  Company  as a group.  Upon
consummation of the Merger, the Company will become a wholly owned subsidiary of
Holding.  Except as otherwise  indicated,  the  beneficial  owners of the Common
Stock listed below,  based on  information  furnished by such owners,  have sole
investment  and voting power with respect to such shares.  The business  address
for each executive officer of the Company is in care of the Company.

                                                        Shares
                                                     Beneficially
Name and Address                                        Owned       Percent
----------------                                     ------------ -----------
JWC Acquisition I, Inc.
CT Holding, Inc.
JWC Equity Funding, Inc.
J.W. Childs Equity Partners, L.P.
J.W. Childs Advisors, L.P.
J.W. Childs Associates, L.P.
J.W. Childs Associates, Inc. (1).....................  7,208,551     66.1%
James T. McKitrick (2)...............................    307,770      2.8
Dean Longnecker (3)..................................    102,194        *
John W. Childs (1)...................................  7,208,551     66.1
Jerry D. Horn (1)....................................  7,208,551     66.1
     c/o General Nutrition Companies, Inc.
     921 Penn Avenue
     Pittsburgh, PA 15222
     Steven G. Segal (1).............................  7,208,551     66.1
     Adam L. Suttin (1)..............................  7,208,551     66.1
     Jeffrey D. Swartz...............................          0        *
     c/o The Timberland Company
     200 Domain Drive
     Stratham, NH 03885
     William E. Watts................................          0        *
     c/o General Nutrition Companies, Inc.
     921 Penn Avenue
     Pittsburgh, PA 15222
     George D. Miller (4)............................     60,000       *
     Don Walter (5)..................................     26,850       *
     Glenn Kraiss (6)................................      5,000       *
     1979 Abbots Ford
     Barrington, IL 60013
     Daryl Lansdale (7)..............................      7,000       *
     5300 Recker Highway
     Winter Haven, FL  33882
Francis J. Palamara (8)..............................      9,000       *
     P.O. Box 44024
     3110 East Maryland
     Phoenix, AZ  85016
All Directors and executive officers as
     a group (7 persons) (9).........................    517,814     4.7

----------------------
*    Less than 1.0%

(1)  Represents  6,978,028  shares owned by JWC  Acquisition I, Inc., a Delaware
     corporation ("JWCAC") and an additional 230,523 shares subject to a warrant
     owned by JWCAC and exercisable within 60 days. CT Holding, Inc., JWC Equity
     Funding,  Inc.,  J.W.  Childs Equity  Partners,  L.P., J.W. Childs Advisors
     L.P.,  J.W. Childs  Associates,  L.P.,  J.W.  Childs  Associates,  Inc. and
     Messrs.  Childs,  Horn, Segal and Suttin may each be deemed to beneficially
     own  shares  owned  or  deemed  beneficially  owned by  JWCAC.  Each of the
     foregoing,  except  Mr.  Horn,  has a  business  address  c/o  J.W.  Childs
     Associates, L.P., One Federal Street, Boston, MA 02110.

                                       22

<PAGE>




(2)  Includes  305,370  shares  subject to stock options  exercisable  within 60
     days.  Includes 2,400 shares beneficially owned by Mr. McKitrick's wife, as
     to which Mr. McKitrick disclaims beneficial ownership.

(3)  Includes 19,565 shares subject to stock options exercisable within 60 days.
     Includes 11,000 shares  beneficially owned by Mr. Longnecker's wife and 200
     shares  beneficially  owned  by  Mr.  Longnecker's  son,  as to  which  Mr.
     Longnecker disclaims beneficial ownership.

(4)  Includes 60,000 shares subject to stock options exercisable within 60 days.

(5)  Includes 26,850 shares subject to stock options exercisable within 60 days.

(6)  Includes 5,000 shares subject to stock options exercisable within 60 days.

(7)  Includes 7,000 shares subject to stock options exercisable within 60 days.

(8)  Includes 9,000 share subject to stock options exercisable within 60 days.

(9) Includes 459,635 shares subject to stock options exercisable within 60 days.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Two of the Company's suppliers, Iron age Corporation ("Iron Age") and Walls
Industries,  Inc. ("Walls"), are controlled by certain BCC affiliates.  Iron Age
is a manufacturer and distributor of work boots and protective  footwear.  Walls
is a manufacturer of insulated and  non-insulated  workwear,  rugged outdoor and
hunting apparel and casual outerwear. The Company believes that the terms of its
purchases  from Iron Age and Walls are at least as  favorable  to the Company as
could be obtained from other suppliers.  In fiscal 1996, the Company's purchases
from Iron Age and Walls totaled $4.7 and $1.6 million respectively.

     At the affective time of the merger,  it is  contemplated  that the Company
and Holding will enter into a management agreement with Associates providing for
payment by the  Company  to  Associates  of (i) a $1.7  million  closing  fee in
consideration of Associates'  services  regarding the planning,  structuring and
negotiation of the acquisition and (ii) an annual  management fee of $240,000 in
consideration  of  Associates'  ongoing  provision  of  certain  consulting  and
management  advisory services.  Payments under this management  agreement may be
made only to the extent  permitted by the New Credit Facility and the Indenture.
The management  agreement is expected to be for a five-year term,  automatically
renewable  for  successive  extension  terms of one year,  unless  associates or
Holding shall give notice of termination.

     Additionally, Messrs., McKitrick and Longnecker are parties to Stockholders
Agreement  dated as of December  23, 1996,  applicable  to all shares of Holding
common  stock or  vested  options  to  acquire  such  common  stock  held now or
hereafter  acquired by them.  The  Stockholders  Agreement,  among other  terms,
permits  Holding to "call" their shares and vested options on their  termination
of employment for any reason.  Additionally,  if Mr. McKitrick or Mr. Longnecker
is  terminated  for any reason  other than for cause or without  good reason (as
those  terms are  defined in the  Stockholders  Agreement),  he has the right to
"put" his shares or vested  option to Holding.  Depending on the  circumstances,
the price for shares of Holding common stock purchased in connection with a call
or put under the  Stockholders  Agreement  will, in general,  be cost, six times
EBITDA or seven times  EBITDA.  The put and call  features  of the  Stockholders
Agreement  terminate on completion of a public  offering of Holding common stock
with aggregate net proceeds of $50.0 million or more.

     Also, in connection with the consummation of the  acquisition,  the Company
will loan $250,000 to George miller to partially  fund his investment in Holding
common stock. The loan will be due in ten years and require payments of interest
only prior to  maturity  at the  applicable  interest  rate under the New Credit
Facility.


                                       23

<PAGE>



                                     PART IV

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

     (a) Documents filed as part of this Report:

         1.  Financial  Statements.   See  the  Index  to  Financial  Statements
appearing at page F-1.

         2. Financial Statement Schedules.  The following Consolidated Financial
Statement Schedule is included at page F-21:

     Schedule II - Valuation and Qualifying Accounts

     No other  Financial  Statement  Schedules  have  been  presented  since the
required  information  is not  present or not present in amounts  sufficient  to
require  submission  of the  schedule,  or because the  information  required is
included in the consolidated financial statements or the notes thereto.


         3. Exhibits.


         The  following  exhibits are filed with this Annual Report on Form 10-K
or incorporated herein by reference.



Exhibit
  No.                               Description

3(i).1    --    Restated  Certificate of  Incorporation,  filed as exhibit
                3(i).1 to the  Company's  Registration  Statement on Form S-1
                (File  #33-82620)  originally  filed on  August  9,  1994 and
                incorporated herein by reference.

3(i).2    --    Certificated  of Merger dated  October 5, 1994,  filed as
                exhibit  3(i).2 to the  Company's  Registration  Statement on
                Form S-1 (File #33-82620)  originally filed on August 9, 1994
                and incorporated herein by reference.

3(ii)     --    By-Laws  of the  Company,  filed as  exhibit  3(ii) to the
                Company's Registration Statement on Form S-1 (File #33-82620)
                originally filed on August 9, 1994 and incorporated herein by
                reference.

4.1       --    Form of Common Stock Certificate of the Company,  filed as
                exhibit 4.1 to the Company's  Registration  Statement on Form
                S-1 (File  #33-82620)  originally filed on August 9, 1994 and
                incorporated herein by reference.

4.2       --    Exchange Agreement dated October 14, 1994, among the Company,
                Mezzanine Lending Associates I, L.P., Mezzanine Lending 
                Associates II, L.P., and Mezzanine Lending Associates III, 
                L.P., filed as exhibit 4.2 to the Company's Registration 
                Statement on Form S-1 (File #33-82620) originally filed on 
                August 9, 1994 and incorporated herein by reference.


                                       24

<PAGE>




4.3       --    Form of 7% Convertible Subordinated Note due 2002 (contained 
                as Exhibit 2 to the Exchange Agreement filed as Exhibit 4.2),
                filed as exhibit 4.3 to the  Company's Registration Statement
                on Form S-1 (File #33-82620) originally filed on August 9,
                1994 and incorporated herein by reference.

10.1      --    Credit Agreement dated January 28, 1994 among the Company, 
                Herschel Corporation and First Bank National association, 
                filed as exhibit 10.1 to the Company's Registration Statement
                on Form S-1 (File #33-82620) originally filed on August 9,
                1994 and incorporated herein by reference.

10.2      --    Stockholder's Agreement, dated October 14, 1994, among the 
                Company, Mezzanine Lending Associates I, L.P., Mezzanine 
                Lending Associates II, L.P., and Mezzanine Lending Associates
                III, L.P., and the individual stockholders party thereto, 
                filed as exhibit10.2 to the Company's Registration Statement 
                on Form  S-1 (File  #33-82620) originally filed on August 9,
                1994 and incorporated herein by reference.

10.3      --    Form of Stock Option Agreement of the Company with respect to
                options issued prior to Form S-1 (File #33-82620) originally
                filed on August 9, 1994 and incorporated herein by reference.

10.4      --    1994 Stock Incentive Plan, filed as exhibit 10.4 Company's 
                Registration Statement on Form S-1 (File #33-82620)
                originally filed on August 9, 1994 and incorporated herein 
                by reference.

10.5      --    Employment Agreement between the Company and James T. 
                McKitrick dated as of September 16, 1994, filed as exhibit 
                10.5 to the Company's Registration Statement on Form S-1 
                (File #33-82620) originally filed on August 9, 1994 and 
                incorporated herein by reference.

10.6      --    Employment   Agreement   between  the  Company  and  Dean
                Longnecker  dated as of September 16, 1994,  filed as exhibit
                10.6 to the  Company's  Registration  Statement  on Form  S-1
                (File  #33-  82620)  originally  filed on  August 9, 1994 and
                incorporated herein by reference.

10.7      --    Employment Agreement between the Company and Michael London 
                dated as of September 16, 1994, filed as exhibit 10.7 to the
                Company's Registration Statement on Form S-1 (File #33-
                82620) originally filed on August 9, 1994 and incorporated 
                herein by reference.

10.8      --    Warrant dated August 31, 1993, registered in the name of BCC 
                Industrial Services, Inc., filed as exhibit 10.8 to the 
                Company's Registration Statement on Form S-1 (File #33-82620)
                originally filed on August 9, 1994 and incorporated herein 
                by reference.

10.9      --    Merger Agreement dated as of September 14, 1994 between the 
                Company and Central Tractor Farm & Country, Inc., an Iowa 
                Corporation, filed as exhibit 10.9  to the Company's 
                Registration Statement on Form S-1 (File #33-82620)  
                originally filed on August 9, 1994 and incorporated
                herein by reference.

10.10     --    1994 Directors' Stock Option Plan, filed as exhibit 10.10 to 
                the to the Company's Registration Statement on Form S-1 
                (File #33-82620) originally filed on August 9, 1994 and 
                incorporated herein by reference.


                                       25

<PAGE>




10.11     --    First Amendment to Credit Agreement dated December 3, 1994
                among  the  Company,  Herschel  Corporation  and  First  Bank
                National Association, filed as exhibit 10.11 to the Company's
                10-K  originally  filed on January 26, 1996 and  incorporated
                herein by reference.

10.12     --    Second  Amendment to Credit  Agreement  dated May 16, 1995
                among  the  Company,  Herschel  Corporation  and  First  Bank
                National Association, filed as exhibit 10.12 to the Company's
                10-K  originally  filed on January 26, 1996 and  incorporated
                herein by reference.

10.13     --    Third Amendment to Credit Agreement dated December 1, 1995
                among the Company and First Bank National Association, filed
                as exhibit 10.13 to the Company's 10-K originally filed on
                January 26, 1996 and incorporated herein by reference.

10.14     --    Asset Purchase Agreement By and Between Alamo Group (USA) 
                inc. (the "Buyer") and Herschel Corporation and Central 
                Tractor Farm and Country, Inc. (the "Sellers") dated 
                December 4, 1995 filed as exhibit 10.14 to the Company's 
                10-K originally filed on  January 26, 1996 and incorporated 
                herein by reference.

10.15     --    Asset Purchase Agreement By and Between Central Tractor Farm 
                & Country, Inc., (the "Buyer") and Big Bear Farm Stores, Inc.
                (the "Seller") dated May 22, 1996, filed as exhibit 10.15 to 
                the Company's 10-Q originally filed on September 9, 1996 and 
                incorporated herein by reference.

10.16     --    Agreement Plan of Merger dated November 27, 1996 by and among
                Central Tractor Farm & Country, Inc., J.W. Childs Equity 
                Partners, L.P., JWC Holdings I, Inc., and JWC  Acquisition I,
                Inc.,  filed as an exhibit to the  Company's  8-K  originally
                filed on December 3, 1996 and incorporated herein by reference.

10.17     --    Securities Purchase Agreement dated as of November 27, 1996  
                by and among Central Tractor Farm & Country, Inc., J.W. Childs
                Equity Partners, L.P., JWC Holdings I, Inc., and JWC
                Acquisition I, Inc., filed as an exhibit to the Company's 8-K 
                originally filed on December 3,  1996 and incorporated
                herein by reference.

10.18     --    Securities Purchase Agreement, dated as of November 6, 1996, 
                by and among Mezzanine Lending  Associates I, L.P., Mezzanine
                Lending Associates II, L.P., Mezzanine Lending associates III,
                L.P.,  Senior Lending Associates I, L.P., BCC Industrial 
                Services, JWC Acquisition  I, Inc., J.W. Childs Equity
                Partners, L.P., Central Tractor Farm & Country, Inc. filed as 
                an exhibit  to JWCAC's Schedule 13D originally filed on
                December 9, 1996 and incorporated herein by reference.

10.19     --    Letter Agreement, dated as of November 27, 1996 between JWC 
                Acquisition I, Inc. and Mr. James T. McKitrick, filed as an 
                exhibit to JWCAC's Schedule 13D originally filed on
                December 9, 1996 and incorporated herein by reference.

10.20     --    Letter Agreement, dated as of November 27, 1996 between JWC 
                Acquisition I, Inc. and Mr. G. Dean Longnecker, filed as an 
                exhibit to JWCAC's Schedule 13D originally filed on
                December 9, 1996 and incorporated herein by reference.

10.21     --    Employment  Agreement  between  the Company and George D.
                Miller  dated  May 6,  1996,  filed as  exhibit  10.25 to the
                Company's   Registration   Statement   on  Form   S-1   (File
                #333-19613)   originally   filed  on  January  10,  1997  and
                incorporated herein by reference..



                                       26

<PAGE>


10.22     --    Credit Agreement dated as of December 23, 1996 among the
                Company, Holding, JWCAC, certain banks, financial institutions 
                and other lenders listed therein, Fleet, as administrative 
                agent, and NationsBank, as co-agent.

11        --    Statement Regarding Computation of Per Share Earnings

21        --    Subsidiaries of the Company.

23.1      --    Consent of Ernst & Young, LLP

     (b) Reports on Form 8-K Filed During the Last Quarter of Fiscal 1996

         None.

     (c) See Item 14(a)(3) of this report.

     (d) See Item 14(a)(2) of this report.





                                       27

<PAGE>
                          INDEX TO FINANCIAL STATEMENTS

Report of Ernst & Young LLP.................................................F-2
Consolidated Balance Sheets as of October 29, 1994, October 28, 1995
   and November 2, 1996.....................................................F-4
Consolidated Statements of Income for fiscal years ended October 29, 1994,
   October 28, 1995 and November 2, 1996....................................F-5
Consolidated Statements of Changes in Stockholders' Equity for fiscal
   years ended October 29, 1994, October 28, 1995 and November 2, 1996......F-6
Consolidated Statements of Cash Flows for fiscal years ended October 29,
   1994, October 28, 1995 and November 2, 1996..............................F-7
Notes to Consolidated Financial Statements..................................F-9



                                       F-1

<PAGE>



                         REPORT OF INDEPENDENT AUDITORS







The Board of Directors
Central Tractor Farm & Country, Inc.


We have audited the accompanying  consolidated balance sheets of Central Tractor
Farm & Country,  Inc. as of October 29,  1994,  October 28, 1995 and November 2,
1996,   and  the  related   consolidated   statements  of  income,   changes  in
stockholders'  equity,  and cash flows for the years then ended.  Our audit also
included the financial statement schedules listed in Item 14(a). These financial
statements and schedules are the responsibility of the Company's management. Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedules based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial position of Central Tractor
Farm & Country, Inc. at October 29, 1994, October 28, 1995 and November 2, 1996,
and the consolidated  results of its operations and its cash flows for the years
then ended, in conformity with generally accepted accounting  principles.  Also,
in our opinion,  the related financial statement  schedules,  when considered in
relation to the basic financial  statements taken as a whole,  present fairly in
all material respects the information set forth therein.

                                       /s/ Ernst & Young LLP

Des Moines, Iowa
December 6, 1996


                                       F-2

<PAGE>



<TABLE>
<CAPTION>
                                                CENTRAL TRACTOR FARM & COUNTRY, INC.

                                                     CONSOLIDATED BALANCE SHEETS

                                                           (In thousands)



                                                         October 29,        October 28,           November
                                                             1994               1995              2, 1996
                                                       ----------------   ----------------    ----------------
<S>                                                         <C>                 <C>                <C>  
Assets
Current assets:
   Cash and cash equivalents                                $   2,582            $  3,094          $   3,809
   Receivable from sale of common stock (Note 6)                6,703                  --                 --
   Trade receivables, less allowances of $168 in
     1994, $72 in 1995 and $50 in 1996                          1,469                 883                992
   Inventory                                                   75,044              93,874            107,203
   Deferred income taxes (Note 7)                                 172                  --                 --
   Other                                                        1,511               1,383              2,368
   Net assets of discontinued operations (Note 10)              8,113              13,520                 --
                                                            ---------           ---------          ---------
Total current assets                                           95,594             112,754            114,372

Property, improvements and equipment:
   Leasehold improvements                                       7,740               9,988             12,803
   Furniture and fixtures                                      14,614              18,253             23,766
   Capitalized property rights (Note 5)                         2,508               2,508              2,859
   Automobiles and trucks                                         499                 817              1,065
                                                            ---------           ---------          ---------
                                                               25,361              31,566             40,493

   Less allowances for depreciation and
     amortization                                              10,917              13,339             16,036
                                                            ---------           ---------          ---------
                                                               14,444              18,227             24,457

Goodwill, net of amortization of $3,490 in 1994,
   $4,014 in 1995 and $4,592 in 1996                           17,454              16,930             19,018
Other intangible assets, net of amortization of
   $2,406 in 1994, $2,527 in 1995 and $2,759 in
   1996                                                         1,630               1,406              1,016
Other assets                                                      775                 660                375
Noncurrent assets of discontinued operations                    9,519                  --                 --
                                                            ---------           ---------          ---------
Total assets                                                $ 139,416           $ 149,977          $ 159,238
                                                            =========           =========          =========
</TABLE>



                                    F-3

<PAGE>



<TABLE>
<CAPTION>
                                                CENTRAL TRACTOR FARM & COUNTRY, INC.

                                               CONSOLIDATED BALANCE SHEETS (continued)

                                                           (In thousands)


                                                         October 29,        October 28,           November
                                                             1994               1995              2, 1996
                                                     ------------------   ----------------    ----------------
<S>                                                         <C>                 <C>                <C>  
Liabilities and stockholders' equity
Current liabilities:
   Bank line of credit (Note 3)                             $     977           $   6,789          $   3,669
   Accounts payable                                            37,557              39,150             41,081
   Accrued payroll and bonuses                                  4,438               2,553              3,631
   Deferred income taxes (Note 7)                                  --                  --                913
   Accrued income taxes                                           140                 163                  4
   Other accrued expenses                                       1,482               1,506              1,101
   Current portion of long-term debt and capital
     lease obligations                                            558                  97                170
                                                            ---------           ---------          ---------
Total current liabilities                                      45,152              50,258             50,569

Long-term debt, less current portion
   (Notes 2 and 4)                                             16,017              16,000             16,000
Capital lease obligations, less current portion
   (Note 5)                                                       942                 862              1,341
Deferred income taxes (Note 7)                                  1,570               1,580              1,265
                                                            ---------           ---------          ---------
Total liabilities                                              63,681              68,700             69,175

   Stockholders' equity (Notes 3 and 6):
   Preferred stock, $.01 par value: authorized
   shares -5,000,000; none issued or
   outstanding                                                     --                  --                 --
   Common stock, $.01 par value: authorized
     shares - 45,000,000; issued and outstanding
     shares - 10,576,676 in 1994, 10,576,676 in
     1995 and 10,589,082 in 1996                                  106                 106                106
   Stock warrant outstanding                                      665                 665                665
   Additional paid-in capital                                  69,667              69,667             69,709
   Retained earnings                                            5,297              10,839             19,583
                                                            ---------           ---------          ---------
   Total stockholders' equity                                  75,735              81,277             90,063

   Commitments (Notes 5 and 8)                                     --                  --                 --
                                                            ---------           ---------          ---------
   Total liabilities and stockholders' equity               $ 139,416           $ 149,977          $ 159,238
                                                            =========           =========          =========
</TABLE>

                             See accompanying notes

                                       F-4


<PAGE>


<TABLE>
<CAPTION>
                                                CENTRAL TRACTOR FARM & COUNTRY, INC.

                                                  CONSOLIDATED STATEMENTS OF INCOME

                                                (In thousands, except per share data)

                                                                      Fiscal year ended
                                                     ---------------------------------------------------
                                                       October 29,       October 28,      November 2,
                                                           1994              1995             1996
                                                     ----------------  ---------------- ----------------

<S>                                                      <C>              <C>               <C>  
Net sales                                                $ 231,064        $ 251,703         $ 293,020
Cost of sales                                              161,523          177,340           207,228
                                                         ---------        ---------         ---------
Gross profit                                                69,541           74,363            85,792

Selling, general and administrative expenses,
     including amounts with related parties (Note 2)        54,548           58,294            68,197
Amortization of intangibles                                    841              862               938
                                                         ---------        ---------         ---------
Operating income                                            14,152           15,207            16,657

Interest expense, including amounts with related
     parties (Note 2)                                        4,774            1,302             1,663
                                                         ---------        ---------         ---------
Income from continuing operations before income
     taxes and extraordinary item                            9,378           13,905            14,994

Income taxes (Note 7)                                        4,197            5,720             6,250
                                                         ---------        ---------         ---------
Income from continuing operations before
     extraordinary item                                      5,181            8,185             8,744

Discontinued operations (Notes 7 and 10):
     Income (loss) from discontinued operations, net
         of income taxes (benefit) of $(340) in 1994
         and $474 in 1995                                     (745)             812                --
     Loss on sale of Herschel Corporation, net of
         $665 income tax benefit                                --           (3,455)               --
                                                         ---------        ---------          --------
Loss from discontinued operations                             (745)          (2,643)               --
                                                         ---------        ---------          --------
Income before extraordinary item                             4,436            5,542             8,744

Extraordinary loss on early extinguishment of debt,
     net of income tax benefit of $2,073 (Note 6)            3,110               --                --
                                                         ---------        ---------         ---------
Net income                                               $   1,326        $   5,542         $   8,744
                                                         =========        =========         =========

Per share (Note 1):
     Income from continuing operations before
         extraordinary item                                  $0.66            $0.74             $0.80
     Discontinued operations:
         Income (loss) from operations                       (0.10)            0.07                --
         Loss on sale                                           --            (0.31)               --
     Extraordinary loss                                      (0.40)              --                --
     Net income                                               0.17             0.50              0.80
Weighted average common and common equivalent
     shares outstanding (Note 1)                             7,791           11,019            10,986
</TABLE>

                              See accompanying notes.

                                        F-5

<PAGE>



<TABLE>
<CAPTION>
                                                CENTRAL TRACTOR FARM & COUNTRY, INC.

                                     CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                                                           (In thousands)

                                                Fiscal years ended October 29, 1994,
                                                October 28, 1995 and November 2, 1996




                                                                                      Note                                  
                                                             Stock    Additional   Receivable                   Total       
                                               Common       Warrant     Paid-In       from       Retained    Stockholders'  
                                                Stock     Outstanding   Capital    Stockholder   Earnings      Equity       
                                              ----------  ----------- -----------  -----------  -----------  -----------    
                                                                                                                            
<S>                                           <C>         <C>         <C>           <C>         <C>          <C>
Stockholders' equity at October 30, 1993      $    70     $    665    $  19,664     $    (83)   $  3,971     $  24,287
   Repurchase of common stock                      --           --          (70)          --          --           (70)
   Reduction in notes from stockholders            --           --           --           83          --            83
   Issuance of common stock in connection                                                                                   
     with the Company's initial public                                                                                      
     offering, net of offering expenses
     (Note 6)                                      36           --       50,073           --          --        50,109
Net income                                         --           --           --           --       1,326         1,326       
                                               ------      -------      -------      -------     -------       -------       
Stockholders' equity at October 29, 1994          106          665       69,667           --       5,297        75,735    
   Net income                                      --           --           --           --       5,542         5,542
                                               ------      -------      -------      -------     -------       -------       
Stockholders' equity at October 28, 1995          106          665       69,667           --      10,839        81,277    
   Exercise of common stock options                --           --           42           --          --            42
   Net income                                      --           --           --           --       8,744         8,744
                                               ------      -------      -------      -------     -------       -------       
Stockholders' equity at November 2, 1996       $  106      $   665      $69,709      $    --     $19,583       $90,063
                                               ======      =======      =======      =======     =======       =======
</TABLE>

                            See accompanying notes.
                                              
                                       F-6

<PAGE>



<TABLE>
<CAPTION>
                                                CENTRAL TRACTOR FARM & COUNTRY, INC.

                                                CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                           (In thousands)




                                                                   October 29,    October 28,     November 2,
                                                                     1994            1995            1996
                                                              ----------------  --------------- ---------------
<S>                                                               <C>             <C>              <C> 
Operating activities
Income from continuing operations before income taxes and
   extraordinary item                                             $   9,378       $  13,905        $ 14,994
Adjustments to reconcile pretax income from continuing
   operations to net cash provided by (used in) continuing
   operations:
   Depreciation and amortization of property, improvements
     and equipment                                                    2,206           2,523           3,056
   Amortization of intangibles and other deferred assets              1,180             862             998
   Loss on sale of assets                                               143              24              20
   Deferred interest                                                    109              --              --
   Changes in operating assets and liabilities:
     Trade receivables                                                 (362)            586              83
     Inventory                                                      (23,345)        (18,830)         (4,549)
     Other current assets                                              (330)            128            (972)
     Accounts payable                                                11,371           1,593          (3,806)
     Accrued expenses                                                   269          (1,861)            445
                                                                  ---------       ---------        --------
                                                                        619          (1,070)         10,269

Income (loss) from discontinued operations before income
   taxes                                                             (1,085)          1,286              --

Adjustments to reconcile pretax income(loss) from
   discontinued operations to net cash provided by
   discontinued operations:
   Depreciation and amortization of property, improvements
     and equipment                                                      559             559              --
   Amortization of intangibles                                          561             561              --
   Deferred interest                                                    336              --              --
   Changes in operating assets and liabilities                       (1,321)           (651)         13,520
                                                                  ---------       ---------        --------
                                                                       (950)          1,755          13,520

Extraordinary loss on early extinguishment of debt before
   income taxes                                                      (5,183)             --              --
Income taxes paid, net                                               (1,815)         (5,324)         (5,675)
                                                                  ---------       ---------        --------
Net cash provided by (used in) operating activities                  (7,329)         (4,639)         18,114
</TABLE>




                                    F-7

<PAGE>



<TABLE>
<CAPTION>
                                                CENTRAL TRACTOR FARM & COUNTRY, INC.

                                          CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

                                                           (In thousands)




                                                                   October 29,    October 28,     November 2,
                                                                     1994            1995            1996
                                                              ----------------  --------------- ---------------
<S>                                                               <C>             <C>              <C> 
Investing activities
Purchases of property, improvements and equipment                 $  (5,207)      $  (6,339)       $   (8,789)
Acquisition of certain net assets of Big Bear (Note 11)                  --              --            (5,650)
Other                                                                   (54)            (74)              255
Discontinued operations                                                (255)           (400)               --
                                                                  ---------       ---------          --------
Net cash used in investing activities                                (5,516)         (6,813)          (14,184)

Financing activities
Repurchase of common stock                                              (70)             --                --
Proceeds from sale of assets                                             --               7                --
Borrowings under line of credit                                      39,025          67,020            86,782
Repayments on line of credit                                        (38,048)        (61,208)          (89,902)
Payments on long-term debt                                          (37,757)           (372)              (17)
Payments on capitalized lease obligations                              (244)           (186)             (120)
Proceeds from issuance of common stock                               43,406           6,703                42
                                                                  ---------        --------         ---------
Net cash provided by (used in) financing activities                   6,312          11,964            (3,215)
                                                                  ---------       ---------          --------
Net increase (decrease) in cash and cash equivalents                 (6,533)            512               715

Cash and cash equivalents at beginning of period                      9,115           2,582             3,094
                                                                  ---------       ---------          --------
Cash and cash equivalents at end of period                        $   2,582       $   3,094          $  3,809
                                                                  =========       =========          ========

   Supplemental disclosures of cash flow information
Cash paid during the period for interest                          $   7,925       $   1,491          $  1,991

Supplemental schedule of noncash investing and financing
   activities
Receivable from sale of common stock                                  6,703              --                --
</TABLE>


                           See accompanying notes.

                                     F-8

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                  For the fiscal years ended October 29, 1994,
                      October 28, 1995 and November 2, 1996




1.  Summary of Accounting Policies and Other Matters

Business and Principles of Consolidation

Central  Tractor  Farm & Country,  Inc.  and  subsidiaries  (the  Company) is an
agricultural  specialty  retailer which operates retail stores primarily located
in  the  Midwest  and  Northeastern   United  States.  The  Company  also  sells
merchandise on a wholesale basis under various distributor agreements throughout
the  United  States.  With  the sale of the net  operating  assets  of  Herschel
Corporation,  a wholly-owned  subsidiary of the Company,  continuing  operations
constitute one business segment for financial reporting purposes.

The Company  operates on a 52-53 week fiscal year ending on the Saturday nearest
to October 31.

All  significant  intercompany   transactions  have  been  eliminated  from  the
consolidated financial statements.

Cash and Cash Equivalents

For purposes of the statements of cash flows,  the Company  considers all highly
liquid  investments with a maturity of three months or less when purchased to be
cash equivalents.  Investments,  including repurchase  agreements and commercial
paper, are carried at cost, which approximates market.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial  statements and accompanying notes.
Actual results could differ from those estimates.

Trade Receivables

Most of the  Company's  retail  sales  are  cash or  credit  card  sales,  while
wholesale  sales are  generally on account.  Concentrations  of credit risk with
respect to trade  receivables  are limited due to the number of customers of the
Company and their geographic dispersion.  The allowance for doubtful accounts is
based on a current  analysis of receivable  delinquencies  and  historical  loss
experience.

Inventory

Inventory  is  recorded  at  cost,  including  warehousing  and  freight  costs,
determined principally by the last-in,  first-out (LIFO) method, which is not in
excess of market. The Company reviews its inventory for slow-moving, obsolete or
otherwise  unsalable items on a regular basis throughout the year,  including at
the time of  physical  inventory  counts.  Provision  is made for any  estimated
losses to be  incurred  with  respect  to  slow-moving,  obsolete  or  otherwise
unsalable  inventory as such inventory is identified.  Inventories  valued using
the LIFO method were  approximately  $3,926,000,  $4,851,000  and  $5,081,000 at
October 29, 1994, October 28, 1995 and November 2, 1996, respectively, less than
the amounts of such inventories valued at current cost.

                                      F-9

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


1.  Summary of Accounting Policies and Other Matters (continued)

Property, Improvements and Equipment

Property,  improvements  and equipment are carried at cost less  allowances  for
depreciation and amortization. Depreciation and amortization expense is computed
primarily on a basis of the straight-line method over the estimated useful lives
of the assets as follows:

<TABLE>
<S>                                                                            <C>     
   Leasehold improvements (not in excess of underlying lease terms)            5 to 20 years
   Furniture and fixtures                                                      5 to 15 years
   Automobiles and trucks                                                      3 to 10 years
</TABLE>


Certain long-term lease  transactions have been accounted for as capital leases.
The property  rights recorded under direct  financing  leases are amortized on a
straight-line  basis over the lesser of the useful life or the respective  terms
of the leases.

Goodwill and Other Intangible Assets

Goodwill is being amortized utilizing the straight-line  method principally over
periods  of 40 years.  Other  intangible  assets  are being  amortized  over the
periods of expected  benefit,  ranging from 5 to 24 years. The carrying value of
goodwill and other intangibles is reviewed  continually to determine whether any
impairment has occurred. This review takes into consideration the recoverability
of the unamortized amounts based on the estimated undiscounted cash flows of the
related business lines.

Deferred Income Taxes

The Company uses the liability method of accounting for income taxes. Under this
method,  deferred income tax assets and liabilities are determined  based on the
difference  between  financial  reporting  and  income  tax bases of assets  and
liabilities  using the enacted marginal tax rates.  Deferred income tax expenses
or credits  are based on the  changes in the asset or  liability  from period to
period.

Fair Value of Financial Instruments

The following methods and assumptions were used by the Company in estimating its
fair value of financial instruments:

     Cash equivalents,  short-term investments, accounts receivable and payable,
     and  bank  line of  credit:  Carrying  amounts  reported  in the  Company's
     consolidated balance sheets based on historical cost approximate  estimated
     fair value for these instruments, due to their short-term nature.

     The  fair  value  of  the  convertible   long-term  debt  is  estimated  to
     approximate  its carrying value as of November 2, 1996 and was based on the
     estimated market price for this security as of that date.

Returns and Warranties

Costs  relating to  merchandise  returns from sales at retail stores and through
distributors are not significant and are accounted for as they occur.

                                      F-10

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


1.  Summary of Accounting Policies and Other Matters (continued)

Catalogs, Sale Flyers and Advertising Costs

The direct cost of printing and mailing the Company's  annual mail order catalog
is deferred and amortized  against mail order revenues over the year the catalog
is in use. The direct cost of printing and distributing  sale flyers is deferred
and  amortized  over the life of the flyer which is generally two weeks or less.
Other advertising costs are expensed as incurred.  Unamortized  amounts relating
to the costs of the annual  catalog and periodic  sale flyers is  immaterial  at
each  fiscal  year-end.  Advertising  expenses  were  approximately  $6,184,000,
$7,228,000 and $8,841,000 for fiscal 1994, 1995 and 1996, respectively.

Store Pre-Opening Costs

Direct costs,  which consist  principally  of rent,  employee  compensation  and
travel costs for  merchandise  set-up and  supplies,  incurred in setting up new
stores for opening are deferred and amortized over the first twenty-six weeks of
store  operations.  The amount of unamortized store pre-opening costs at October
29, 1994, October 28, 1995 and November 2, 1996, amounted to $502,000,  $431,000
and $1,123,000, respectively.

Earnings Per Share

Per share  earnings is based on the weighted  average number of shares of common
stock and common stock  equivalents  outstanding  and assuming all stock options
issued prior to the Company's initial public offering and the stock warrant were
outstanding at the beginning of each  respective  year.  The dilutive  effect of
outstanding  stock options and the stock warrant were determined  based upon the
Treasury  Stock  Method.   Fully  diluted   earnings  per  share  did  not  vary
significantly from earnings per share as presented.

Emerging Accounting Issues

The Company is not aware of any accounting  standards which have been issued and
which will  require  the Company to change its  current  accounting  policies or
adopt new  policies,  the effect of which  would be  material  to the  Company's
financial statements.


2.  Transactions with Related Parties

Certain  investment funds  (collectively  referred to as "BCC Funds") managed by
Butler  Capital  Corporation  ("BCC") own a majority of the  outstanding  common
stock of the  Company.  The BCC Funds  held the senior  and  subordinated  notes
extinguished  in October 1994, and currently hold the outstanding 7% convertible
notes (see Note 4).  Interest  paid on such notes in fiscal 1994,  1995 and 1996
was approximately $6,960,000, $883,000 and $1,425,000, respectively.

A company affiliated with the BCC Funds was paid a management and consulting fee
of approximately $238,000 in fiscal 1994.

The Company purchases inventory from two suppliers who are controlled by the BCC
Funds.  Purchases  from these  suppliers  aggregated  approximately  $3,882,000,
$6,254,000 and $6,228,000 for fiscal years 1994, 1995 and 1996, respectively.


                                      F-11

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


3.  Line of Credit

On January 28, 1994, the Company entered into a line of credit  agreement with a
commercial  bank through  February 1, 1998.  At November 2, 1996,  borrowings of
$3,669,000  and  letters  of  credit  totaling  approximately   $1,515,000  were
outstanding against the line of credit.  Available  borrowings under the line of
credit are $25,000,000  each year from November 1 through May 31 and $12,000,000
from June 1 through October 31. Interest on the  outstanding  borrowing  varies,
but is  primarily  payable  monthly at an annual rate equal to the bank's  prime
rate.  The interest  rate on October 29, 1994,  October 28, 1995 and November 2,
1996 was 8.25%,  8.75%,  and 8.25%,  respectively.  In addition,  the Company is
required to pay commitment  fees ranging from 0.375% down to 0.125% on the total
credit line, less outstanding borrowing. During the period from April 15 through
December 31 in each year, the Company must have  borrowing less than  $5,000,000
outstanding  under this line of credit for a consecutive  period of 45 days. The
line of credit contains,  among other provisions,  requirements that the Company
maintain a minimum  current  ratio,  leverage  ratio and fixed  charge  coverage
ratio. At November 2, 1996, substantially all retained earnings were restricted.

4.  Long-Term Debt

Long-term debt consisted of the following:

                              October 29,        October 28,        November 2,
                                  1994              1995               1996
                             ---------------   ---------------    --------------

   7% convertible notes      $  16,000,000     $   16,000,000     $  16,000,000
   Other                           388,989             17,044                --
                             -------------      -------------     -------------
                                16,388,989         16,017,044        16,000,000
   Less current portion            371,944             17,044                --
                             -------------      -------------     -------------
                             $  16,017,045      $  16,000,000     $  16,000,000
                                         5                  0                 0
                             =============      =============     =============

Interest on the convertible notes is payable quarterly at 7.0% per annum and the
entire  principal  amount is due October 31, 2002. The note may be prepaid after
October 14, 1999, at a premium of 2.0%,  which declines by 1.0% annually on each
October 14 thereafter.  The holders of the convertible  notes have the right, at
any time prior to the close of  business  on October  31,  2002,  to convert the
principal  amounts into shares of common stock at a conversion  price of $19.375
per  share.  The  conversion  price  of the  convertible  notes  is  subject  to
adjustment in certain  events,  including a common stock split,  the issuance of
securities  convertible or exchangeable  into common stock at less than the then
fair market value of the common  stock and certain  mergers,  consolidations  or
sales of stock. The convertible  notes are subordinated to the principal amounts
outstanding pursuant to the line of credit (see Note 3).

As of November 2, 1996,  there are no  maturities  of long-term  debt during the
next five fiscal years.



                                      F-12

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


5.  Lease Obligations

The Company has entered into certain  long-term lease  agreements for the use of
warehouses, certain retail store facilities and computer equipment. These leases
have been  accounted  for as  purchases  of property  rights and  designated  as
capitalized leases.

Amortization expense relating to such property rights recorded under capitalized
leases was  $213,000,  $130,000 and  $125,000  for fiscal  1994,  1995 and 1996,
respectively.  The net book value of  property  rights  recorded  under  capital
leases was $829,000, $699,000 and $926,000 at October 29, 1994, October 28, 1995
and November 2, 1996, respectively.

As of November 2, 1996, the debt associated with the capitalized property rights
is represented by the present value of the minimum lease payments as follows:

   Fiscal year ended in:
     1997                                                   $    347,108
     1998                                                        324,648
     1999                                                        292,968
     2000                                                        292,968
     2001                                                        292,968
     After 2001                                                  735,000
                                                            ------------
   Total minimum lease payments                                2,285,660
   Less amount representing interest                             774,663
                                                            ------------
   Present value of minimum lease payments                     1,510,997
   Less current installments                                     170,072
                                                            ------------
                                                            $  1,340,925
                                                            ============

The Company also has entered into certain noncancelable operating leases for the
use of real estate,  automobiles  and trucks,  and office  equipment.  Aggregate
rental  expense  for  operating  leases  for  fiscal  1994,  1995  and  1996 was
approximately $6,724,000, $7,833,000 and $9,294,000, respectively.

The following is a summary of minimum rental commitments as of November 2, 1996,
for operating leases:

<TABLE>
<CAPTION>
                                                Automobile        Office
     Fiscal Year-End          Real Estate       and Trucks      Equipment         Total
-------------------------    -------------    --------------- --------------   -----------
<S>      <C>                  <C>                 <C>           <C>           <C>         
         1997                 $  9,479,335        $ 12,293      $   52,328    $  9,543,956
         1998                    8,320,110           8,195          52,328       8,380,633
         1999                    6,822,291              --          46,280       6,868,571
         2000                    5,288,555              --          16,544       5,305,099
         2001                    2,927,707              --           1,972       2,929,679
         After 2001              6,315,729              --              --       6,315,729
                             -------------       ---------      ----------   -------------
                              $ 39,153,727        $ 20,488      $  169,452    $ 39,343,667
                             =============       =========      ==========   =============
</TABLE>



                                      F-13

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


6.  Capital Stock and Stock Options

Capital Stock

During  October 1994, the Company  completed an initial public  offering for the
sale of 3,565,000 shares of its common stock. The net proceeds from the offering
were used to prepay both  principal and  prepayment  premium on the  outstanding
Senior Notes and a portion of the  outstanding  Subordinated  Notes.  Prepayment
premiums on the early extinguishment of these notes resulted in an extraordinary
loss of $3,110,000,  net of income tax benefit. The remaining Subordinated Notes
in the amount of $16,000,000 were exchanged for notes which are convertible into
the Company's common stock. At October 29, 1994,  $6,703,000 of the net proceeds
representing  the  Underwriter's  exercise  of their  over-allotment  option was
receivable. This amount was received on November 2, 1994.

The Board of  Directors is  authorized  to issue up to an aggregate of 5,000,000
shares of  preferred  stock,  $0.01 par value per share,  in one or more series,
each series to have voting  preferences  or other  rights as  determined  by the
Board of Directors.

Under  the  Company's  stockholders'  agreement,  common  stock  acquired  by  a
management  stockholder  is  subject  to  certain  restrictions  on the  sale or
transfer of such shares.

Stock Options

The Company has stock option  arrangements with various officers,  directors and
other  members of management  which it accounts for under the  provisions of APB
Opinion No. 25 and related interpretations.  The option prices approximated fair
market value at the date of grant.  The options  generally  vest over periods of
three to seven years and must be exercised no later than ten years from the date
of grant.  With respect to options for 150,200 shares,  their vesting period may
be accelerated  based upon the attainment of specified  Company operating goals.
Shares of common stock  issuable  upon  exercise of stock options are subject to
restrictions on transfer.

A  summary  of common  stock  option  activity  through  November  2, 1996 is as
follows:

<TABLE>
<CAPTION>
                                                              Fiscal Year
                                             --------------------------------------------
                                                1994            1995               1996
                                             ---------        ---------          --------

<S>                                          <C>               <C>               <C>    
   Outstanding at beginning of year           468,923           637,774           623,960
   Options granted                            323,464            66,800            81,900
   Options exercised                               --                --           (12,406)
   Options canceled                          (154,613)          (80,614)          (30,771)
                                             --------          --------          --------
   Outstanding at end of year                 637,774           623,960           662,683
                                             ========          ========          ========

   Range of option prices per share:
     Outstanding                             $3.08-$15.50      $ 3.08-$15.50     $ 3.08-$15.50
     Granted during year                     $3.41-$15.50      $11.50-$15.50     $11.38-$14.50
</TABLE>




                                      F-14

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


6.  Capital Stock and Stock Options (continued)

At November 2, 1996, options for 295,973 shares were exercisable.  The remaining
options  become  exercisable  in fiscal years as follows:  1997 - 90,802 shares;
1998 - 30,916 shares; 1999 - 25,409 shares; 2000 - 14,000 shares; 2001 - 156,583
shares; 2002 - 49,000 shares.

As of November 2, 1996, the Company has reserved  914,025 shares of common stock
for issuance under stock option arrangements  described above. In addition,  the
Company has reserved 230,523 shares of common stock for issuance under the stock
warrant.

Compensation expense charged to operating income relating to stock option grants
amounts to $111,000  for fiscal  1994,  $1,000 for fiscal 1995 and $0 for fiscal
1996.


7.  Income Taxes

Deferred  income  taxes  reflect  the net tax  effect of  temporary  differences
between the amount of assets and  liabilities for financial  reporting  purposes
and the amounts  used for income tax  purposes.  Significant  components  of the
Company's deferred tax liabilities and assets are as follows:

<TABLE>
<CAPTION>
                                                                      Fiscal Year Ended
                                                     --------------------------------------------------
                                                            October 29,  October 28,      November 2,
                                                            1994            1995             1996
                                                     ----------------- ---------------  ---------------
<S>                                                    <C>              <C>             <C>
   Deferred tax liabilities:
     Differences in depreciation on property,
       improvements and equipment                      $ 1,789,000      $ 1,890,000     $ 1,766,000
     LIFO and uniform capitalization differences on
       inventories                                         787,000        1,391,000       1,160,000
     Prepaid advertising                                   211,000          174,000         244,000
     Deferred leasing costs                                185,000           82,000              --
     Store pre-opening costs                               208,000          172,000         449,000
     Other                                                  10,000           10,000           9,000
                                                       -----------     ------------     -----------
   Total deferred tax liabilities                        3,190,000        3,719,000       3,628,000
                                                       -----------     ------------     -----------
</TABLE>



                                      F-15

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


7.  Income Taxes (continued)

<TABLE>
<CAPTION>
                                                                        Fiscal Year Ended
                                                     -------------------------------------------------------
                                                          October 29,      October 28,         November 2,
                                                          1994                1995                1996
                                                     ---------------     ---------------     ---------------
<S>                                                    <C>                <C>                 <C>
   Deferred tax assets:
     Loss on sale of discontinued operations:
       Ordinary loss                                   $        --        $    665,000        $         --
       Capital loss carryforward                                --             755,000             755,000
     Allowance for doubtful accounts                       101,000              45,000              20,000
     Compensation and employee benefit accruals            174,000             148,000              58,000
     Operating leases                                      330,000             261,000             273,000
     Accrued profit sharing contributions                  323,000             321,000             356,000
     Stock warrant                                         279,000             266,000             266,000
     Accrued store closing costs                           168,000              86,000              32,000
     Capitalized property rights and lease
       obligations treated as operating leases for
       income tax purposes                                 126,000              97,000             234,000
     Other                                                 291,000             250,000             211,000
                                                      ------------        ------------        ------------
                                                         1,792,000           2,894,000           2,205,000

     Less valuation allowance for capital loss
       carryforward                                             --            (755,000)           (755,000)
                                                      ------------        ------------        ------------
   Total deferred tax assets                             1,792,000           2,139,000           1,450,000
                                                      ------------        ------------        ------------
   Net deferred tax liabilities                       $  1,398,000        $  1,580,000        $  2,178,000
                                                      ============        ============        ============

<CAPTION>
The capital loss  carryforward  relating to the sale of Herschel  will expire in
the year 2001.

Components of income tax expense (benefit) are as follows:

                                                                       Fiscal Year Ended
                                                    --------------------------------------------------------
                                                      October 29,          October 28,         November 2,
                                                          1994                1995                1996
                                                    ----------------     ---------------     ---------------
<S>                                                     <C>                  <C>                 <C>
   Continuing operations:
     Current:
       Federal                                          $  3,121,000         $ 3,768,000         $ 3,951,000
       State                                                 709,000           1,152,000           1,199,000
                                                        ------------         -----------         -----------
                                                           3,830,000           4,920,000           5,150,000
     Deferred                                                367,000             800,000           1,100,000
                                                        ------------         -----------         -----------
                                                           4,197,000           5,720,000           6,250,000

   Discontinued operations:
     Current                                                (302,000)            427,000             367,000
     Deferred                                                (38,000)           (618,000)           (367,000)
                                                        ------------         -----------         -----------
                                                            (340,000)           (191,000)                 --
                                                        ------------         -----------         -----------
   Extraordinary loss - currently deductible              (2,073,000)                 --                  --
                                                        ------------         -----------         -----------
   Total                                                $  1,784,000         $ 5,529,000         $ 6,250,000
                                                        ============         ===========         ===========
</TABLE>


                                      F-16

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


7.  Income Taxes (continued)

Total reported  income tax expense differs from the tax that would have resulted
by applying the  statutory  expected  federal  income tax rate to income  before
taxes. The reasons for these differences are as follows:

<TABLE>
<CAPTION>
                                                                    Fiscal Year Ended
                                                    -------------------------------------------------
                                                     October 29,     October 28,    November 2,
                                                        1994            1995            1996
                                                   ---------------  -------------  --------------

<S>                                                    <C>            <C>            <C>
   Income tax at federal statutory rate                $  1,057,000   $  3,764,000   $  5,098,000
   Increases in taxes resulting from:
     State income taxes, net of federal income
       tax effect                                           403,000        897,000        833,000
     Goodwill amortization                                  215,000        215,000        178,000
     Capital loss carryforward                               --            755,000             --
     Other, net                                             109,000        102,000        141,000
     Reduction of prior year overaccruals                    --           (204,000)            --
                                                       ------------   ------------   ------------
                                                       $  1,784,000   $  5,529,000   $  6,250,000
                                                       ============   ============   ============
</TABLE>


8.  Employment Commitments

The Company has employment  agreements  with three officers of the Company which
provide  for  annual  salaries   amounting  to  approximately   $775,000.   Upon
termination of employment for death,  disability or without cause,  compensation
may be continued for a period not to exceed two years.


9.  Profit Sharing Plan

The Company has a profit  sharing plan  covering all  employees who meet certain
eligibility   requirements.   The  plan  provides  for  discretionary   employer
contributions   and  allows   voluntary   participant   contributions.   Company
contributions  are  determined by its Board of Directors.  The Company  incurred
expense in  connection  with the profit  sharing plan of $770,000,  $804,000 and
$881,000 for fiscal 1994, 1995 and 1996, respectively.


                                      F-17

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


10.  Discontinued Operations

During  fiscal  1996,  the  Company  completed  the  sale  of its  wholly  owned
subsidiary,  Herschel  Corporation  ("Herschel"),  a manufacturer  and wholesale
distributor  of equipment  parts for use in the farming  industry.  Herschel has
been reported as a discontinued  segment of the business;  accordingly,  its net
assets and operating results have been segregated in the consolidated  financial
statements.  The net assets of  Herschel  Corporation  have been  classified  as
current at October  28, 1995 as the  carrying  amount  approximates  the selling
price, plus advances to be repaid, less expenses of sale, and were realized upon
closing in December 1995.

Summarized   financial   information   of  the  Company's   income  (loss)  from
discontinued operations follow:

                                                        Fiscal Year Ended
                                                 -------------------------------
                                                  October 29,        October 28,
                                                     1994               1995
                                                 -------------     -------------

   Net sales                                      $ 23,312,046      $ 22,969,504

   Income (loss) before income taxes                (1,085,217)        1,286,242

   Income taxes (credit)                              (340,000)          474,127

   Income (loss) from discontinued operations         (745,217)          812,115



11.  Acquisition

On May 31, 1996, the Company acquired 31 retail stores and related net operating
assets from Big Bear Farm Stores,  Inc. ("Big Bear"), an agricultural  specialty
retailer, for approximately  $5,650,000.  The transaction was accounted for as a
purchase. The purchase price was allocated based on fair value as follows:

   Inventories                                                     $  8,780,000
   Accounts receivable and other assets                                 206,000
   Leaseholds and equipment                                             517,000
   Deferred income taxes                                                135,000
   Goodwill                                                           2,666,000
   Accounts payable and accrued expenses                             (6,654,000)
                                                                   ------------
                                                                   $  5,650,000
                                                                   ============

The  results of  operations  of Big Bear from the date of purchase to the end of
fiscal year 1996 are  included in the  accompanying  consolidated  statement  of
income.


                                      F-18

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


11.  Acquisition (continued)

Pro forma  amounts,  based on the assumption  that the purchase  occurred at the
beginning of fiscal 1995, are as follows (in thousands, except per share data):

                                                  Fiscal Year Ended
                                    --------------------------------------------
                                           October 28,           November 2,
                                            1995                    1996
                                    --------------------    --------------------

   Net sales                                  $275,685                 $307,847
   Net income                                    6,018                    9,104
   Net income per share                            .55                      .83



12.  Quarterly Results of Operations (Unaudited)

The following is a tabulation of the unaudited  quarterly  results of operations
for the years ended October 28, 1995 and November 2, 1996 (in thousands,  except
per share data):

<TABLE>
<CAPTION>
                                                           First         Second          Third         Fourth
                                                          Quarter        Quarter        Quarter       Quarter
                                                         -----------   -------------   ------------   ----------
<S>                                                        <C>           <C>            <C>             <C> 
   Fiscal year ended October 28, 1995:
     Net sales                                             $61,836       $59,347         $74,362        $56,158
     Gross profit                                           17,362        18,214          22,557         16,230
     Income from continuing operations                       1,473         2,121           4,249            342
     Income (loss) from discontinued operations                 (1)          467             187         (3,296)
     Net income (loss)                                       1,472         2,588           4,436         (2,954)
     Per share:
       Income from continuing operations                      0.13          0.19            0.39           0.03
       Income (loss) from discontinued                          --          0.04            0.02          (0.30)
         operations
       Net income (loss)                                      0.13          0.23            0.40          (0.27)

   Fiscal year ended November 2, 1996:
     Net sales                                              69,967        62,989          86,169         73,895
     Gross profit                                           18,862        19,245          25,417         22,268
     Net income                                              1,280         1,684           3,937          1,843
     Net income per share                                     0.12          0.15            0.36           0.17
</TABLE>


The sum of  quarterly  per share  amounts  do not  necessarily  equal the annual
amount reported,  as per share amounts are computed  separately for each quarter
and the full year  based on  respective  weighted  average  of common and common
equivalent shares outstanding.


                                      F-19

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)


13.  Subsequent Event

On November 27, 1996,  the Board of Directors of the Company  approved,  and the
Company  entered into, a merger  agreement  (the "Merger  Agreement")  with J.W.
Childs Equity Partners, L.P. and two of its affiliates (collectively,  "Childs")
that  provides  for the  acquisition  of the  Company  by Childs in a  two-stage
transaction.  The Merger  Agreement  provides that following the  acquisition by
Childs  of all of the  Company  shares  held by  affiliates  of  Butler  Capital
Corporation  (collectively,  "BCC"),  an affiliate of Childs will merge with and
into the Company,  and Childs will acquire the  remaining  shares of the Company
held by public  stockholders  for $14.25 per share in cash. The  consummation of
the merger is subject to the satisfaction of certain conditions including, among
other things,  (i) the acquisition by Childs of all of the Company's shares held
by affiliates of BCC and (ii) the availability of sufficient funds to consummate
the merger  pursuant to  commitments  obtained  by Childs  from its  prospective
lenders.

Pursuant to an agreement  executed  contemporaneously  with the Merger Agreement
between  Childs  and  affiliates  of  BCC  which  own  64.5%  of  the  Company's
outstanding  common stock,  BCC's  affiliates have sold 1,048,214  shares of the
Company's common stock  (representing 9.9% of the outstanding  shares) to Childs
for a cash  consideration  of $14.00  per share,  and have  agreed to sell their
remaining  shares to Childs  for $14.00 per share in cash.  The  agreement  also
provides  that  such  BCC  affiliates  will  agree,  immediately  following  the
conclusion of the stock sale, to the prepayment by the Company  (without payment
of any prepayment premium) of all the Company's 7% convertible notes with a face
amount of $16,000,000.  In connection with the second purchase,  certain members
of management  agreed to sell 146,299 shares to Childs for a cash  consideration
of $14.00 per share.

While the Merger  Agreement is subject to stockholder  approval,  it is expected
that Childs will own a  sufficient  number of shares of Company  common stock to
adopt and approve the merger.

                                      F-20

<PAGE>



                      CENTRAL TRACTOR FARM & COUNTRY, INC.

                        Valuation and Qualifying Accounts

                                   Schedule II


                                               Allowance for
                                             Trade Receivables
                                             ----------------
Balance at October 30, 1993                      $(157,000)
  Charged to expense                               (18,000)
  Write-off of uncollectible accounts                7,000
                                              ------------
Balance at October 29, 1994                       (168,000)
  Credited to expense                               30,500
  Write-off of uncollectible accounts               65,500
                                              ------------
Balance at October 28, 1995                        (72,000)
  Credited to expense                               20,500
  Write-off of uncollectible accounts                1,500
                                              ------------
Balance at November 2, 1996                      $ (50,000)
                                              =============



                                      F-21

<PAGE>


                                    SIGNATURE

         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.

                                            CENTRAL TRACTOR FARM & COUNTRY,
                                                     INC.



DATED:  January 31, 1997            By: /s/ James T. McKitrick
                                         James T. McKitrick, President
                                         and Chief Executive Officer

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

DATED:  January 31, 1997


/s/ James T. McKitrick           President and Chief Executive Officer, Director
James T. McKitrick               Principal Executive Officer)


/s/ Dean Longnecker              Executive Vice President of Finance, Director
Dean Longnecker                  (Principal Financial and Accounting Officer)


/s/ Francis J. Palamara          Director
Francis J. Palamara


/s/ Daryl Lansdale               Director
Daryl Lansdale


/s/ Glenn Kraiss                 Director
Glenn Kraiss