True Value Co · 10-K405 · For 12/28/96 · EX-99.C

Filed On 3/27/97   ·   SEC File 2-20910   ·   Accession Number 950137-97-1176

Annual Report -- [X] Reg. S-K Item 405   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Annual Report                                         38    145K 
 2: EX-21       Subsidiaries of Registrant                             1      5K 
 3: EX-27       Financial Data Schedule                                1      5K 
 4: EX-99.A     Notice of Annual Meeting & Proxy                       2     10K 
 5: EX-99.C     Cotter & Co. 1996 Annual Report                       38±   134K 

EX-99.C   ·   Cotter & Co. 1996 Annual Report

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                                                      EXHIBIT-99.C

COVER:                                                                          
Cotter & Company 1996 Annual Report                                             

INSIDE FRONT COVER: DENISE L GIBBONS  DENNIS J VAN FLEET  JOSEPH D CLARK  JOHN T
ROGERS  KARA L MACKIE  MICHAEL J SOCHA  SAMUEL A CONRY  DONALD F RILEY          
KATHERINE L VERMETT JOSEPH P JUSTEN  CHERYL DREDSKE  GUY E HUDSON  LLOYD A SMITH
LARRY R KORTTE KURT A WILKENING  CERES C MORGAN  JACK E HORGAN  DEANNA L        
THOMPSON  RICHARD L GATREL  MARY C MILLER  MICHAEL W MARKO  DARCY A BUSH  RUSTY 
L MARTIN  ROSEMARIE A CARLSON  KATHRYN L JOHNSON  RANDY A HORTER  CORINNE K ORR 
TERRY F CREMEENS WILLIAM E MELTON  THOMAS J WHITE  BARBARA K CAMREN  DONALD K   
WILSON  SANDRA L DUNHAM  SCOTT R SHANHOLTZER  DEBRA K CALDWELL  JANICE A SCHMIDT
KENNETH G MOLLER  BARBARA SOUCIE  KEVIN L SOVA  JAMES G MOORE  SCOTT L HERMANN  
JEAN A BOVIALL  ALEJANDRO ZAMORA  HERMAN F EICHHOLZ  BECKYJ THOMAS  RICHARD W   
PIERCE RAY B SMITH  DAVID A KAMHOLTZ  THERESAM KRUEGER  DONALD A BUSCH  DALE A  
MEYER STEVEN J SORENSEN  LONNIE W RETHERFORD  DEBORAA HOPPE  LINDA M WEBB       
KENNETH W REYNOLDS  CHRIS SHIPPEE  DAPHNEJ KELLETT  ROBINM BISLEW  WALTERE      
TAYLOR  BRENDA L RAGLIN  JULIE M KORTTE  GEORGE C KORTTE JR  KATHRYN M JONES    
DAVIDM GARCIA REBECCA L WADE  KIMBERLY S HERNES  MICHAEL V SMITH  SUSANE FIEPKE 
PATRICIA M EICHHOLZ  JOHN M PETERSON JR  EVA BOYKIN  SHELLEY M BOUNDS  RUTHANN M
VEST MARSHA H KING  JULIANN M WOOD  BOBBI-JO ENGELKE  MICHAEL D GREENLEE  JANE L
GALLAGLY  KATHRYN JOHANSEN  EDITH L ABARCA  DENNIS W MORGAN  RONALD D RYMAN JOE 
NINO JR  WANDA K GREENLEE  DARHL D THOMAS JR  PAULINE S DALEY  MELISSA A ABARCA 
MICHAEL E ROUSH  TIM J ELLER  DOUGLAS C NOBLE  JEFFERY S KLEIN  JANETTE L HASS  
RAYMUND G DURICIC  WILLIAM L MORELLI JR  BARBARA J HALLMAN  DENNIS E FORSYTHE   
JOHN D SMITH  MICHELLE M ROSE  THOMAS D BLOOMGREN  ROBIN G ENGELKE PAUL R WHITE 
JAMES W HUTCHINSON  SANDRA A BURTMAN  CHRISTOPHER E JONES  THOMAS C DAVIE  GARY 
D HAMMOND  SHEILA A RAAB  MARIE P ANDERSON  KATHLEEN CLARK BIBIANNE J VERBA     
SAMANTHA L JOHNSON  KATHRYN WALSTRA  CHRISTOPHER M RUHFF JOANN TIMM  MYRNA L    
BARBER  SHARON S BORTH  MARY L DAVIS  JANET JUNGBLUT BARBARA J CRADIC  SHERRIL A
NAY  JOAN A SCHMID  MARGARET F JACOBSON  TAMMY M EDMONDS  CAROLE S MOORE  JULIE 
ZELL  MARY K LEONARD  NATHAN A BRUGGER  JACKI R WENZEL  MARGRET M KAZORT        
KRISTINA P DAVIS  DALE K ALTEN  DARCY L BUCHANAN KATHERINE FERGER  GLENN D      
KENDALL  PAMALA S SIMONSON  WILLIAM D JONES  MICHELE R PETTY  JAMIE A SCHROETER 
ANTHONY C URBAS  BRENDAR GORTER  JACKIE L AUSTIN JENNIFER L KOHLIN  SANDRA L    
LANE  MICHELE L MORRIS  JOSEPH W MORGAN  JAMES E MASON  ROXANNE G MIDDLETON     
JOYCE L BURD  DONALD H JONES  MIKE S REYNOLDS GERALD A KAMLAGER  MICHAEL J      
KAZORT  KEVIN L MASON  SHELLEY M GATREL  KATHRYN J EMMER  PATSY S MULLIN        
MICHAEL G WESSELS  CHARLES W DUKEY  DEBRA K WHITE MICHAEL A HURRLE  LISA R      
MELSON  LLOYD SMITH  DAWN E MORRIS  LINDA J RETHERFORD JEFF SMITH  TIMOTHY G    
KILPS  STEPHEN M HAVENS  JAMIE M DAVIS  BRIAN L ROHRER THOMAS E WILLIAMS  RONALD
L DITZENBERGER  DONALD L KUNATH  LARRY L MACKEBEN JOSEPH E SINKOVIC  FRANKLIN   
HARRIS  RONALD A FILKILL  STEVE MARSHALL CHRISTOPHER S GOAN  DENNIS L BEHNER    
SHERRY L HAYES  SHELLY Y SLAGLE  RITA C REESE  LONNIE E ESTEP  DALE A STEIN     
DEREK TROY DECLUETT  TONY R BOWIE  STEVEN L GALLIS  DENISE M BAXTER  ROBERT A   
RUSNAK  ALVIN J SCHWEIDT  ALONZO BOGGAN SERGIO EDUARDO FUENTES  JOHN E STEINMAN 
DAVID J WOLFS  MARK D BISHOP  JAMES T SUTHARD  THERESA M GOSSETT  TAMMY L       
TERNOIR  WANDA J JEFFERSON  JENNIFER L LAROCHELLE  DANIEL J SKUBOVIUS           
CHRISTOPHER BUTLER  DENNIS M KUKO  TYRONE WOODRUFF  GERALD L FABER  CARL WILLIAM
AUVIL  SARA J LOUIS  TYRONE MCCLAIME DONNA J SIMMONS  ROSA L BREWER  RENWICK    
LYDELL RUSH  THOMAS F DUDKOWSKI CLOGGIE A CROWDER  ROBERT S PFENNINGER  MICHAEL 
KAZIMER  JACQUELINE MARIE GROH MICHAEL R FILKILL  WILLIE C MCMILLON  MICHELLE M 
GRISANTI  JOSEPH CARL PALETTA DOROTHY MION  TIMOTHY JR. SWARTWOOD  DAVID A REPKO
CHARLES R NEWMAN  JOSEPH J MENDONSA  BETTY COOPER  MIGUEL A SUAREZ  GEORGE R    
DUNCKEL  ROBERT J ENGLISH ALAN S LOCKSEY  CLARICE RUCKER  KAREN L SOTKA         
CLIFFORD D MCINTOSH  ROY E RASHKE  DERRICK L MUSE  DAVID D CHIDO  JAMES D       
HAMILTON  ROBERT BROWN  LARRY D MARSHALL  PERCY HATCHER  SCOTT M MACK  DONNA M  
PARSONS  CLARENCE SCHULTZ JR LEE A MCCOY  DAVID K GAUM  PHILLIP A HARDING       
RICHARD J MIROLA  GREGORY BUTE JAMES A LINN  DENISE L CONWAY  TRACEY A DIFILIPPO
KAREN L KRATT  FREDERICK A PAPENFOTH SR  SHERMAN DEROSHA JR  THOMAS P JUERGENS  
JOSEPH E COOKE  FRANK J SMITH  RICHARD A SCHMIDT  TONY L MION  PETER C ZIKELI   
PETER J SIGAL SR MICHELLE R ALMAS  VICTOR R OSGOOD II  SAMUEL E MCCOY  RODNEY S 
HULSEY  TERESA L BUTLER  TERRI HAHN  LYNN M WILMS  DENISE SURRENA  JUDY K DRIGGS
ROSE M RADVANSKY  MARY E THOMAS  LINDA LEE HANNON  NANCY J KUNKLE  MARY ANNE    
JONAS SHARON M KELTY  SUSAN J SIEFKE  MARK J FEYERCHAK  LINDA J WARANAI         
CHRISTINE A IPPOLITO  EDWARD RADVANSKY  STANLEY C HUNTINGTON  TERENCE E GASKEY  
JEFFERSON D SMITH  WILLIAM T BARRY JR  DENNIS W NACARATO  WILLIAM J MCINTIRE    
JOSEPH E KNECHTGES  KRISTEN D GUNVALSEN  THEODORE A CSINCSAK JR  TONY R PETITT  
GARRY J MARSH  FREDERICK D CIPOLLA  JAMES E LAUBERT  JAIME J KOPCZYK  EDWARD P  
BUTCHER DARRELL R BAON  CLAUDE M PITMAN  DAVID A SCOTT  RODNEY ALAN BOONE  FRANK
DEAN TOY  ROBERT J TRISKA  ROBERT B BAIRD  BRIAN A LANCASTER  RICHARD N JONES   
RUSSELL L GRAHAM  JOHN M PERRETTI  RAYMOND DUTTKO  ALAN J FEENEY  EDWARD J      
MACHOVINA  GEOFFREY W SHANKS  JAMES D BROWN  DOUGLAS E RUNYON  ERIC R JANUS     
TIMOTHY J CLARK  BERNARD J ULINE  CHARLES C SUTZ  RICHARD LEMMEYER  CLAUDIA A   
JOZEFKOWICZ  BRIAN M WRIGHT  LINDA ANN WALLS  MICHAEL P ELLIS  CANDUS M OLSON   
MICHAEL J ROMANSKI  DAVID S STANLEY  DONALDR LOVING JR  CRAIG J BALOG  JAY D    
RHODES  STANLEY TATE JR  WILLIAM B LIPFIRD  CY D YOUNG  RONALD J SABIN JR  JOHN 
WEINMANN  MARTHA L PARSONS  GREGORY E JAMES  PAUL D FRANKIEWICZ  JEFFREY M      
SCHULTZ  JAMES G STEIGERWALD  ROY J RASHKE  ADAM D CSONGEDI  HENRY O BUEHNER    
KENNETH R COOK MICHELLE L MERKOSKY  LYNNE M SHAFFER  MARY C CALLIHAN  MARK P    
BINDER  PAUL D DILLS  MICHAEL D MACNEAL  DAVID A KUTNER  JOHN M CRAWFORD JR     
ROBERT A SZABO CURTIS J BALOG  ROBERT H GARCIA  ROBERT L GRIFFIN  TONI TASHE    
NICKOLOFF  JAMES E NEELY  RICHARD L                                             

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SINDELAR  GARY JOSEPH GARZA  SHANNON L MURRAY  MICHELLE C DRUDZINSKI  ROBERT C  
EARLY  LARRY A WATERS  MARK J KUZMANOVICH  WILLIAM A RISHEL  SAUL A HERNANDEZ   
JAMES D SOTHERLAND  STEVEN M FOSTER  DONNA S BRISSON GEORGE A DUBOIS            
CHRISTOPHER S OLEARY  SUZAN M HINTON  RUSSELL L GLIDDEN DANIEL J BATTISTELLI    
ARMAND R L'HEUREUX  LAWRENCE D CARTY  RICHARD D WALEGA DANA R FRASER  WILLIAM H 
TREMBLAY  JACQUES R BOISVERT  DANIEL R LAWRENCE  JOHN J KILLAY  PHILIP D        
BALDINELLI  GREGORY J FEEHAN  ADELAIDE E RILEY  STEVEN A GOUPIL  ROBERT E LABRIE
DOUGLAS A BALDINELLI  BRENDA K BOLDUC  RALF J BAUMANN WILLIAM A ZYGADLO  HORACIO
L KIEP  ANNE L HOULE  ROBERT A PHANEUF  THOMAS HUNT DANIEL J NOLL  DAVID J      
JEROME  ROBERT F BEECHER  RAYMOND T BRISSON  GERARD J CHALIFOUR  GILBERT        
BOISVERT  DANIEL J COSMA  SCOTT R HENAULT  DAN R HUPPE WENDY L MERRILL  JAMES M 
ALDRIDGE  MARK P TURGEON  DAVID L LANGLOIS  RAYMOND P SEVIGNY  JOHN N NACOS     
MICHAEL D BOISVERT  JOHN A MADDEN  PHILIP C BEAUDET JAMES R YOUNG  BARRY R      
FAUCHER  TINA M SARETTE  GERALD M VEILLEUX  ALAN R COTE LUCIEN A DESRUISSEAUX   
JOHN M PERSONS  ROBERT R MORIN  ROLAND L MIVILLE CATHERINE A CARCHIDE  MICHAEL J
OTOOLE  ROBERT N MOREAU  PAUL LAMPRON  JAMES J HAWES  DARRYL B CHAMPNEY  ERIK P 
RANSOM  DANNY C WEBSTER  KENNETH J SKIDMORE SR RAYMOND R PROVENCHER  WILLIAM O  
PETTERSON JR  ELAINE M BOBULA  ROBERT STEVENS RAY M CAMPBELL  HENRY HEBERT      
DAVID J BILODEAU  CINDY L LITTLE  LUC L LABRIE MARY WEBSTER  DANIEL T HALL  MARK
BEDARD  HARRY J LORANGER JR  EDWARD A RICHARD THEODORE W ROBINSON  MARK A JORDAN
RUSSELL J SMALL  BRICE R CUNNINGHAM RICHARD R ST HILAIRE  BELLA M MORIN  ELAINE 
PYATT  DAVID M SHEA  MARLENE R WHITE  PATRICIA A BILODEAU  MELISSA M VINCENT    
JOAN A GOLABIEWSKI  DOROTHY G MURRAY  DEBRA J TIRRELL  RICHARD P GURTNER  JUDITH
C SALACH  DAVID MUZEROLL CHARLOTTE J FRIZZELL  TERI A SMITH  CAROL A MILLER     
JOYCE M BARIBEAU  ANN-MARIE THERRIEN  LINDA M DAY  MICHAEL C DUFF  COLLETTE J   
MCKENNA  LYNDA M SANBORN  ANN M JORDAN  GERALD E JALBERT  NORMAN D ROSS  OWEN R 
BELLOWS  TODD A LETOURNEAU PAUL D AGRELL  NORMAN R PROULX  THOMAS D KELLETT     
SHEILA M COOK  JEFFREY A SAVAGE  JOSEPH C RIENERT  ROBERT E WEBB  ROBERT A LA   
BARRE  WILLIAM E HUTTON HARRY M WEAVER  ROBERT C BROWN  JOSEPH C GANCARZ  ALBERT
J PROVENCHER  RUSSELL PHILLIPS  RAYMOND V AYOTTE  ERNEST E PEPIN  GERARD J BIRON
DAVID A BURGESS MARK SILEGY  CLAUDE A ST PIERRE  CHRISTOPHER J BURDIN  GREGORY J
HUNT  MICHAEL J PROVOST  DAVID J ENRIGHT  HOWARD A ZERBER  BRIAN ROBIDOUX       
GLORIA M NOLAN RICHARD L DUHAIME  JOSEPH F KATZ  GARY K BOLDUC  CARRIE I NOLAN  
KRISTINE L BERGERON  RUSSELL F FEDERICO  STEPHEN DELBENE  WILLIAM P COOK  ROBERT
P DALTON STEVE C GIBSON  NICHOLE L COLTEY  PAULINE TANCREDE  CHARLES T LACKEY   
EDWARD S RAND  LINDA B UNDERWOOD  RUSSELL W SPAIN  THEODORE A TODD  ERIC V      
JACOBS CHRISTOPHER J LE MAUK  RICHARD A MELANSON  RANDY COWLES  WAYNE BARSS     
ROGER E HUARD  LEO L DEMERS  CRISH BUXTON  JAMES P BARTLETT  ARTHUR G MAKRIS    
THOMAS E CARNEY  GILLIS L UPTON  JO A VAUX  PAUL A DIROSA  FERDINAND P DLUGOSZ  
III EDWARD T JUDGE  GLENN A LAWRENCE  DAVID W CRAMER  MELISSA A MATHERNE        
DOUGLAS R CHAUVETTE  MICHAEL K DUNKER  PAMELA A PROKOS  JACK J VILLEMURE  CORY F
SAMBLE KEVIN R DEROCHER  RICHARD T DUCHARME  DONALD E LABRECQUE  RICHARD P      
DUMOULIN ALLAN YIANAKOPOLOS  CHRISTOPHER F LABORE  BETSY L MARTEL  DAVID K      
SCHNEIDER JOANNE C YOUNG  RONALD M CLENDENNING  THOMAS W SCHLEAR JR  OSCAR R ROY
III PAULINE A JACOB  DAVID A PHILBROOK  DANIEL M BOLDUC  ROGER G YOUNG  LORETTA 
A SESTITO  JAMES D III LEATH  DAMITA A ANDREWS  DAVID L BROWN  CAROL A MCBURNETT
GWENDOLYN A RICHARDSON  CLAUDIE B JONES  JOHN FITZGERALD BARTON  LINDA V RANSOM 
WILLIE N MARTIN  JEREMY D GOBER  DAVIS M DUNBAR  FREDRICK O LEE  AGNES J WEEMS  
SCOTT M WRIGHT  LARRY P HAMILTON  JEFF C FOX  TERRANCE L OWENS  KEVIN R         
SATTAZAHN  WILFRED BROWN  RODDRICK K JOHNSON  MICKY E BALES  NEHEMIAH JOHNSON   
JOHNNY D THOMPSON  SANDI J HAYES  WILLIAM S MCALLISTER  WILLIAM H DUTTENHOFFER  
MELVIN A JORDAN  AKUA T METZGER  ROBERT JACK MILNER  KIMSEY A HARMON  IRMA S    
JACKSON  MARCUS A EMORY  DONNA J FRAZIER  MICHAEL E WYATT  TERRY L TUTTON       
MICHAEL D WHITLOCK  DONNY R PARHAM  TOMMY A ROE  JANET M JACKSON  JOEL D        
MARSHALL  MARCUS L BROWN  DALE M BOOTON  LISA C MILANI  CYNTHIA E GLASS  SHEILA 
G HARRIS  EDWARD S BLANTON  LEWIS E VOYLES  MICHELLE M WALDROP  FARRON L        
WHISENANT  CHARLES B CANNADY JR  JERRY W SMITH  ROBERT V ANDREWS  DELFIN DIAZ   
JAMES H LUMBUS  DARREL F MILLER  GREGORY A CHAMBERS  JAMES FULLER  GREGORY S    
LANIER  MONA J BROTHERTON  MICHAEL FLETCHER  MICHAEL W JONES JR  GEORGIA L      
STOREY  LINDA G BONNER  RONDA J BURT  NANCY D WEEKS  TERRILYN ELLIOTT  CARLENE  
CLINTON  MICHELLE LOWRIMORE  CAROLYN G DUKES  RUBY CLEMMONS  NANNETTE J MARTIN  
DIANE M GIBSON  TONIE WAYNE JARRELL  NELLA M BARTON  LYDIA M HEAD  REGINA V     
THOMPSON  JOHN H BYRON JR  JOHN L COOPER  LARRY SHULTZ  DONALD HAMM  THOMAS FAIN
JAMES D CAMPBELL  ERNEST M POPE JR  WILLIAM H SCHENCK  FLOYD G HAY  BRUCE L KARR
JOHN O MOORE  MICHAEL D SCHENCK  CLEOPHAS SMITH  LONNIE S DICKERSON STEVEN E    
ATKINSON  NEIL L SCOTT  THOMAS E MILLER II  KEVIN PANGBURN  JAMES E HOBBS  COLEY
BANKS  STEPHEN P PRESTON  JONATHAN JOHNSON  DANNY L SMITH  DEBRA KAYE CLAYTON   
DAVID REID  MARSHA D GRAY  ANGELA R HAYNES  ZAKIYYAH KHALIFAH AQUIL  BYRON JAMES
ADDERLEY  WANDA BOLER  ANTONIO BURNEY  TONYA MICHELLE WILLIAMS  SYEPHEN         
CHRISTOPHER FOLDS  CHRIS RAMIREZ  MARY ANN HUNTER  MELANIE ELIZABETH SHANNON    
TOBY C HENDRICKS  ROBERT B WOOD  LARRY DARNELL WOODS  SCOTT JOHN PALICKI  CRAIG 
CLAY RAMBERT  JAMES LEONARD ASBERRY  JOSEPH THOMPSON III WAYMAN HUNT  ANTHONY C 
HUNT  BRADLEY ALLEN HOBBS  ANTHONY PAUL BASTIAN  ANGELA RENEE ARNOLD  CHARLIE M 
RICE  MICHAEL ANTHONY WILLIAMS SHEEWAN DENISE DAVIS  LEMUEL CRAIG EUBANKS       
DEBORAH ANN WATSON  TERRY LEWIS WALLER  WANDA SALLEY  PORTIA ELAINE DAVIS       
DEXTER DURANT CLARK  MICHELLE L HENSON  KAREN JAN                               

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WORKING TOGETHER BUILDING DREAMS                                                
HOLLIS  JEREMY JOHN TAYLOR  JOSH R HEARD  DONALD M BISSELL  LISA J KENT         
ANASTASIOS AIVALIOTIS  ROGER W CARLILE  DEAN A GEARY  GREGORY R SLY  GARY D     
GRIER  CHARLES D HOTALING  LOUIS J MACDONALD  JEFFREY T                         

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BERKS  DAVID L DUNCAN SABINO CASTELLANO  JAY PETTIS  JOHN A SELLIN  JEROME R    
RYNNING  DAVID L BERGER EDWARD P TAMLIN  LEONARD W GRANT  JOE COPPOLA  RICHARD W
KEEFER JR  MICHAEL D FARRELL  DENNIS R BURG  DAVID R ORTH  RANDOLFF MOREY  GLENN
R MADSEN  WILLIAM R TERRIEN  CHAD W MOORE  GEORGE D BAYNARD  CHARLES E THOMAS   
WILLIAM J ELDRIDGE DONALD M SPARKS  DOUGLAS A BISSELL  RICHARD E DYAS  VASILIOS 
KLADOUCHOS RAYMOND G GILL  BRUCE W RICHARDSON  RONALD L RATHKE  ROBERT B MOEN   
GARY A SASSER  EARL J MEWING  DAVID E SMITH  LOUIS L SEIDL  JOHN W ZIMMERMAN    
FORREST G MOSS  ROY E BYRD  LONNIE SHELLENBARGER  CHARLES W SCHMIDT JR  MERLIN V
KOST BOB E DEVEREUX  RUSSELL L SICHLEY  MICHAEL W KEEL  ROBERT M FARLEY  RYAN   
HORDICHOK  DANNY D PROCTOR  GAYLE J DITTLER  SCOTT J DANELL  JAMES J GUERARD    
STEVEN W FLOURA  BRIAN M GARRY  RONALD G CALDER  WILLIAM K LABRECQUE  CHARLES A 
CECILIANI  KENNETH FELTON JR  TREVOR A CASWELL  BRIAN M LUBY  JAMES G HUDDLESTON
JASON A BIRMAN  KEN D COCKRIEL  JOHN D HUDDLESTON  LARRY H HUNT KENNETH C SEIBEL
BRENT D LAWRENCE  THOMAS HAYS  NICHOLAS A BANKS  THOMAS C SLOOP  CASSANDRA J    
WARREN  KENT R SALYER  MICHAEL E MCMAHAN  KENNETH A CROUSE JR  CHARLOTTE C SEIDL
JOYCE I BANANTO  DEBORAH L NORDYKE  PAULA A CADY KATHLEEN E FARLEY  MARCIA N    
MAES  WANDA SUE GRAVES HALLGRIMSON  SYLVIA J MITCHELL  MARJORIE L PERRINE  DONNA
C MOSS  COLLETTE J MCDOWELL  SUSAN A DALTON GORDONK HAUGEN  STEVEN D GATES      
BRIAN R HAGEY  WILLIAM D LAYTON  JOSEPH C D'AMICO  R MITCHELL MANN  DAVID J MENG
WILLIS S RILEY III  JONATHAN P MILLER DANIEL J HOFFMAN  BRIAN P ROOF  NICK W    
HARMS  ROGER L NICHOLSON  MICHAEL J ENDNER  ROBERT DIDIER JR  MICHAEL D         
BILLERBECK  LARRY LUKESH  BENJAMIN E HARMAN JASON A ALDERMAN  DANIEL H BETTS    
RICK D BYRAM  JON M BUDDE  DOUG D URBICK ROBERT HEWITT  BRAD A NEWBREY  EDWARD A
HAMMERBERG  STEVE A MEYER  RAYMOND W HARMAN  RANDALL M WALLACE  RAE J NORTON    
STEPHEN J RYAN  DONALD L BURNS  FRED M FISHER  LOREN R PETTIS  ERIC D VAN DYKE  
DAVID J GENTZLER  TOM D VEAL  BRUCE M GATES  ROCKY L ROGERS  MARK V SAVRE       
ROBERT M KEENE  BECKY L MOREY  JAMES STEVENS  JERRY HARMS  CHRISTOPHER R NEELY  
RICHARD A LAINE  DAVE R BROUGHTON KATHY L GRUBER  LORNA M ROTH  MARCIE R BESZ   
CHRISTINE M BRINGENBERG  MICHELLE M HUBBARD  CHARLENE J HILBERT  SANDRA R KUCSAN
JOHN A MORRISON  COLLEEN FLUESO SUSAN A WADDING  JOANN R MOLL  BARBARA T KLIMEK 
DAVID E ROTH  GLORIA A BAUER JUNE E CESSNA  LINDA K KLEMAN  CATHY A KLINE       
DANIELLE KROLL  LORETTA A BOYER RONALD M GREENZWEIG  KEVIN B MILLER  SHANNON Y  
FRITZ  BRENDA L STITZER  MICHAEL A KINDT  RODGER M DUNSE  DAVID C FRITZINGER JR 
EDWARD J FYNES  DAVID M KNOBLACH  LEON K BUFFINGTON  BEATRICE M LOPATA  LINCOLN 
D LABAR  PATRICK MOORE BERNICE J RAUCH  DEBORAH M EASTMAN  BRETTG ZEHNER  TODD A
BURKETT  MICHAEL K NONNEMACHER  RICKY L DERR  JOHN KREMSNER  SHARON ZEHNER      
THOMAS C KUTZ  JEFFERY S FOX  JOSEPH T NARATIL  ROBERT G LICK  ROSALIE B        
BILLHEIMER  JEFFREY W BAUCHSPIES  JAMES M TOTANI  M RICHARD BIEHL  DENNIS J     
CHECK  BRUCE D YODER DENNIS G RAUCH  RICKY FRITZ  ROBERT M SMITH  CARL D HAMANN 
ROBERT J NEIFERT JR FREDERICK D RUPP  DORA L HOPPES  DARVIN J SCHOENBERGER  JOHN
EVANKO JR  LEE C BITTNER  EDDY L FISHER  KIP R KOGELMAN  JOSEPH A FREY  RENEEA  
WERKHEISER MICHAEL GALANTI  ROBERT J CSENCITZ  JEREMY W SCHAUS  DIANE L HARTUNG 
DONNA M STROHL  FRANCIS E ZEHNER  DONALD E NESTER  MICHAEL J EGAN  MILTON C     
BAILEY KEITH SNYDER  PAUL RUSSELL BROPHY  BRENT S KLECKNER  CARL C MOYER  BARRY 
L SILFIES  MICHELLE ZETTLE  THOMAS S RUHE  JOSEPH S CSENCITZ  JERRY W HEIM      
ROGER L HOFFMAN  KIRBY E MILLER  RYAN K THOMSON  DONALD B MAIROSE  ROBERT D BEST
ARTHUR E RUDELITSCH  GREGORYJ MATYASCIK  STERLING S CHRISTMAN  MICHAEL B        
SHIPWASH  BETH A PAJAKINAS  KENNETH W SCHAUS  CHRISTOPHER S MITCHELL  JOHN P    
ROWLAND  MICHAEL P HALDEMAN  DENNIS POHRANICHNY  JOYCE J STEIGERWALT  JAMES D   
YOURGAL  ANGELO GEORGE ZERVOS  SALVATORE E TAIBI  MAUREEN R REX  GARY J BRODE   
BRUCE E STEIGERWALT  KEITH L HESS  ROBERT F FLUESO  GARY C HOCH  ROBERT J BEVICH
ROBERTA J SCHLEGEL  JOEL F GEORGE  WILLIAM D HAUSMAN  DONALD W MARTIN MARY K    
BEDNARIK  STANLEY P TORBEY  THOMAS R SOMMERS  TERRY L ROTH  JEANINE C BRAREN    
WUCHTER  DANIEL A SWEITZER  DALE K STOKES  MICHAEL E BUSKIRK  JASON C RIEPENSELL
MICHAEL TOMECEK  ALLEN K MECKES  GLENN E MITCHELL  MICHAEL J BURNS LOUISE R     
BRAREN  JEFFREY A SCHALLES  LINDA L VICTORY  WILLIAM J FARBER  JILL PARKER TODD 
A CHEESE  DAVID E JOHN  ROBERT E MILLER JR  GARY S LONG  RICKY E SMITH  DAVID R 
MOORE  CAROL J LYNN  DOUGLAS T BOBENKO  RONALD E MUIK  KAY E HAMM  DEBRA L AHNER
DONALD J LEIBY  TINA M MARKO  ROGER A RUHE  TODD D QUALLEY TERRY S KUNKLE  FRANK
J GESECK III  RANDALL A RUHE  DENISE A BEVICH  MICHAEL J HANZARIK JR  SYBIL M   
CORRELL  GERALD L NAGLE  JOHN T MINCHHOFF  MILTON C BAILEY JR  JAMES D VARNER   
MICHAEL R MANOGUE  SUELLEN M HESS  GARY S STROHL  RICHARD SCHOENEBERGER JR  GARY
M BENNER  ANDREA L SHUMACK  ROBERT W LEDFORD  PATRICIA A SCHWARTZ  WILLIAM J    
OCHS  LINDA K WECHSLER  DAVID L MAKOVSKY JR  JASON D ZELIFF MIGUEL A ROSARIO    
MICHAEL J MELLEY  LISA J   COSTENBADER  PATRICK A FARBER MITCHELL W MILLER      
SHELLY A WILLIAMS  KIM L MAY  DENNIS M KERN  STEVE V GOWEN KAY A KNAPPENBERGER  
JONATHAN N SKELTON  MARK A BENNER  GLEN A PAULES  RANDY P TROXELL  MARK L PAULES
MICHAEL T WILLIAMS  LOUIS L AMICI JR  DENNIS W TROXELL JACKIE L GILDNER  MILES I
ENGLEMAN  BERLYN R TROXELL JR  SHAWN D LINDLEY JEREMY WHITE  JEFFREY E MILLER   
PAUL S MILLER  JAMIE D HOMYAK  JEFFREY G MILLER  LESLIE L GEORGE  BRIAN C       
ONUSHCO  WENDY L DAVIES JOSEPH B YASHUR JR  JASON K HOMYAK  SHAWN M KELLER      
BRIAN P MCAVOY  MARK G POLKOWSKI  MICHAEL D STEIGERWAIT  THOMAS J STEIGERWALT   
JASON L MUFFLEY  JUSTIN M MUFFLEY  PHILIP H BRINK  MICHAEL J SERINA  JASON M    
ALLENDER  LEROY CROUCH MICHAEL D MOORE  CLAUDE W MOORE  ROSANNA HERNANDEZ       
TIMOTHY J SIPES  GEORGE S BRYSON  LARRY D BLICKHAN  RICK D PARRIS  FRANK A KUHL 
JESSIE D CERVANTES CONNIE TSE DRBOHLAV  DANNY G CONNER  DAVID L SEBASTIAN       
STEVEN H BENNETT  JASON A TREOLO  LISA A MURDOCK  SHAWN C MCGINNIS  JAMES H     
CRUNK  WILLIAM L FOREMAN CRAIG D SMITH  TONIA E STUKES  LEROY A BRONSON  ERICK M
EATON  KENNETH L HALL KATHY L BRILLHART  JOSE A LUCERO  SAMUEL ALLEN  DONALD R  
LYNN  LARRY D PRIDEMORE  LISA K WARDEN  ROBERTO VILLALOBOS  DARIN L ELLISON     
BILLY J MCTEER RICHARD K CORAM  RAYMOND C MITCHELL  MARION D HECKADON  PAUL M   
WENDLANDT JOSEPH M MADISON  JAMES H JOHNSON  DAVID W CHARLES  TED H DAVIS  LARRY
R STEWART  TERRY A KOOKER  JAMES GILLESPIE JR  JOSEPHA PINTER  RICHARD BERRY JR 
DEWEY L HENRY III                                                               

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BOBBY R WILKINS JR  TIMOTHY E CUSHING  MARY L HARPER CHARLES A YOKLEY  MICHAEL O
LEFFINGWELL  JAMES D HARRILL JR  KARYN S BOWER VONDA S NOLAND  LISA STODGELL    
MARY C LOCKARD  MARK A DEARDORFF  BRIANK KURLE HAL M HYDEN  VICKI L BRYSON      
KAREN I STEWART  JOHNR SMITH  PATRICIA BELCHER SARAH J STATLER  HAROLDL CLEMENS 
REBECCA L WRIGHT  EDWIN M RODRIGUEZ  MARK A SCHICK  JOHN W DARLING  KIM AUGUSTIN
CAROLYN S SMITH  JANICE J BRINDLE  SHAWNT ALFORD  MARY A MILBURN  MICHAEL L     
GILLESPIE  BOBBI S JOHNSON  CHRISTOPHER A HOFF  JAMES R HIXSON II  LUU T LOWRY  
DARRELL L SHAFER  JOHN A GASTON  CHARLES E KNIGHT  JOSEPH F SPICER  BENJAMIN D  
CHAI  MICHAEL C SCOTT  ROBERT J MORRIS BRIAN BITTNER  JAMES D MURDOCK  TIMOTHY M
CERVANTES  JEREMIAHJ WILLIAMS  KEVIN D NELSON  RUSSELL L FISHER  ORLANDO E      
COLEMAN  HENRY R HERNANDEZ  MARK BURGER JASON M CHERRY  DANIELG HALL  LEANNA J  
CHAMBERLAIN  SANDRA K CORRISTON  DIANA K SMITH  BARBARA MITCHELL  SHIRLEY I     
THIELE  SANDRA S MELENSON  VELMA I BARNUM ROSE M REEVES  PAMELA M ARCHER        
KIMBERLY R JUNKIN  ROSE A CERVANTES  BRENDA K BREMER  AMIEM BAUGHER  TARA N     
GRAHAM  DONNA J TUBBS  CYNTHIA L BEASLEY  ROBERT J FRANK  RICHARD L VOWELLS     
JAMES A SIEKER  VERN E SHEETS  MICHAEL L DAVIS LARRY D BULLARD  BENNY L KUEHN   
THURMAN J KUYKENDALL  MICHAEL K HOPKINS  DONALD E CANNAFAX  CHARLES V DOWNEY    
DENNIS E DORWEILER  EDWIN D WHITE  JOSEPH B ANCRUM  ROGER D HATTON  DWIGHT O    
COLEMAN  DEANG JONES II  EZEQUIEL URESTI DAVID L SMITH  DALE A BERRY  JAMES A   
FEITZ  ROBERT HARRILL  DEANNA M ELLISON RONALD L JOHNSON  KENNETH L SHAY  JOHN R
VINSON  CRAIG A BROWN  KIMBERLY R BUCKNER  JOESPH L CLARY  JAMES S BAKER  LARRY 
DUNCAN  GREGORY M WEEDEN  PAUL A SAFFELL  MARYANN CAVENDER  JAMIE W CLARK  SARAH
J WHITE  DANIEL J HEITMAN AUBREY J DAVIS  VALERIE A WALKER  MICHAEL J           
CHRISTACOPULOS  MICHAEL A COTE RALPH D GEDDES  TERRY N TURNER  SCOTT LE MAY     
DEBORAH A MURCHISON  MISTY J NILES  DANIEL S AVILA  CARL MECOM  LAURA K MILLER  
HERMAN P WHEELER  KENNETH L BRAZIEL  JOHN V PETCULESCU  LELAND HART  CHARLES R  
HEITMAN  KATHY GADE  ANN L CARD  RICK E POLLEY  HOLLY L VINES  MICHAEL J KOERNER
JUDY LYNN PADILLA DENNIS D DONOVAN  TAMMY LYNN HASTINGS  BRYAN L CRAIG  ALBERT  
LEGAULT  JAMES S DUNHAM  JOHN F TILLIS  CHAUN D WILLIAMS  MARK HARRINGTON  JAMES
E BENSON SHARON B WYNNE  RAELYN S RYAN  ROBERT BRANIGAN  RUBY C HEITMAN  BERNARD
RAMOS LINDA K MISKILL  PATRICIAF YOUNG  ERIC JARVIS  JEROME I KLAFTER  LINDA L  
SUTTON SHIELA S SMITH  ZORAYDA LEE STACKHOUSE  JAY R MACNIELL  VERNE KANNIANEN  
KEVIN R CURTIS  JON P PITTMAN  DAVID HATTON  SARA E CONAWAY  DEBBIE A SORG      
WENDI B SELANA  SCOTT E RHODA  DEBRA A BAILEY  THOMAS E ANDERSON  ALANNA J      
MCCRARY MELISSA K FESSENDEN  TRACY A FRIEND  SALLY A EVANS  ROBERT R HUNSAKER   
RICHARD R FORTIER  LINDA FITZL  LYNN KANNIANEN  JAMES CRONIN  DONNA M SIMPSON   
SUZANNE MCCLINTOCK  KAREN L RAINWATER  STACY L SWANSON  YVONNE BARRON  FREIDA   
DELAHOYDE MICHELE HUTH  MARJORIE M PITTMAN  LANCE D MATZDORFF  MANUEL ARREDONDO 
CLEOPHUS M HERMES  WALTER COLLINS  MICHAEL E SCHMIDT  KENNETH S HUNTER  LESLIE F
RIECK  DAVID A BURKE  DENNIS W CLARK  FRANK A CIOLKOSZ  ALLAN C MORRIS          
CHRISTOPHER HORNBROOK  JAMES J ENGSTROM  MICHAEL E HOSKINS  LONNIE R JONES ROGER
L ROBERSON  JAMES E ROBERSON  BILL F BRIDGER  LARRY J SULLIVAN  PETE T GALVAN   
ELIJAH BRADLEY  ROBERT O WILKINS  LESLIE A TAYLOR  DAVID E RAGSDALE JERRY U     
ESTRIDGE  JOEL S DUBOSE  LARRY S RAGLAND  CECIL R BEASLEY  JOHN D BRATCHER  JOHN
W CAREY JR  FREDDIE L PRUITT  JOHNNY C WHITE JR  JOHN W BRIGGS CYNTHIA D        
MCCARTER  JULIUS G MUSICK  LOUIS J ROBERTS JR  JEFF W DOVER  ROBERT L REAM      
WILLIAM W BAILEY  GARY T LEHMAN JR  LORI J EMERSON  KEVIN V CLARY  MARTHA L     
NICHOLS  RANDY S WATTERS  WILLIAM T WARD  JEFFERY D CHANDLER  WAYNE J WOLF      
DARRELL G TEMPLIN  JERRY D FORD  DAVIDG ROSE  TOMMIE J BATSON  FREDE RICHARDSON 
RUTHIE RICHARDS  KATHY L MORGAN  TENA M THOMAS  BILLY E AULDS  DEBORAH J OBRIEN 
BARBARA A FAULK  DAVID K THOMAS  PAUL S COTTAR  LEE E GRIFFIN  JOE L HARRELL    
LIZZIE M LAWRENCE  GABRIEL OVALLE  KERRY D CARRICO  ROBERT L JONES RANDALL M    
FARMER  MARVIN R DANIELS SR  KEVIN A GETTEL  THOMAS E WILLIAMS STANFORD L       
DANIELS  CHARLES L BARHAM  RICHARD E FERRELL  BRANDON R FRANKS RICHARD A PAIR   
STEPHEN C MCQUARY  ROBERT B THOMAS JR  CHARLES BURNS JR  DONALD W NUNAMAKER     
ERNESTO NAJERA  ALVIN C MULLICAN JR  JOE C MILAM  JOHN W PITTS DARYN W NICHOLSON
BRIAN W NORTHERN  MELVIN D THOMPSON  DANNY L HAYES  MATTHEW C MORGAN  RICKY L   
POGUE  KELLEY P MITCHELL  CRAIG M BRIGGS  JAMIL W JOHNSON DONALD E WILLIAMS JR  
SHANE ERIC EUDY  LORI A MURRAY  JAMES W NEAL JR  CHARLES J FRANKLIN  MARY C     
WOODCOCK  ERIC K KRANTZ  GREGORY C WOODS  JAMES E TOLLIVER MARY L KENNEMORE     
RICHARD W GRANT JR                                                              

PAGE 2:                                                                         
PHOTO OF ROBERT LADNER AND DANIEL COTTER                                        

PAGE 3:                                                                         
A LETTER TO OUR MEMBERS                                                         
Chart: Average Member Return (in thousands) (for the years 1992-1996)           

Perhaps it was anticipating the future when your Chairman and President's 1995  
letter noted "the measure of a company's success in any given period... is how  
well the company prepared... for the years ahead." If that was correct, then it 
is undoubtedly true 1996 was the most successful year in the history of Cotter  
& Company.                                                                      
When the announcement was made on December 9 that Cotter & Company was planning 
to merge with ServiStar Coast to Coast to make the world's largest and most     
efficient hardware co-op, to be named TruServ(TM) Corporation, your company     
took the greatest step ever in its quest to serve Members well into the next    
century. We are very proud of the work that went into that merger plan. It was  
not easy to accomplish this at the same time we continued with all the other    
important work essential to giving you the products, programs and services that 
you expect every day.                                                           

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The work involved in planning the merger and preparing for the announcement did 
not get in the way of day-to-day operations. For scores of your executives,     
managers and others, the planning process meant an extraordinary work load. For 
everyone there was a great deal of satisfaction in the knowledge that they had  
done something very important for the future success of all Members.            
The effort put forth to make TruServ a reality is indicative of the dedication  
and energy Cotter & Company employees demonstrate every day on your behalf. All 
of these employees are named in this report. Many of them are pictured. The     
names and faces you see throughout this publication belong to the voices you    
hear when you call Chicago headquarters or one of our Distribution Centers.     
They belong to the hands that create your advertising, or the minds that devise 
the services that help you compete. Whoever they are, pictured or not, every    
employee shares one goal in common, and that is to serve the Membership. They   
are part of the team that put 1996 in the history books.                        
When you look at Cotter & Company financial statements for 1996, you will see   
figures showing a good, but not great, year. You should be even more impressed  
when you look behind the numbers. Total revenues were virtually flat at $2.44   
billion, an increase of only 0.2 percent from the year before. However, your    
company's Membership base was significantly larger during a big part of 1995,   
before the variety division was closed (and General Power sold). That's why we  
emphasize the "comparable stores" figure, showing that stores that were Members 
for all of 1995 and 1996 increased their purchases from Cotter & Company 4.4    
percent.                                                                        
One of the first questions our Members always ask at year end is "how is the    
patronage dividend?" We believe you will be pleased with the answer. The total  
patronage dividend is $53.3 million, and the number of Members participating is 
down considerably from a year earlier. The result is impressive: The average    
patronage dividend is up 10.3 percent over a year earlier!                      
And that's not all. Your company's gross margins as a percent of revenues were  
driven down again for the fifth consecutive year, so you have a lower cost from 
the time you receive merchandise instead of waiting a year to get a bigger      
patronage dividend.                                                             
The $7.1 million you Members saved in your purchases as a result of Cotter &    
Company's lower margins is significant,                                         

PAGE 4:                                                                         
Chart: Operating Expenses as a Percent of Revenues (for the years 1992-1996)    

whether you used it to increase your profit or improve your competitive         
position.                                                                       
The dividend on Tru-Test Manufacturing purchases increased to 12.5              
percent from 11.9 percent while Baltimore Brush remained at 12.3 percent.       
Before we discuss programs and services, we'd like to emphasize one performance 
category in which we take particular pride. That is expense control. There were 
a lot of extraordinary expenses, such as the one-time cost of moving to a new   
national headquarters, and upgrades in information services. Yet overall, your  
executives, managers and staff did an excellent job of controlling costs.       
We were particularly pleased when CFO magazine, which serves Chief Financial    
Officers nationally, recognized Cotter & Company as a leader in holding down    
selling, general and administrative (SG&A) costs. The annual survey, conducted  
by Arthur Andersen LLP, lists leading "Lean SG&A Machines" in 33 industries,    
and your company was No. 1 in its category.                                     
We believe the best measure of your company's performance during 1996 is the    
way programs and services have progressed. trueAdvantage has been remarkable.   
Today there are 1,403 Members who have committed to trueAdvantage, and 624 of   
those Members meet all the standards and are eligible for all the benefits of   
the program. The remaining 779 are in the process of being approved for full    
participation. The count of committed stores rose 38 percent last year; the     
number of approved trueAdvantage Members soared 232 percent! This shows Members 
are not just signing up for the program, they are taking action in their stores 
to meet customer expectations and enhance the name of True Value everywhere.    
trueAdvantage stores earned $1.5 million in credits during 1996 by increasing   
their warehouse purchases, and most of the stores were eligible for these       
credits for only a portion of the year. trueAdvantage stores' stock purchases   
in 1996 were up over 14 percent.                                                
Additionally, 13 percent of the trueAdvantage Members have made use of the      
below-market-rate business improvement financing, with interest savings         
averaging $500 a month per store, or $6,000 a year. The number of participants  
in the loan buy-down program still is growing rapidly. trueAdvantage is a       
voluntary program and the benefits are available to every True Value Member.    
Store size is not a major factor, and the standards are based on customer       
expectations.                                                                   

PAGE 5:                                                                         
The growth and in-store success of Just Ask Rental has become the envy of the   
industry. In 1996, 100 new Just Ask Rentals opened, bringing the total to 350.  
Many more started the process of market analysis, preparation of in-store       
space, writing opening stock orders and training employees, and we expect about 
500 Just Ask Rental Departments will be operating before the end of 1997. The   
Commercial Supply Network shows an even faster development and growth rate.     
The Paint Shop concept developed by Tru-Test Manufacturing at the end of 1994   
is taking off, with 297 Paint Shops added during 1996, expanding the program to 
432 Member stores.                                                              
The new "joint venture" Cabot Stain Program has been extremely successful.      
Almost 1,000 stores were shipped $2.1 million in Cabot products after the Fall  
Market. This seven weeks of business compares with $3.5 million in Enrich       
Varnish and Stains products for an entire year.                                 
Efforts to improve service levels on your merchandise orders continued, and     
while the numbers were nearly the same the last two years, growing to 93.2      
percent, the emphasis on how your needs were met has been fine-tuned. Items     
considered "seasonal" often are sold year-round in many stores, so your         
management has taken steps to provide year-round order fill in those areas.     
Basic departments have been given extra attention. We know that an unfilled     
order is a lost sale and a disappointed customer to you, so we have expanded    
our efforts to deliver 100 percent complete orders immediately.                 
Two major accomplishments -- the introduction of True Start(TM) and negotiation 
of an alliance with Triad to provide enhanced technical support for Tru-Trac    
and Triad users-- made 1996 a year of important advances in Information         
Services. In the Information Services section of this report you will find      
details about your new affordable True Start store automation system. The       
rollout at the Fall Market was quite successful, with a hundred Members         
installing the system in the busy closing months of the year.                   

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Establishment of new regional advertising and merchandising programs was a      
major 1996 accomplishment. The Marketing and Merchandising sections of this     
report give details of these programs, which help Members do a better job of    
serving the unique wants and needs of customers, whether the store is in        
Portland, Ore., or Portland, Maine, in Minneapolis, Minn., or Miami, Fla.       
Cotter Canada has completed another excellent year, with membership at year-end 
reaching 505, a net gain of 12 percent for the year.                            
True Value International continued to expand, now serving stores in more than   
50 foreign countries and U.S. territories, an increase of 10 countries from a   
year earlier.                                                                   
To summarize, 1996 might be described as the most exciting time in the 49-year  
history of your company. There were outstanding accomplishments, some with an   
immediate impact and others that will ensure the future prosperity and security 
of True Value Members. None of this could have been accomplished without the    
support of Members, and the dedication and hard work of management, staff and   
all employees of Cotter & Company.                                              
We thank all of you for your cooperation and loyalty.                           

Robert J. Ladner                                                                
Chairman of the Board                                                           

Daniel A. Cotter                                                                
President and Chief Executive Officer                                           

Chart: Gross Margins as a Percent of Revenues (for the years 1992-1996)         

PAGE 6:                                                                         
Photo of  Kevin Houlihan, Richard Matzke, & Frank Rothing                       

PAGE 7:                                                                         
Photo of tape measure                                                           
Photo of Master Mechanic Packaging                                              

The true measure of a successful merchandising program is the value it delivers 
at retail.                                                                      
Can the customer find the right product choices at True Value? Is the price     
competitive? What about quality?                                                
These are the key questions we ask whenever we plan, negotiate or purchase      
merchandise for our retail Members. It's simply not enough to provide a broad   
selection of merchandise at competitive prices. We need to know that the        
merchandise has the power to draw paying customers into True Value.             
In 1996 Dave Christmas led the Merchandising group in an aggressive pursuit to  
expand SKUs and negotiate better prices for True Value Members.                 
We successfully added thousands of new items, achieving a product offering that 
exceeds 60,000 SKUs.                                                            
And by flexing the purchasing muscle of 5,000 retailers, Cotter & Company       
negotiated lower prices on thousands of items. By year's end, we reduced        
Members' merchandise costs by $7.1 million--savings that simultaneously improve 
retail margins and earn loyal customers.                                        
Commercial Supply is another success story. Serving the growing industrial and  
commercial supply customer has created advantageous profit centers for nearly   
200 True Value retailers. Cotter & Company supports these Members with a        
comprehensive training seminar, catalogs, support literature and a team selling 
approach.                                                                       
We strengthened the merchandise program in 1996 by deploying seven regional     
merchandise managers across the country. These local experts serve as liaisons  
to the corporate merchants, generating a merchandise mix tailored to local      
demands.                                                                        
Customer demand for choices was also enhanced with the addition of              
popular national brands. These items complement the offering of nationally      
renowned private labels exclusive to True Value, including Tru-Test(R) Paints,  
Master Mechanic(R) and Green Thumb(R).                                          
An important key to our successful merchandising efforts is the strong and      
lasting relationships we build with our manufacturing partners. We continue to  
work with vendors who share our commitment to provide a quality product         
offering at lower prices.                                                       
There's much more to a successful merchandising equation. We consider           
packaging, display, vendor programs that reward Members and much more. But the  
bottom line is always the value we can deliver at retail, because earning       
customers for our Members is the cornerstone of retail success.                 

Kevin Houlihan                                                                  
Richard Matzke                                                                  
Frank Rothing                                                                   
Merchandising                                                                   

Photo of Merchandising department employees                                     

PAGE 8:                                                                         
Photo of Danny R. Burton                                                        

PAGE 9:                                                                         

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Photo of woman shopping                                                         
Cover of Just Ask Rental Brochure                                               

The greatest balance we achieve at Cotter & Company is to act like a wholesaler 
and think like a retailer. That means we have to understand both sides of the   
business--gaining the advantages of a national wholesaler while improving every 
retail enterprise. It means we have to listen. We have to be flexible. We have  
to be creative. In that sense, 1996 was a Leap Year in more ways than one.      
trueAdvantage is our Company's most aggressive retail support program. We       
concluded 1996 with 624 retailers meeting all 12 retail standards. These Members
not only qualify for rebates and other incentives, they also report tremendous  
customer response to their retail improvements. There are countless other       
opportunities to help our Members compete more aggressively at retail. We learn 
more every day through our Retail Development and Operations Team which is in   
the field talking to Members, observing customers, listening to questions,      
exploring new opportunities and finding answers and solutions.                  
In 1996 we responded to Member feedback and the changing retail environment,    
generating new programs to appeal to female consumers, ideas for competing      
against big boxes and national chains, buying markets with broader appeal, a new
price shopping program called Hardware Education Leadership Program (HELP) and  
much more.                                                                      
The field Retail Support Team assisted Members with 90 changes of ownership and 
established 32 branch locations with nearly 400,000 square feet of new retail   
space. Another 78 Members expanded their retail locations, adding over 630,000  
square feet of selling space. And another 92 Members remodeled their existing   
stores.                                                                         
The Just Ask Rental program became the No. 1 in-store program in the rental     
industry this year. This dynamic program came about because Members told us     
there were big opportunities in rental.                                         
We listened, and committed resources to rental--providing advertisingtraining   
and market evaluations for Members considering this business. By year's end,    
there were 350 Just Ask Rental operations.                                      
That's what comes from performing like a wholesaler, while thinking like a      
retailer.                                                                       

Danny R. Burton                                                                 
Vice President, Retail Development                                              
and Operations/Markets                                                          

Photo of Retail Development department employees                                

PAGE 10:                                                                        
Photo of Robert F. Johnson                                                      

PAGE 11:                                                                        
Photo collage of globe, keyboard, and numbers                                   
Photo of keyboard closeup                                                       

The benefits of retail automation are so evident, industry analysts routinely   
question why automation is not mandated in each of the hardware co-ops.         
It's a fair question, but what industry analysts fail to understand is the      
financial challenge of automating a store, particularly a small, neighborhood   
hardware store. It's an obstacle we overcame in 1996.                           
Cotter & Company entered the year with a mission to develop an entry-level      
computer system that would simultaneously help True Value retailers gain the    
advantages of electronic systems, but would also protect our Members' bottom    
line and ease their initial automation investments. We closed the year with an  
affordable, accessible, highly compatible system called True Start(TM).         
The system is appropriately named because it essentially gives Members--large   
and small--a place to start.                                                    
True Start requires a modest investment of less than $6,000. It is provided     
with training, service and support. It is user-friendly, so even the most       
new-to-automation retailer can put it to use quickly and easily.                
True Start consists of an electronic catalog, complete with the 60,000 items    
included in the Fine Line Catalog. It provides electronic ordering for speedy,  
accurate processing without errors. Plus it allows retailers to communicate     
electronically with Cotter & Company.                                           
The implications of True Start are immense. It will eliminate duplication of    
effort at the store level, reduce order processing time, improve tracking and   
follow-up. And perhaps most important, True Start will give Members more time   
to spend with their customers and minding the store.                            
With full automation will come the efficiencies and savings that will help us   
compete more successfully against the big boxes and national chains. That's why 
retail automation exists. And that's why Cotter & Company has been a leader in  
developing it.                                                                  

Robert F. Johnson                                                               
Vice President, Information Services                                            

PAGE 12:                                                                        
Photo of Charles L. Kremers                                                     

PAGE 13:                                                                        
True Value MasterCard graphic                                                   
The Story of Santa Claus poster graphic                                         
Photo of World Series/Man of theYear Flip card stunt                            

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Building the True Value brand in the hotly contested DIY market is a            
multi-faceted responsibility... one that requires national, regional and local  
components.                                                                     
To effectively reach the do-it-yourself customer, we have to be everywhere our  
customers are. In 1996, we were.                                                
The launch of the regional program was a milestone, because it allows retailers 
to tailor marketing efforts to their specific market with low-cost regional     
circulars. More than 1,300 stores took advantage of the regional circulars in   
1996.                                                                           
In 1996, True Value launched the industry's first co-branded MasterCard(R) that 
not only provided one of the lowest annual percentage rates, but also rewarded  
customers for shopping at True Value stores with rebates in the form of gift    
certificates redeemable only at True Value. By the end of the year, there were  
nearly 75,000 active customers in the U.S. carrying True Value MasterCards.     
True Value reached millions of consumers in 1996 on national television with    
dramatic commercials positioning True Value as a helpful do-it-yourself         
resource. We also ran national commercials to generate store traffic during our 
major holiday sales.                                                            
In the spring, True Value virtually owned Opening Day of Major League           
Baseball(R). We rebuilt 115 local Fields of Dreams in the first summer of our   
baseball sponsorship. We honored local heroes and benefited hundreds of         
charities across the country through our Man of The Year sponsorships in Major  
League Baseball, NASCAR(R) and the NFL(TM).                                     
Then we dominated the fourth game of the World Series in October with a card    
stunt orchestrated by 55,000 fans and watched by millions of viewers around the 
world.                                                                          
True Value made history again in December, sponsoring the new animated CBS      
special, "The Story Of Santa Claus," viewed by millions of families during the  
busy holiday shopping season. We brought the theme of the program home to local 
stores by serving as drop sites for the U.S. Marine Corps' Toys For Tots        
program.                                                                        
At every level, in every season, True Value was a dominant presence in 1996,    
with even more to come in 1997.                                                 

Charles L. Kremers                                                              
Vice President, Advertising and Marketing                                       

PAGE 14:                                                                        
Photo of John P. Semkus                                                         

PAGE 15:                                                                        
Photo of Inside of Warehouse                                                    
Chart: Service Levels (for the years 1993-1996)                                 

Distribution accounts for 50 percent of your company's operating costs. Going   
into 1996, one of our primary business objectives was to drive costs out of the 
distribution and transportation channels while preserving the reliable service  
we provide the Members. By all accounts, we exceeded our goals.                 
Overall, system-wide labor and operating expenses were maintained in 1996,      
while the organization handled over $100 million more merchandise than the      
previous year.                                                                  
By putting our trucks to more efficient use and revising our route structure,   
we also eliminated 1.2 million miles and 17 tractors from the distribution      
cycle. And we did this while delivering 31 million more pounds of merchandise   
than was delivered in 1995. These achievements were particularly important      
because they allowed us to lessen the impact of the significant and unexpected  
increases in the cost of diesel fuel.                                           
In the third quarter of 1996, Cotter & Company introduced a new and simplified  
system for assigning freight charges to the Membership. The system is based on  
14 purchase brackets which are calculated against a Member's total purchase     
dollars. Essentially, the system gives Members more control because they can    
ultimately manage their freight rates by maximizing their Cotter & Company      
purchases.                                                                      
One of the most advantageous programs in 1996 was the Gainsharing initiative.   
This employee empowerment program has proven so successful, it has been         
introduced in 10 of our 15 Distribution Centers. Gainsharing is a program which 
awards monetary bonuses to employees who meet and exceed performance goals.     
Manchester is a prime example of how Gainsharing benefits the employees and the 
company. The empowered Manchester DC staff capitalized on the incentives with   
such enthusiasm they earned individual bonuses and still managed to achieve an  
8 percent reduction in operating costs for the Membership.                      
In 1996 we also developed an infrastructure for our Quick Response strategy, an 
initiative that will pivot on the Central Ship system. By year-end we had       
prepared the Central Ship facility, located inside the former General Power     
factory, to receive slower-moving SKUs; and we tested technological systems     
that could successfully manage the new distribution format. By laying this      
groundwork in 1996, we are confident that the launch of Central Ship will occur 
on schedule in the second quarter of 1997.                                      
There were other achievements that put 1996 in the history books. The RDCs      
posted a significant improvement in quality by achieving a 10 percent gain for  
the year. Service levels reached 93.2 percent, and we also realized a           
productivity improvement in both lines filled and dollars shipped.              
These are successes that achieve greater service and cost control for the       
membership. The dedicated employees who made it happen should be very proud of  
what they accomplished in 1996.                                                 

John P. Semkus                                                                  
Vice President, Distribution                                                    
and Transportation                                                              

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PAGE 16:                                                                        
Photo of Kerry J. Kirby, Karen M. Agnew & Daniel T. Burns                       

PAGE 17:                                                                        
Managing the financial performance of a co-op is a complex business. At Cotter  
& Company, there are essentially 5,000 bottom lines to consider in every        
business decision.                                                              
At the wholesale level, our primary mission in 1996 has been to fortify the     
financial strength of Cotter & Company and improve our permanent capital. We    
achieved this goal through many efforts: controlling expenses, realizing        
operating efficiencies and modifying the Members' stock requirement. These and  
other changes will make Cotter & Company a healthier company, and every         
improvement has been pursued with a parallel interest in protecting our         
Members' interests. We need to maximize their patronage dividends, and put cash 
back into their businesses as quickly as possible so they can invest in their   
futures.                                                                        
1996 was a milestone for True Value, and with the emergence of TruServ(TM) in   
the years ahead, we are building on a solid foundation that is remarkably firm. 
Kerry J. Kirby                                                                  
Vice President                                                                  
Finance, Treasurer and                                                          
Chief Financial Officer                                                         

To take the pulse of a company, you should look in its mail room. Or check out  
the switchboard and the duplicating center. That's where chaos tends to         
migrate, because that's where the deadlines are ultimately met and where all    
the make-or-break services that hold a company together are performed.          
Cotter & Company has always invested in these vital services, and the new West  
Loop center that opened in 1996 is a prime example.                             
This facility houses accounts payable, claims administration, member and        
manufacturer relations, collating, credit card operations, mail services,       
maintenance, payroll, printing and shipping/receiving.                          
In 1996 the group of professionals who occupy West Loop accomplished hundreds   
of thousands of small, often invisible feats. And thanks to them the Members    
were heard, the bills got paid, the mail was delivered, information was         
disseminated, data was processed, staff was paid and Cotter & Company enjoyed a 
banner year.                                                                    
Karen M. Agnew                                                                  
Vice President                                                                  
Management Services;                                                            
Assistant Secretary                                                             

The Human Resources, Benefits and Law Departments impact nearly every aspect of 
Cotter & Company's business, providing legal advice or training in areas of     
corporate and commercial law, trademark or real estate law, benefit plans,      
labor relations or human resources.                                             
The Law Department concluded some significant projects in 1996, including the   
Triad Agreement, the Member Finance Agreement with the National Consumer        
Cooperative Bank and the new True Value credit card agreement.                  
Labor agreements with unions were negotiated at our West Loop Center and the    
Portland and Parts Central facilities. And managers were trained on management  
relations practices.                                                            
The Human Resources and Benefits team provided empowerment training, career     
development programs and GainSharing systems.                                   
In its ongoing commitment to provide competitive benefits, the Benefits         
Department amended the pension plan to provide lump sum payments, and           
established a point of service medical plan. Along with the 401K plan, these    
plans provide benefits that meet contemporary needs of our associates.          
Daniel T. Burns                                                                 
Vice President                                                                  
Legal and Human Resources;                                                      
Secretary                                                                       

PAGE 18:                                                                        
Photo of the Board of Directors                                                 
Cotter & Company Board of Directors                                             

First Row: (left to right)                                                      
Leonard C. Farr, William M. Claypool, III, Robert J. Ladner, Daniel A. Cotter,  
Jerrald T. Kabelin, Samuel D. Costa                                             
Second Row: (left to right)                                                     
John M. West, Jr., Richard L. Schaefer, Joe W. Blagg, George V. Sheffer, Dennis 
A. Swanson, Kenneth M. Noble, William M. Halterman,                             
John F. Lottes, III                                                             

Joe W. Blagg3                                                                   
Weakley-Watson                                                                  
True Value                                                                      
Brownwood, TX (915) 646-0536                                                    
Director since 1996                                                             
William M. Claypool, III1,2                                                     
Claypool True Value Hardware                                                    

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Needles, CA (619) 326-2110                                                      
Director since 1970                                                             
Samuel D. Costa, Jr.4                                                           
Costa's True Value Hardware                                                     
Smethport, PA (814) 887-5542                                                    
Director since 1988                                                             
Daniel A. Cotter*                                                               
President and                                                                   
Chief Executive Officer                                                         
Cotter & Company                                                                
Chicago, IL (773) 695-5000                                                      
Director since 1989                                                             
Leonard C. Farr3                                                                
Farr's True Value Hardware                                                      
Coos Bay, OR (541) 267-2137                                                     
Director since 1972                                                             

William M. Halterman3                                                           
Halterman's True Value Hardware                                                 
Petersburg, WV (304) 257-4552                                                   
Director since 1990                                                             
Jerrald T. Kabelin1,4,5                                                         
Kabelin True Value Hardware                                                     
LaPorte, IN (219) 324-5251                                                      
Director since 1985                                                             
Robert J. Ladner, Chairman*                                                     
Ladner's True Value Hardware                                                    
Granite Falls, MN (320) 564-3130                                                
Director since 1994                                                             
John F. Lottes, III2                                                            
Rozier True Value                                                               
Perryville, MO (573) 547-6521                                                   
Director since 1996                                                             
Lewis W. Moore1,4                                                               
Moore's True Value                                                              
Rochelle, IL (815) 562-7682                                                     
Director since 1948                                                             
(Not pictured)                                                                  

Kenneth M. Noble4                                                               
Noble True Value Hardware                                                       
South Glens Falls, NY                                                           
(518) 761-6777                                                                  
Director since 1995                                                             
Richard L. Schaefer3                                                            
Carroll-Ames True Value Hardware                                                
Bryan, OH  (419) 636-1149                                                       
Director since 1976                                                             
George V. Sheffer2                                                              
Murdale True Value Hardware                                                     
Carbondale, IL (618) 529-3400                                                   
Director since 1994                                                             
Dennis A. Swanson4                                                              
Steamboat True Value Hardware                                                   
Steamboat Springs, CO                                                           
(970) 879-8014                                                                  
Director since 1995                                                             
John M. West, Jr.2                                                              
Gulf Coast True Value Hardware                                                  
Englewood, FL (941) 474-1807                                                    
Director since 1991                                                             

Corporate Officers                                                              
Karen M. Agnew                                                                  

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Vice President, Management Services; Assistant Secretary                        
Daniel T. Burns                                                                 
Vice President, Legal and                                                       
Human Resources; Secretary                                                      
Danny R. Burton                                                                 
Vice President, Retail Development and Operations/Markets                       

David W. Christmas                                                              
Vice President, Merchandising                                                   
Daniel A. Cotter                                                                
President;                                                                      
Chief Executive Officer                                                         
Robert F. Johnson                                                               
Vice President,                                                                 
Information Services                                                            

Kerry J. Kirby                                                                  
Vice President, Finance; Treasurer; Chief Financial Officer                     
Charles L. Kremers                                                              
Vice President,                                                                 
Advertising and Marketing                                                       

Steven J. Porter                                                                
Executive Vice President;                                                       
Chief Operating Officer                                                         
John P.  Semkus                                                                 
Vice President, Distribution                                                    
and Transportation                                                              

Committee Memberships:                                                          
1-Executive Committee, 2-Long Range Planning Committee, 3- Audit and Finance    
Committee                                                                       
4-Management Development and Compensation Committee 5-Business Development      
Committee                                                                       
* Ex officio member of all committees                                           

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WORKING TOGETHER BUILDING DREAMS                                                
JAMES C SAYLES  CHRISTINE M LANGE  VALLAY BOWDEN  BILLY RAY BARBER  ALVIN CHAD  
RICHARDS  DOUGLAS WARREN WHITTEN  KEVIN R COLLIER  JEREMY A ZILLS  DORIS F      
DOMINGUEZ  CATHYSTUTTS JONES  STEVENS SMITH  CARL M CASBEER JR  JAMES E         
WIELKENS  RAUL PEREZ  CRISSAL DUVALL  JOHNC RITTER  JARRODD COKER  KEVIN LEE    
LARRY E CARNLEY  MARSHALL HENSLEY  RANDY J WARREN JR  JOHN L WEAVER  ANDY G     
MIKULA  EMMA F RALEY  RUBY K DRAUGHN  ANNAM TANNER  RONALD C ZILLS  LINDA J     
DERDEN  ROGER W HARTMAN  RONALD DALE JORDAN  JOSEPH R KLECKA II  JAYNE A WHITE  
EDDIE B FARMER  ROY E WISEMAN  TERESA A ROPER  MICHAEL R KIDWELL  CHARLES E     
ALLEN  RANDALL J CARVER  STEPHEN W MUNCY  GARY A POE  DWAIN R SMITH  WANDA F    
SPAIN  JAIME RIOS  SCOTTY L MAYO  CLINTON J BELL JR  PAULA G WATSON  VICTOR M   
SLOVAK  PAULINO MORENO  REID A TOLLEFSON  PETER A GONZALES  JAMEY L TIPPING     
GEORGE W MITCHELL  EDDIE J WATSON  TOMMY E SIMS  ROBERT K FARRIS  STEVEN W      
HAYNIE  DARLENE WARREN  VICKI L BRANCH  MARK A BATES  KENNETH W VALENTINE       
DAVID G SEALE  WILLIAM D BURNETT III  LEONEL P GARCIA  JERRY W REDMON  MAURICE  
A SMITH  VIRGIL C JOHNSON  JIMMY E DRIVER  CHARLENE DENNIS  MICHAEL D MCCARTER  
GILBERTO MEDRANO JR  DARRELL J FREDERICK  BRIAN D NETT  WILLIAM H WAKEFIELD     
RANDY W NEREM  MICHAEL J KREMER  RONALD J SMOOK  EDWARD J JACOBSON  DAVID L     
THRUN  SAM E BODE  KEVIN J DORN  BRUCE J HEMINOVER  MITCHELL J LAVEN  KEVIN K   
KENT  PAUL C DUMKE  DANNY L HOPP  BRYON C BAUMAN  KENNETH D ZERNECHEL  JAMES J  
RYAN  NEIL G HEILMAN  JOHN C CARLSON  GERRIT N HOOGENRAAD  LARRY L LAMM  RONALD 
L STATHAM  ROBERT A DITTRICH  DARCEY L BAUMAN  ROYAL C PAHNISCH  KELLY J        
TRUDEAU  DANNY A KOLLMANN  RICHARD A FRENZEL  MARLYN J PETERSON  DANIEL L       
THORSON  ROBERT P MULDOON  DOUGLAS S SARGENT  HUGH B GAPPA  MICHAEL L LUTTER    
KEITH G ANDERSON  BRUCE E LOKKEN  THOMAS J HOERR  LYNN W OLSON  THEODOOR K      
HOOGENRAAD  STEVEN D VISHER  JAMES A REED  JEFFREY S LUTTER  LARRY L HOLTZ      
GERALD STOFFREGEN  THOMAS D TESKE  KEITH J DORN  DALE E MARBLE  DENNIS D        
METTLER  DANIEL P GEMMILL  DANIEL C SARGENT  DENNY J WELLER  SCOTT D JOHNSON    
DONALD D SOLYNTJES  CHRISTOPHER S BLEGEN  ROBERT A REED  DAVID C SCHULTZE  RYAN 
M KIRBY  CHRISTOPHER T EMICH  GARY D KLINDER  CRAIG T WOITAS  WILLIAM W LLOYD   
WILLIAM J KINDLER  JONATHAN                                                     

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G EMICH  DANIEL K WILLIAMS  MICHAEL J HESTON THOMAS J PERRIZO  MARK A ENTER     
STEVEN G KREMER  KEVIN J JONES  JERRY H BEEMAN JACE R FRANKLIN  PAUL E NELSON   
PATSY A ZIWISKY  CINDY R SCHMIT  JANET L HOFFMAN  SHARON M JACOBSEN  CARMEN A   
OEFFLER  COLLEEN MCVENES  VICTORIA A JUHLIN  CATHERINE A HEMINOVER  MARY A      
WIDELL  DENISE M THOMPSON  MAXINE L ANDERSON  SHARI L HADLER  JANS KOR JR       
ARNOLD W MENSE  CHARLES E HOFFMAN  JAMES L BURNS  RAYMOND L WARD  ELDON J JONES 
GENE H STRUCK  TERRY L MENK  RONALD D WILLIAMS  THOMAS J ELBERT  GERALD B       
WAISANEN  DUANE J HANSON  WALTER J BAUER GORDON J GOEBEL  TIMOTHY J ELBERT      
BILLY A RAMUS  THOMAS J NEUBERT  RANDY KEIM HARRY E STEVENSON  DANIEL V SONNEK  
ALAND STENCEL  BARRY W KEIM  RANDALL S BESKE  DOUGLAS J THOMPSON  DONALD ACTON  
HAROLD M ALLEN  ROYCE BAUER  BYRON CLEMENS  JEFFERY D MILLER  DANNY W MCMAHON   
TOM B FISHER  DWAYNE W BEDWELL DENNIS HILAND  BRIAN H SCHWARTZ  ROBERT L WAGNER 
RICHARD T HENRY  MEACHELE L GREATHOUSE  JERRY MCCONNELL  JAMES E CALDWELL       
DONALD MARTIN  CAROL A WESTRICH ESTEL MARTIN  STERLING STEWART JR  TIM J        
COURTNEY  BRUCE SCHAEDEL  ROBERT G CAIN  LARRY W LEE II  TINA M WILLIAMS  RANDY 
WAYNE GILL  JOE A REED  BRIAN C SNIDER  JACK B EMMONS  JON D GILES  JOHN L VARGO
LLOYD R HORLACZER  MICHAEL MURPHY III  ROYCE A HUG  JOHN P COX  BARRY W         
MCCONNELL  GREG M UNGER  JOHN L MCDONALD  JAMES K LIEBERT  ROBERT R KANE  TROY W
GLENDENNING  STEVEN D GORE TODD B DILLINGHAM  MATTHEW D LYONS  DAVID R BRENTON  
RANDALL G HALCOMB  JAMES L TRAYLOR  ROOSEVELT SELLERS JR  TIMOTHY A RUSSELL     
DANIEL J ZIMMERMANN  KURT A HARRIS  DARRELL C MYNATT  DAVID P MASON JR  SHARON K
DUKE  BRIAN SWIHART ROBERT D SNAPP JR  ARCY J CASADA  JIM F SPEARS  TOMMY J     
OLIVE  DAVID L ROLFSON MICHAEL C HOBEIN  MARK E WRIGHT  JAMES M WHITE JR  ERIN L
COOK  JOHN M DANIELS KEITH L DURHAM  SHANNON L MCKINNEY  KATHY J JOHNSON  KEITH 
A DOWELL  JACK GAMMON  JAMES C JANSEN  THERESA ANN CLINE  JAMES C MAVERICK      
BRIAN DOUGLAS MASON  GIRMA SEIFU  DOUGLAS J PRIVETTE  CHRISTINA M DEMOTT  ROBERT
A ROBERTSON LARRY WALLACE  MARTHA BARRETT  CHERRYL MAYFIELD  DIANA ROBERTS      
JANET K GILES JAN MARTIN  SHIRLEY J LUSK  RUTH B SMITH  PAULA L RAGAR  KATRINA  
BREEDEN  SUSAN D LITTLE  YVONNE J MAHONEY  MARVIN D TERRELL  FLOYD P ANDERSON   
JOHN D HOLT DANIEL MOORE  DALLAS L MEDENWALD  CHARLES S BUSH  CHARLES D BOOTH   
DUANE W BRIAR  JERRY A YOST  RICHARD D COPE  TANYAS PARMALEE  STEVEN K WEST     
EDWARD H BURTON  EDWARD J AHERN JR  CURTIS COOK  RICK R ABNEY  TIMOTHY O'CONNOR 
STEPHEN T MEYER  JAMES W HEFFLEY  CHARLES B COOPER  GARY D PRUESS  FRANK L      
THOMPSON TERRY TROSPER  KYLE S MCKINNIES  MICHAEL E MAHOY  MARK D WYLD  JAY A   
BUSER SCOTT C HARROD  ERIC E WATSON  JON T REIFF  THOMAS L CARY  ROBERT DOUGLAS 
PLACE TROY W LUSK  ROBERT G HARRIS  EDWARD J GERKEN  DARWIN H SCHLEHUBER  JASON 
A WALKER  BRIAN J O'DONNELL  DELTON G SCHLEHUBER  JACK BREMER  KENNETH H MC     
CLAIN HENRY J VARGAS  ROY F BESSEY  KEVIN E BASS  ROBERT J PETERSON  BRYCE R    
PURCHASE  ANTHONY C MURPHY  CHRISTOPHER P WOLF  ODDIE B MEDLOCK  ANDREW C       
JENKINS  ARNOLD SENA  LAWRENCE H PORTER  BRIAN D NELSON  JOHN L THOMPSON  STEVE 
GOMEZ  CARL G MEDLOCK  DANNY J PAWLETZKI  ROBERT S LOPEZI  ROGER A SJOSTRAND    
MICHAEL J TATE  JAMES D BOUSKA  PATRICK K TOW  MICHAEL R RONDEAU  REED M HABERL 
RICK C TAFOYA  DARCY  JOANNE  DAVID W SCHNEIDER  NICHOLAS J GUADAGNOLI CHARLES P
HIXENBAUGH  DANIEL A BLOHM  DAVID JAMES BOWES  KENDRA S GRISCHKOWSKY FRANK E    
BRICKHOUSE  DEON R ROGERS  DAVID W PARKS  AMBER D MORRIS  ANNIE M BALDWIN  SHAWN
D TOW  TIMOTHY M BONE  EDITH R STOUT  THOMAS V TOEWS  SHARON L SIMMONS  MANUEL A
GUTIERREZ  JAMES D BENNETT  DONALD A COSTER  SCOTT D SMITH MICHAEL E MENDEZ     
DARWIN D KRAMER  DANIEL T ORTEGA JR  NORMAN D WHEELER GREGORY VIDAL LEAL  SCOTT 
E BROSIER  PAUL F THORNTON  ROY N HARRIS  REBECCA L BOLTON  ELINA M FRESQUEZ    
MELANIE M STOWELL  CAROL L PROUTY  CONNIE A REISENBIGLER  JESSICA E FADEYI      
PAMELA SINNER  SHARON M FRIEDLI  PAULINE L STOWELL  TAMMIE L TAYLOR  JEROME L   
REISENBIGLER  DENNIS F SITTER  DALE J DAVIS SHAWN T SCOTT  DALE R HOHN  PAUL L  
DELK  PAUL A BECKER  ARTHUR M WALLEVIK MARVIN M EDELMAN  VERNON L RAUDABAUGH    
MIKEL R CONNOR  KENNETH J POOLER  JAMES S PIMPLE  WILLIAM D TAYLOR  VIRGIL L    
KRUGER  WILLIAM T WYATT  THOMAS NICHOLAS GEURTS  RICHARD S REISENBIGLER  JOHN   
HARVEY ELLIS  RICHARD P THOMAS  JOHN W MURPHY  ROCKY D WOOD  DUANE ALLEN        
CLEARWATER  MICHAEL M ZUNIGA  THOMAS HICKS GARY GENE SCHAFER  RICK L GASPERSON  
MARION E MERIDETH  DAVID DAY GUERRERO NEWTON J HOLT  MARK PAUL BIGGS  ROBERT E  
POLKIV  HOSEA JEROME DAVIS  DARLA TAFOYA  LISA J CORREIA  MICHAEL G WESTRAY     
RICHARD A TURNER  GENE A DINGER SERGIO MARTINEZ  GORDON L MUMMA  DAVE A ENGLAND 
MICHAEL J PATENAUDE  HOWARD W DOYLE  JEFFERY M SMITH  DON WESLEY WARNKE  CHARLES
E PIAZZA  URIAH WALTER HARRISON CLARK  JODY A KING  MICHAEL B COTNER  ANGELA    
KATHRINE RYAN  HENRY D RATHJEN JR  EDELMIRA AMISTANI  ERNESTO MARTINEZ  DAVID M 
HAMER  CARLOS G HERNANDEZ  ADRIAN RODRIGUEZ  KENISE M NICHOLS  DEBRA L KING     
MICHAEL A CORDONE JOHN A TIESMAN  JIM D HAIRSTON  ROBERT J ALVAREZ  KEVIN J     
HAMER  MEREDITH R RUTHERFORD  TIMOTHY W HAYES  BEN I HIGA JR.  GREG L MIKAELSEN 
ROBERT R CARTER DALE T GAULDIN  ROBERT H DUNCAN JR  NICOLAS MARMOLEJO  HENRY G  
HUNTER  GWEN K HATZFELD PARKER  JOHN A HILL  MARTIN J JOHANNECK CABRERA  JAMES L
CRESAP KARRIE L HATZFELD  LYDIA LOSOYA  ROBERTO LOSOYA  BILLY W GAGE  MATTHEW J 
WUNDER VIKTOR W ANDERSON  STEPHEN P GILLESPIE  DENNIS D HUBBARD  GEORGE N       
SANDOVAL JR MARK C PIPKIN  ESTELA MARTINEZ  JEFFREY S HILL  RICARDO PIZANO      
BENJAMIN J DELEON  ADRIAN E PEREZ  ANTONIO M OLVERA  LOUIS C STEINMETZ  LUIS C  
VILLA JOSHUA K SCHAFER  CINDY MARTINEZ  HERTIS M BOYD  GARY S GADDIE  ROBERT    
URIBES TERRANCE L PARKHURST JR  MICHAEL R ROACH  DONALD D WEEKS  RICHARD O      
GUTIERREZ MELISSA L MENDOZA  TERRY R PIXTON  ANNETTE POLK  LAURA M HENRIQUEZ    
ALBERTA R SAVALA  TERESA H TORRES  MARILYN K NAVARRO  DEBRA A LANDERS  LYNDA L  
COOK DANIEL E GREY  CATHY R MONTOYA  TOM A ROACH  RAUL MARTINEZ  ANTONIO MONTOYA
JR RANDY L LEEPER  JAVIER M JACOBO  RYAN K STEWART  MARK L PRESTON  HENRY R     
DAVIS TIMOTHY D SEXTON  KENNETH J BROWN  MONROE THOMPSON  RAUL R CASTANEDA      
STEVEN D PEARSON  GARY O SURRATT  DORREN D THRUSH  THOMAS C WILLIAMS  STEVEN C  
ANDERSON DELBERT E SURRATT  EDWARD L TATUM  MICHAEL E BOWERS  ERIC R JACOBSEN   
DAVID A MELLO  MELVIN WINROW  MARK A GALLEGO  JOHN C HUMPHREY  RONALD C HESELTON
DAN T PARSONS  DAVID A TRUJILLO  TIMOTHY WAYNE BECKWITH  MARY C WALKER  BRENDA F

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LIMER  LARRY D BULLOCK  DEBORAH H MADDOX  CLISTON KEARNEY  CLAUDINE A ALSTON    
JONATHAND STEVENSON  SAMUEL T MEADOR  FELICIA A DUNSTON  RAYMOND T BULLOCK      
REBECCA A RAY  JULIAN W PEGRAM  BRIAN J STEVENSON  EMMA P TOWNSEND  LARRY A     
JORDAN  MARILYN PENDERGRASS  JOSEPH SHEARIN  SOPHIA D RICHARDSON  DEBRA G TOWNS 
SHEILA R TURNER  RONALD W BATES  JAMES T PENNY  JOHN E HAWLEY  HERMAN A MARTIN  
WAYNE H THOMAS  WILLIAM C PATTON  CURTIS T DURHAM  CONVIE E HOWARD  LEROY       
RICHARDSON  OLANDIS T HARRIS  CRAIG H CLARK  MARY M PERRY  TIMOTHY L COMPTON    
LLOYD WATKINS  MARIE K JONES  EUGENE NEWELL  ALFRED TAYLOR III  JEANETTE E      
GRIMALDI  DERRICK L HAWKINS  RENITA D PEACE  SANDRA KAY LEDESMA  LARRY HENDERSON
KENNETH HENDERSON  DOUGLAS R ROBERTS  DEBORAH F BROOKS  RICHARD J TAYLOR  RONALD
F LYNN  DAVID K AVERY  DANNY L RIGGAN  STANLEY RICE  TIGKIN R RICHARDSON        
KENNETH L BALL  BENJAMIN W PULLEY  BETTY J WIMBUSH  LARRY D OWENS JENNIFER B    
LAYTON  MICHAEL R WINTERS  MARGARET F RICHARDSON  JAMES ALLEN JR WILLIAM T WYCHE
JOANN D HENDRICKS  JUDITH MARIE EDWARDS  GAIL N TIPPETT  LORI V NULL  VICKY C   
STOKES  KRISTAL M DICKERSON  MICHELLE R NEWTON  EDNA F BISHOP MELINDA J CURTIS  
GEORGE E BAGBY  MARSHALL N BRADLEY  ARCHIE SMITH  MICHAEL E JONES  JIMMIE L     
THORNTON  JERRY ANDREWS  MELVIN L LEWIS  RICHARD E WAVERLY JOHN C HENDERSON     
JERRY W PRATHER SR  OTHA P WILKINS JR  GEORGE WHITFIELD III MICHAEL G ROBERTS   
HAROLD L PLUMMER  AUBREY D RODWELL  DARYL K HORNE  RICHARD L MASSON  DAVID W    
BJORK  LLOYD A ENGLETON  WILBERT R SWIFT  DAVID FLUKER  JAMES H THURNGUIST      
BRIAN S JONES  WILLIE WASHINGTON JR  SANDRA K LITTLE  SUSAN R ALGER MARK C      
DZURIK  BERNARD E GRAHAM  DAVID L HERNANDEZ  ROBERT L MCGLYNN  SHANNON A REWERTS
HENRY D SMITH JR  DORIS ELIZABETH STEGALL  DENCOV BRYANT II  TINA M WILLIS  MARY
A ENGLETON  CHARLES ANTHONY HOUSER  BRUCE S TOSCANO  CAROLYN D REICH  TERESA A  
RIAUBIA  ANGELA R GAGNE  JOSE R SOTO  NOEL RICKY SMITH  RICHARD C EYLER  VUSHNU 
PERSAUD  ROSLYN M SMITH  MARY A ST LAURENT  JEANNE M MC KENZIE PATRICIA ANNE    
CATHCART  CAROLYN S SHANNON  KIMBERLY A BAYNE  TERESA K ALLEN GARY M CHAPMAN    
ROBERT E WOODRING  JERRY W TIDWELL JR  GARRY L SUMMERS  STEPHEN J SCHMIDT SR    
CHRISTOPHER E OLIVER  ARTHUR W BROWN  LORIL DAVIS  JEFFREY PATRIZI  KATHYM      
ORZECH  JOSHUA B LEMON  SHANNONM KEANE  SCOTT HUMPHREY  SANDRAD GAIC  JANEA     
NADOLNY  APRILM APLAND  SARAHE MAJKZAK  LORNA J SIMPSON  HAROLD M LAMBKEE       
ELIZABETH A CAMPBELL  MICHELLE A BURMAN  CRISTIE L KETCHAM  JERI B APLAND       
BARBARA M SYPIEN  IRENE A BREUTZMANN FRANK E GIERUT  SUZANN HENKEL  MARYANN E   
RAMIREZ  WENDY J WEBER  REGINA S RADKE  CHERYL A GRUEBNAU  DEBRA J DERDZINSKI   
CHERYL L PHILLIPS  MARILYN FUENTES                                              

PAGE 20:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             

FINANCIAL REVIEW                                                                

REVENUES                                                                    
In fiscal year 1996, Cotter & Company revenues were $2,441,707,000, an      
increase of 0.2% from fiscal year 1995.  Current year revenues were         
influenced by the 1995 phase-out of the V&S Variety and General Power       
 Equipment divisions. Comparable store revenues increased 4.4% due to improved
 member participation. Fiscal year 1996 revenue increases were concentrated in
 the core merchandise categories of Electrical and Plumbing, up 4.0%, Painting
and Cleaning, up 5.0%, Farm and Garden, up 3.8% and Lumber and Building     
Materials, up 2.4%.  Additionally, Cotter & Company continued to pursue     
business opportunities such as International, which increased 14.2% and     
trueAdvantage, which increased 14.2%. In addition, the Company continued to 
expand the Pinpoint Pricing program, which reduced the selling price of many
core hardware and related products.                                         

OPERATIONS                                                                  
Overall gross margins, as a percentage of revenues, decreased for the       
fifth year in a row, to 8.1% from 8.3% last year.  This reduction in gross  
margin was the result of a more competitive pricing strategy, which included
the expanded Pinpoint Pricing program that resulted in a $7.1 million price 
reduction to the Members.  Other pricing strategies returned an additional  
$2.0 million to the Members, predominately generated from the trueAdvantage 
program. Warehouse, general and administrative expenses increased slightly  
compared to the prior year, but as a percentage of revenues remained        
comparable to 4.7% in 1995, reduced from  5.2% in 1994.                     

PATRONAGE DIVIDEND AND MEMBER PAYOUT                                        
The annual patronage dividend for fiscal year 1996 was $53,320,000 compared 
to $60,140,000 last year. Despite the decrease in the total dividends, the  
average patronage dividend return per Member increased over 10.0% for fiscal
year 1996 compared to fiscal year 1995.  Total Member payout, which includes
interest paid semi-annually on previously issued promissory (subordinated)  
notes in addition to the patronage dividend, totaled $71,780,000 compared to
$80,767,000 last year.  Presented in the table below are the sources and    
components of Member payout for fiscal years 1996 and 1995.                 

The patronage dividend paid to each Member will vary depending upon the     
volume and type of purchases, the method of shipment and extent of          
 participation in each of the source programs listed below.  As a result, each
Member's patronage dividend will differ slightly from the overall Company   
averages.  In fiscal year 1996, the average dividend percentages from stock,
relay and direct shipment purchases were 2.7%, 1.5% and 0.4%, respectively. 
Purchases of Tru-Test Manufacturing and Baltimore Brush products earned     
Members an average manufacturing patronage dividend of 12.5% and 12.3%,     
 respectively, in fiscal year 1996.  In fiscal year 1995, the average dividend
percentages for stock, relay, direct shipment, Tru-Test Manufacturing and   
Baltimore Brush purchases were 3.6%, 1.5%, 0.4%, 11.9% and 12.3%,           
respectively.                                                               

The Company considers promissory (subordinated) notes and Class B common    
stock important parts of its patronage dividend. The five-year notes provide
Members a recurring return on their investment and the Class B common stock 
provides the Company a source of permanent                                  

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capital.  Reflecting comparable market interest rates, promissory           
  (subordinated) notes issued as part of the fiscal year 1996 patronage dividend
bear interest at an annual rate of 8.1% compared to 7.6% in 1995.           

                                                        [Enlarge/Download Table]

                                                                      Fiscal Year  Fiscal Year
MEMBER PAYOUT                                                            1996         1995    
-------------                                                         -----------  -----------
                                                                          (000's omitted)     
                                                                                              
   Sources of Member payout:                                                                  
   Patronage dividend from:                                                                   
      Stock shipments................................................    $30,108       $37,410
      Relay shipments................................................      3,282         3,473
      Direct shipments...............................................      3,463         3,603
      Tru-Test Manufacturing.........................................     13,919        13,276
      Baltimore Brush................................................      2,548         2,378
                                                                         -------       -------
   Total patronage dividend..........................................     53,320        60,140
   Interest paid to Members..........................................     18,460        20,627
                                                                         -------       -------
   Total Member payout...............................................    $71,780       $80,767
                                                                         =======       =======

   Components of Member payout:                                                               
   Cash payout:                                                                               
      Interest paid to Members.......................................    $18,460       $20,627
      Cash patronage dividend........................................     16,142        18,315
                                                                         -------       -------
   Total Member cash payout..........................................     34,602        38,942
   Promissory (subordinated) notes...................................     25,123        32,047
   Class B common stock..............................................      8,645         6,422
   Member indebtedness...............................................      3,410         3,356
                                                                         -------       -------
   Total Member payout...............................................    $71,780       $80,767
                                                                         =======       =======


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PAGE 21:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             

CONSOLIDATED BALANCE SHEET                                                      

                                                        [Enlarge/Download Table]


                                                                  December 28,     December 30,
                                                                      1996            1995     
                                                                  ------------    ------------ 
                                                                       (000's omitted)         
                                                                                               
ASSETS                                                                                         
Current assets:                                                                                
   Cash and cash equivalents ....................................     $  1,662      $ 22,473   
   Accounts and notes receivable ................................      307,205       287,888   
   Inventories ..................................................      347,554       315,311   
   Prepaid expenses .............................................       13,517        11,180   
                                                                      --------      --------   
    Total current assets ........................................      669,938       636,852   
Properties owned, less accumulated depreciation .................      167,331       165,683   
Properties under capital leases, less accumulated amortization ..        3,680         5,393   
Other assets.....................................................       13,036        11,648   
                                                                      --------      --------   
    Total assets ................................................     $853,985      $819,576   
                                                                      ========      ========   

LIABILITIES AND CAPITALIZATION                                                                 
Current liabilities:                                                                           
   Accounts payable .............................................     $287,291      $297,884   
   Accrued expenses .............................................       51,149        53,363   
   Short-term borrowings ........................................       70,594         2,657   
   Current maturities of notes, long-term debt and lease                                       
    obligations .................................................       43,458        61,634   
   Patronage dividend payable in cash ...........................       16,142        18,315   
                                                                      --------      --------   
    Total current liabilities ...................................      468,634       433,853   
Long-term debt ..................................................       77,680        75,449   
Obligations under capital leases ................................        2,465         3,764   
Capitalization:                                                                                
   Promissory (subordinated) and instalment notes ...............      185,366       186,335   
   Class A common stock and partially paid subscriptions                                       
    (Authorized 100,000 shares; issued and fully paid                                          
     48,480 and 52,710 shares) ..................................        4,876         5,294   
   Class B nonvoting common stock and paid-in capital                                          
    (Authorized 2,000,000 shares; issued and fully paid                                        
     1,043,521 and 1,055,700 shares; issuable as partial                                       
     payment of patronage dividends, 84,194 and 62,005 shares) ..      114,053       113,062   
   Retained earnings ............................................        1,751         2,661   
                                                                      --------      --------   
                                                                       306,046       307,352   
   Foreign currency translation adjustment ......................         (840)         (842)  
                                                                      --------      --------   
    Total capitalization ........................................      305,206       306,510   
                                                                      --------      --------   
    Total liabilities and capitalization ........................     $853,985      $819,576   
                                                                      ========      ========   

See Notes to Consolidated Financial Statements.                                 

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PAGE 22:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             

CONSOLIDATED STATEMENT OF OPERATIONS                                            

                                                        [Enlarge/Download Table]

                                                       For the Years Ended             
                                           ------------------------------------------- 
                                           December 28,   December 30,    December 31, 
                                               1996           1995            1994     
                                           ------------  ---------------  ------------ 
                                                         (000's omitted)               
                                                                                       
Revenues .................................   $2,441,707       $2,437,002    $2,574,445 
                                           ------------  ---------------  ------------ 
Cost and expenses:                                                                     
  Cost of revenues .......................    2,245,071        2,234,934     2,351,114 
  Warehouse, general and administrative ..      115,457          114,107       132,759 
  Interest paid to Members ...............       18,460           20,627        22,894 
  Other interest expense .................       10,175            9,298         7,493 
  Gain on sale of properties owned .......           --               --          (692)
  Other income, net ......................         (228)          (1,177)         (604)
  Income tax expense .....................          362              176         1,163 
                                             ----------       ----------    ---------- 
                                              2,389,297        2,377,965     2,514,127 
                                             ----------       ----------    ---------- 
Net margins ..............................   $   52,410       $   59,037    $   60,318 
                                             ==========       ==========    ========== 

See Notes to Consolidated Financial Statements. 

PAGE 23:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             

CONSOLIDATED STATEMENT OF CASH FLOWS                                            

                                                        [Enlarge/Download Table]

                                                                        For the Years Ended             
                                                            ------------------------------------------- 
                                                            December 28,   December 30,    December 31, 
                                                                1996           1995            1994     
                                                            ------------  ---------------  ------------ 
                                                                          (000's omitted)               
                                                                                                        
Operating activities:                                                                                   
   Net margins ............................................     $ 52,410         $ 59,037      $ 60,318 
   Adjustments to reconcile net margins to cash and cash                                                
     equivalents from operating activities:                                                             
     Depreciation and amortization ........................       20,561           20,706        21,613 
     Provision for losses on accounts and notes                                                         
       receivable .........................................        3,201            3,741         4,233 
     Changes in operating assets and liabilities:                                                       
       Accounts and notes receivable ......................      (38,581)         (13,921)      (33,112)
       Inventories ........................................      (32,243)          69,436       (49,145)
       Accounts payable ...................................      (10,593)         (36,584)       79,957 
       Accrued expenses ...................................       (2,563)           7,552         6,022 
       Other adjustments, net .............................       (1,801)          (3,327)       (1,223)
                                                                --------         --------      -------- 
       Net cash and cash equivalents provided by                                                        
         (used for) operating activities ..................       (9,609)         106,640        88,663 
                                                                --------         --------      -------- 

Investing activities:                                                                                   
   Additions to properties owned ..........................      (23,530)         (24,904)      (21,427)
   Proceeds from sale of properties owned .................        3,151            5,022         2,174 


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                                                        [Enlarge/Download Table]

                                                                                              
   Changes in other assets ................................    (1,388)        617       1,132 
                                                             --------   ---------   --------- 

       Net cash and cash equivalents (used for)                                               
         investing activities .............................   (21,767)    (19,265)    (18,121)
                                                             --------   ---------   --------- 

Financing activities:                                                                         
   Payment of annual patronage dividend ...................   (18,315)    (18,383)    (16,614)
   Payment of notes, long-term debt and lease                                                 
     obligations ..........................................   (40,271)    (43,106)    (39,632)
   Proceeds from long-term borrowings .....................     1,693       3,000          -- 
   Increase (decrease) in short-term borrowings ...........    67,937      (6,672)    (13,851)
   Purchase of  common stock ..............................      (660)     (1,740)       (216)
   Proceeds from sale of Class A common stock .............       181         168         288 
                                                             --------   ---------   --------- 

       Net cash and cash equivalents provided by (used for)                                   
         financing activities .............................    10,565     (66,733)    (70,025)
                                                             --------   ---------   --------- 

Net increase (decrease) in cash and                                                           
   cash equivalents .......................................   (20,811)     20,642         517 
                                                             --------   ---------   --------- 

Cash and cash equivalents at beginning of year ............    22,473       1,831       1,314 
                                                             --------   ---------   --------- 

Cash and cash equivalents at end of year ..................   $ 1,662     $22,473      $1,831 
                                                             ========   =========   ========= 

See Notes to Consolidated Financial Statements. 
PAGE 24:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             

CONSOLIDATED STATEMENT OF CAPITAL STOCK AND RETAINED EARNINGS                   

For the Three Years Ended December 28, 1996     

                                                        [Enlarge/Download Table]

                                      Common Stock, $100 Par Value                             
                                 ---------------------------------------                       
                                        Class A             Class  B                           
                                 ----------------------  ---------------                       
                                                             Issued                   Foreign  
                                                               and                   Currency  
                                                              to be       Retained  Translation
                                   Issued    Subscribed      Issued       Earnings  Adjustment 
                                 ----------  ----------  ---------------  --------  -----------
                                                         (000's omitted)                       
                                                                                               

Balances at January 1, 1994 ....     $6,588      $   45         $110,773  $  3,867       $(670)

 Net margins ...................                                            60,318             
 Foreign currency translation                                                                  
  adjustment ...................                                                          (245)
 Patronage dividend ............                                  10,829   (60,421)            
 Stock issued for paid-up                                                                      
  subscriptions ................        275        (275)                                       
 Stock subscriptions ...........                    265                                        
 Stock purchased and retired ...       (528)                      (4,939)                      
                                   --------    --------      -----------   -------     ------- 

Balances at December 31, 1994 ..      6,335          35          116,663     3,764        (915)

 Net margins ...................                                            59,037             
 Foreign currency translation                                                                  
  adjustment ...................                                                            73 
 Patronage dividend ............                                   6,422   (60,140)            
 Stock issued for paid-up                                                                      
  subscriptions ................        168        (168)                                       
 Stock subscriptions ...........                    156                                        


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                                                        [Enlarge/Download Table]
                                                                                        
 Stock purchased and retired ...  (1,232)                (10,023)                       
                                 --------  --------   ----------   --------   --------- 

Balances at December 30, 1995 ..    5,271        23       113,062     2,661        (842)

 Net margins ...................                                     52,410             
 Foreign currency translation                                                           
  adjustment ...................                                                      2 
 Patronage dividend ............                            8,645   (53,320)            
 Stock issued for paid-up                                                               
  subscriptions ................      184      (184)                                    
 Stock subscriptions ...........                189                                     
 Stock purchased and retired ...    (607)                 (7,654)                       
                                 --------  --------   ----------   --------   --------- 

Balances at December 28, 1996 ..   $4,848       $28      $114,053    $1,751      $ (840)
                                 ========  ========   ===========  ========   ========= 

Subscribed Class A common stock amounts are net of unpaid amounts of $1,000 
 at December 28, 1996, December 30, 1995 and  December 31, 1994 and $14,000 at
January 1, 1994 (for 290, 240, 360 and 590 shares subscribed, respectively).

See Notes to Consolidated Financial Statements.                                 

PAGE 25:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

1. DESCRIPTION OF BUSINESS AND ACCOUNTING POLICIES                          

Cotter & Company (the Company) is a Member-owned wholesaler of hardware and 
related merchandise. The Company also manufactures paint and paint          
applicators.  The Company's goods and services are sold predominantly within
 the United States, primarily to retailers of hardware and related lines, each
of whom has purchased ten shares of the Company's Class A common stock upon 
becoming a Member.  The Company operates in a single industry as a          
Member-owned wholesaler cooperative.  All members are entitled to receive   
patronage dividend distributions from the Company on the basis of gross     
margins of merchandise and/or services purchased by each member. In         
accordance with the Company's By-laws, the annual patronage dividend is paid
to Members out of gross margins from operations and other patronage source  
income, after deduction for expenses and provisions authorized by the Board 
of Directors.                                                               

On December  9, 1996, the Boards of Directors of the Company and ServiStar  
Coast to Coast Corporation agreed to merge the two companies.  ServiStar    
 Coast to Coast is a $1,700,000,000 hardware wholesaler with a strong presence
in retail lumber and building materials. The transaction is subject to      
customary closing conditions, including approval by the stockholders of both
companies, and is expected to be completed on July 1, 1997. Following       
completion of the merger, the Company will be renamed TruServ Corporation.  

The significant accounting policies of the Company are summarized below:    

Consolidation                                                               
 The consolidated financial statements include the accounts of the Company and
all wholly-owned subsidiaries. The consolidated financial statements also   
 include the accounts of Cotter Canada Hardware and Variety Cooperative, Inc.,
a Canadian Member-owned wholesaler of hardware, variety and related         
merchandise, in which the Company has a majority equity interest.           

On January 13, 1995, the Company agreed to the sale of certain inventory of 
its V&S Variety division to a national wholesaler who  agreed to supply the 
majority of the V&S Stores.  Also, on January 31, 1995, the Company sold    
certain assets of its outdoor power equipment manufacturing division to a   
nationally recognized company and secured a favorable supply agreement for  
such equipment.  These transactions did not have a material impact on the   
Company's results of operation or financial position.                       

Capitalization                                                              
The Company's capital (Capitalization) is derived from Class A voting common
stock and retained earnings, together with promissory (subordinated) notes  
and Class B nonvoting common stock issued in connection with the Company's  
annual patronage dividend. The By-laws provide for partially meeting the    
 Company's capital requirements by payment of the year-end patronage dividend,
of which at least twenty percent must be paid in cash, and the balance in   
five-year promissory (subordinated) notes and $100 par value Class B common 
stock.                                                                      

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Membership may be terminated without cause by either the Company or the     
Member upon sixty days' written notice. In the event membership is          
 terminated, the Company undertakes to purchase, and the Member is required to
sell to the Company, all of the Member's Class A common stock and Class B   
common stock at book value. Payment for the Class A common stock will be in 
cash. Payment for the Class B common stock will be a note payable in five   
equal annual instalments bearing interest at the same rate per annum as the 
 promissory (subordinated) notes most recently issued as part of the Company's
patronage dividend.                                                         

Cash equivalents                                                            
The Company classifies its temporary investments in highly liquid debt      
instruments, with an original maturity of three months or less, as cash     
equivalents.                                                                

Inventories                                                                 
Inventories are stated at the lower of cost, determined on the `first-in,   
first-out' basis, or market.                                                

Properties                                                                  
Properties are recorded at cost.  Depreciation and amortization are computed
by using the straight-line method over the following estimated useful lives:
buildings and improvements - 10 to 40 years; machinery and warehouse, office
and computer equipment - 5 to 10 years; transportation equipment - 3 to 7   
years; and leasehold improvements - the life of the lease without regard to 
options for renewal.                                                        

Revenue Recognition                                                         
The Company recognizes revenue when merchandise is shipped or services are  
rendered.                                                                   

Retirement plans                                                            
The Company sponsors two noncontributory defined benefit retirement plans   
covering substantially all of its employees. Company contributions to       
union-sponsored defined contribution plans are based on collectively        
bargained rates times hours worked. The Company's policy is to fund annually
all tax-qualified plans to the extent deductible for income tax purposes.   

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            

PAGE 26:                                                                        

COTTER & COMPANY 1996 ANNUAL REPORT                                             

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

accompanying notes.  Actual results could differ from those estimates.      

Reporting year                                                              
The Company's reporting year-end is the Saturday closest to December 31.    

2. INVENTORIES                                                              

                                                                [Download Table]

Inventories consisted of:                                                
                            December 28,                   December 30,  
                                 1996                           1995     
                            --------------                 --------------
                                          (000's omitted)                
                                                                         
Manufacturing inventories:                                               
 Raw materials ...........      $  2,797                       $  2,139  
 Work-in-process and                                                     
  finished goods .........        24,558                         19,407  
                                --------                       --------  
                                  27,355                         21,546  
Merchandise inventories ..       320,199                        293,765  
                                --------                       --------  

                                $347,554                       $315,311  
                                ========                       ========  

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3. PROPERTIES                                                               

Properties owned or leased under capital leases consisted of:               

                                                                [Download Table]

                                                   December 28,      December 30,   
                                                       1996              1995       
                                                  --------------    --------------  
                                                  Owned    Leased   Owned    Leased 
                                                  ------    ------  ------    ------
                                                            (000's omitted)         
                                                                                    
Buildings and improvements ...................... $179,206  $   --  $173,568  $   --
Machinery and warehouse equipment ...............   61,183      --    60,197      --
Office and computer equipment ...................   74,065      --    77,340      --
Transportation equipment ........................   16,561  11,202    21,076  11,454
                                                  --------  ------  --------  ------
                                                   331,015  11,202   332,181  11,454
Less accumulated depreciation and amortization ..  175,730   7,522   178,793   6,061
                                                  --------  ------  --------  ------
                                                   155,285   3,680   153,388   5,393
Land ............................................   12,046      --    12,295      --
                                                  --------  ------  --------  ------

                                                  $167,331  $3,680  $165,683  $5,393
                                                  ========  ======  ========  ======

4. LONG-TERM DEBT AND BORROWING ARRANGEMENTS                                

                                                                [Download Table]

Long-term debt consisted of:                                                      
                                                       December 28,   December 30,
                                                         1996             1995    
                                                      ------------    ----------- 
                                                             (000's omitted)      

                                                                                  
Senior note at 8.60% ................................    $47,000        $49,000   
Term loans:                                                                       
  5.97% .............................................      2,437          3,000   
  Variable (7.33% and 7.60%, respectively) ..........      6,200          6,200   
  Canadian prime at 7.50% ...........................         --          3,665   
Redeemable (subordinated) term notes,                                             
  fixed Interest rates ranging from 6.85% to 7.61% ..     26,683         16,697   
Industrial Revenue Bonds (5.28%) ....................      4,000          4,000   
                                                         -------        -------   
                                                          86,320         82,562   
Less amounts due within one year ....................      8,640          7,113   
                                                         -------        -------   
                                                         $77,680        $75,449   
                                                         =======        =======   

Principal payments for the 8.60% senior note are due quarterly in           
incrementally increasing amounts through maturity in 2007.                  

Principal payments for the 5.97% term loan are due quarterly beginning in   
1996 through maturity in 1999.  Payment for the variable term loan is due in
1999.                                                                       

The redeemable (subordinated) term notes have two to four year terms and are
issued in exchange for promissory (subordinated) notes that were held by    
promissory note holders, who do not own the Company's Class A Common Stock. 
Also, effective October 1, 1996 the term notes were  opened for purchase by 
investors that are affiliated with the Company.                             

 On October 1, 1997, and every three-year period thereafter, the interest rate
 on the 5.28% industrial revenue bonds will be adjusted based on a bond index.
These bonds may be redeemed at face value at the option of either the       
Company or the bondholders at each interest reset date through maturity in  
2003.                                                                       

Total maturities of long-term debt for fiscal years 1997, 1998, 1999, 2000, 
2001 and thereafter are $8,640,000 $16,481,000, $17,574,000, $7,625,000,    
$4,000,000 and $32,000,000, respectively.                                   

PAGE 27:                                                                        

COTTER & COMPANY 1996 ANNUAL REPORT                                             

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

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The Company has established a $125,000,000 five-year revolving credit       
facility with a group of banks.  In addition, the Company has various       
short-term lines of credit available under informal agreements with lending 
banks, cancelable by either party under specific circumstances.  The        
borrowings under these agreements were $70,594,000 at December 28,1996 and  
were at a  weighted average interest rate of 5.5%.   At December 30, 1995,  
 the Company's Canadian subsidiaries had short- term borrowings at an interest
rate of 7.5%.                                                               

The Company is required to meet certain financial ratios and covenants      
pertaining to certain debt arrangements.                                    

5. CAPITAL LEASES AND OTHER LEASE COMMITMENTS                               

The Company rents buildings and warehouses, office, computer and            
transportation equipment under operating and capital leases.  The following 
 is a schedule of future minimum lease payments under long-term non-cancelable
 leases, together with the present value of the net minimum lease payments, as
of December 28, 1996:                                                       

                                                                [Download Table]

                                               Capital    Operating    
                                               -------    ---------    
                                                        (000's omitted)
                                                                       
Fiscal years                                                           
------------                                                           
  1997 .......................................  $1,433    $10,387      
  1998 .......................................   1,144      9,126      
  1999 .......................................     809      7,411      
  2000 .......................................     296      6,221      
  2001 .......................................     184      5,509      
  Thereafter .................................     108     45,651      
                                                ------    -------      
Net minimum lease payments ...................   3,974    $84,305      
                                                          =======      
Less amount representing interest ............     145                 
                                               -------                 
Present value of net minimum lease payments ..   3,829                 
Less amounts due within one year .............   1,364                 
                                                ------                 
                                                $2,465                 
                                                ======                 

Capital leases expire at various dates and generally provide for purchase   
options but not renewals. Purchase options provide for purchase prices at   
either fair market value or a stated value which is related to the lessor's 
book value at expiration of the lease term.                                 

                                                        [Enlarge/Download Table]

Rent expense under operating leases was as follows:                                             
                                                                For the Years Ended             
                                                     -------------------------------------------
                                                     December 28,  December 30,     December 31,
                                                        1996          1995             1994     
                                                     ------------  ---------------  ------------
                                                                   (000's omitted)              
                                                                                                

Minimum rent ......................................  $14,476        $ 9,553           $8,487    
Contingent rent ...................................      495            510              611    
                                                     -------        -------           ------    
                                                     $14,971        $10,063           $9,098    
                                                     =======        =======           ======    

6. CAPITALIZATION                                                           

                                                        [Enlarge/Download Table]

Promissory (subordinated) and instalment notes consisted of:                                 
                                                              December 28,       December 30,
                                                                  1996              1995     
                                                              ------------       ------------
                                                                     (000's omitted)         
                                                                                             

Promissory (subordinated) notes -                                                            
   Due on December 31, 1996--6.00% .........................  $         --       $    23,588 
   Due on December 31, 1996--9.50% .........................            --            27,029 
   Due on December 31, 1997-10.00% .........................        16,037            16,660 
   Due on December 31, 1997--7.87% .........................        14,832            15,616 
   Due on December 31, 1998--7.47% .........................        14,886            16,461 
   Due on December 31, 1998--8.00% .........................        25,684            27,048 
   Due on December 31, 1999--7.86% .........................        15,349                -- 
   Due on December 31, 1999--8.00% .........................        24,254            25,470 
   Due on December 31, 1999--8.20% .........................        23,431            25,327 
   Due on December 31, 2000--6.50% .........................        23,010            23,996 
   Due on December 31, 2000--7.58%(issued in 1996) .........        29,315            32,047 
   Due on December 31, 2001--8.06%(to be issued) ...........        25,123                -- 
Instalment notes at interest rates of                                                        


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                                                                [Download Table]
                                                                               
   6.50% to 8.20% with maturities through 2000 .............    6,899     5,753
                                                             --------  --------
                                                              218,820   238,995
Less amounts due within one year ...........................   33,454    52,660
                                                             --------  --------
                                                             $185,366  $186,335
                                                             ========  ========

PAGE 28:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                      

The promissory notes are issued principally in payment of the annual        
patronage dividend. Promissory notes are subordinated to indebtedness to    
banking institutions, trade creditors and other indebtedness of the Company 
as specified by its Board of Directors. Notes to be issued relate to the    
patronage dividend which is distributed after the end of the year. Prior    
experience indicates that the maturities of a significant portion of the    
notes due within one year are extended, for a three year period, at interest
rates substantially equivalent to competitive market rates of comparable    
instruments. The Company anticipates that this practice will continue.      

Total maturities of promissory and instalment notes for fiscal years 1997,  
1998, 1999, 2000 and 2001 are $33,454,000, $42,690,000, $64,603,000,        
$52,950,000 and $25,123,000, respectively.                                  

7. FAIR VALUE OF FINANCIAL INSTRUMENTS                                      

Due to the uncertainty of the ultimate maturities of the promissory         
(subordinated) notes, management believes it is impracticable to estimate   
their fair value.  The carrying amounts of the Company's other financial    
instruments approximate fair value.  Fair value was estimated using         
discounted cash flow analyses, based on the Company's incremental borrowing 
rate for similar borrowings.                                                

8.  INCOME TAXES                                                            

At December 28, 1996, the Company has alternative minimum tax credit        
carryforwards of approximately $900,000 which do not expire.  The           
carryforwards are available to offset future federal tax liabilities.       

Significant components of the Company's deferred tax assets and liabilities 
 as of December 28,1996 resulted primarily from alternative minimum tax credit
carryforwards and temporary differences between income tax and financial    
 reporting for depreciation, inventory capitalization, bad debts, vacation pay
and contributions to fund retirement plans.                                 

Significant components of the provision (benefit) for income taxes are as   
follows:                                                                    

                                                                [Download Table]

                               For the Years Ended             
                   ------------------------------------------- 
                   December 28,   December 30,    December 31, 
                       1996           1995            1994     
                   ------------  ---------------  ------------ 
                                 (000's omitted)               
                                                               
Current:                                                       
Federal .........         $  --           $ (363)       $  486 
State ...........           237              379           462 
Foreign .........           275              273           278 
                          -----           ------        ------ 
Total current ...           512              289         1,226 
                          -----           ------        ------ 

Deferred:                                                      
Federal .........          (147)            (145)         (147)
State ...........           (26)             (26)          (26)
Foreign .........            23               58           110 
                          -----           ------        ------ 
Total deferred ..          (150)            (113)         ( 63)
                          -----           ------        ------ 
                          $ 362           $  176        $1,163 
                          =====           ======        ====== 

 The Company operates as a nonexempt cooperative and is allowed a deduction in
determining its taxable income for amounts paid as patronage dividend based 
on margins from business done with or for Members.  The reconciliation of   
income tax expense to income tax computed at the U.S. federal statutory tax 
rate of 35% in fiscal year 1996, 1995 and 1994 is as follows:               

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                                                        [Enlarge/Download Table]

                                                                For the Years Ended            
                                                    -------------------------------------------
                                                    December 28,   December 30,    December 31,
                                                        1996           1995            1994    
                                                    ------------  ---------------  ------------
                                                                  (000's omitted)              
                                                                                               

Tax at U.S. statutory rate ........................      $18,470       $20,725       $21,518   
Effects of:                                                                                    
  Patronage dividend ..............................      (18,662)      (21,049)      (21,147)  
  State income taxes, net of federal tax benefit ..          137           229           283   
  Other, net ......................................          417           271           509   
                                                         -------       -------       -------   
                                                         $   362       $   176       $ 1,163   
                                                         =======       =======       =======   

9. CASH FLOW                                                                

 The Company's non-cash financing and investing activities in fiscal year 1996
and 1995 include acquisition of transportation equipment by entering into   
 capital leases and the acquisition of property for resale. These transactions
aggregate $178,000 and $4,008,000 in fiscal years 1996 and 1995,            
respectively.  In addition, the annual patronage dividend and promissory    
(subordinated) note renewals relating to non-cash operating and financing   
activities are as follows:                                                  

                                                                [Download Table]

                                                  For the Year Ended             
                                      -------------------------------------------
                                      December 28,   December 30,    December 31,
                                          1996           1995            1994    
                                      ------------  ---------------  ------------
                                                    (000's omitted)              
                                                                                 

Patronage dividend payable in cash ..   $16,142        $18,315         $18,383   
Promissory (subordinated) notes .....    15,354         23,536          23,213   
Class B nonvoting common stock ......     1,248         (2,592)          5,900   
Instalment notes ....................     4,605          5,972           3,058   
Member indebtedness .................    15,971         14,909           9,867   
                                        -------        -------         -------   
                                        $53,320        $60,140         $60,421   
                                        =======        =======         =======   

Note renewals .......................   $27,938        $23,974         $26,191   
                                        =======        =======         =======   

Cash paid for interest during fiscal years 1996, 1995 and 1994 totaled      
$28,694,000, $29,624,000 and $30,583,000, respectively. Cash paid for income
taxes during fiscal years 1996, 1995 and 1994 totaled $694,000, $1,012,000  
and $1,709,000, respectively.                                               

PAGE 29:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                                  

10. RETIREMENT PLANS                                                        

 The components of net pension cost for the Company administered pension plans
consisted of:                                                               

                                                        [Enlarge/Download Table]

                                                                           For the Years Ended             
                                                               ------------------------------------------- 
                                                               December 28,   December 30,    December 31, 
                                                                   1996           1995            1994     
                                                               ------------  ---------------  ------------ 
                                                                             (000's omitted)               
                                                                                                           

Income:                                                                                                    
      Actual return (loss) on plan assets ....................      $13,007          $25,564      $ (1,543)
      Amortization of excess plan assets .....................          914              914           920 
                                                                    -------          -------      -------- 
                                                                     13,921           26,478          (623)
                                                                    -------          -------      -------- 
Expenses:                                                                                                  
      Service cost-benefits earned during the year ...........        4,851            4,152         4,765 
      Interest on projected benefit obligation ...............        7,623            7,242         6,736 
      Deferral of excess (deficiency) of actual                                                            
         over estimated return on plan assets ................        4,223           18,021        (8,815)
                                                                    -------          -------      -------- 
                                                                     16,697           29,415         2,686 
                                                                    -------          -------      -------- 
Net pension cost..............................................      $ 2,776          $ 2,937      $  3,309 
                                                                    =======          =======      ======== 

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The discount rate and the rate of increase in future compensation levels used in
determining the actuarial present value of the projected benefit obligation were
respectively, 7.75% and 4.50% in fiscal year 1996, 7.25% and 4.50%, in fiscal   
year 1995 and 8.50% and 4.50% in fiscal year 1994.  These changes in actuarial  
assumptions did not have a material impact on net pension cost for fiscal years 
1996 and 1995 and the Company does not anticipate that these changes will have a
material impact on net pension cost in future years.  In fiscal years 1996, 1995
and 1994, the expected long-term rate of return on assets was 9.50%. During     
1995, the Company amended its pension plan, and such amendment had no material  
impact on the projected benefit obligation or pension expense. During 1996, the 
Company settled $8,520,000 of pension obligations under it's amended plan that  
resulted in a reduction of  $798,000 in pension expense for fiscal year 1996.   

Plan assets are composed primarily of corporate equity and debt securities.     
Benefits are based on years of service and the employee's compensation during   
the last ten years of employment, offset by a percentage of Social Security     
retirement benefits. Trusteed net assets and actuarially computed benefit       
obligations for the Company administered pension plans are presented below:     

                                                        [Enlarge/Download Table]

                                                         December 28,                   December 30, 
                                                             1996                           1995     
                                                         ------------                   ------------ 
                                                                       (000's omitted)               
                                                                                                     
Assets:                                                                                              
  Total plan assets at fair value ......................     $107,954                       $104,396 
                                                             ========                       ======== 

Obligations:                                                                                         
  Accumulated benefit obligations -                                                                  
     Vested ............................................     $ 70,593                       $ 77,435 
     Non-vested ........................................       13,369                         10,830 
  Effect of projected compensation increases ...........       21,015                         21,730 
                                                             --------                       -------- 

  Total projected benefit obligations ..................      104,977                        109,995 
                                                             --------                       -------- 

Net excess assets (liabilities):                                                                     
  Unrecognized -                                                                                     
     Unamortized excess assets at original date ........        6,170                          7,673 
     Net actuarial gain (loss) .........................        5,702                         (3,793)
     Prior service costs ...............................       (3,424)                        (4,017)
  Recognized accrued pension cost ......................       (5,471)                        (5,462)
                                                             --------                       -------- 
  Total net excess assets (liabilities) ................        2,977                         (5,599)
                                                             --------                       -------- 
Total obligations and net excess assets (liabilities) ..     $107,954                       $104,396 
                                                             ========                       ======== 

The Company also participates in union-sponsored defined contribution plans.    
Pension costs related to these plans were $641,000,  $720,000 and $757,000 for  
fiscal years 1996, 1995 and 1994, respectively.                                 

PAGE 30:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             
REPORT OF INDEPENDENT AUDITORS                                                  

To the Members and the Board of Directors                                   
Cotter & Company                                                            

We have audited the accompanying consolidated balance sheets of Cotter &    
Company as of December 28, 1996 and December 30, 1995, and the related      
consolidated statements of operations, cash flows, and capital stock and    
retained earnings for each of the three years in the period ended December  
 28, 1996.  These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial 
statements based on our audits.                                             

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

 In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Cotter &      
Company at December 28, 1996 and December 30, 1995, and the consolidated    
results of its operations and its cash flows for each of the three years in 
the period ended December 28, 1996 in conformity with generally accepted    
accounting principles.                                                      

Ernst & Young LLP                                                           

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Chicago, Illinois                                                           
February 10, 1997                                                           

PAGE 30:                                                                        
COTTER & COMPANY 1996 ANNUAL REPORT                                             

SELECTED FINANCIAL DATA                                                         

                                                        [Enlarge/Download Table]

                                                       For the Fiscal Years                      
                                  ---------------------------------------------------------------
                                     1996        1995          1994           1993        1992   
                                  ----------  ----------  ---------------  ----------  ----------
                                                          (000's omitted)                        
                                                                                                 
Revenues                          $2,441,707  $2,437,002       $2,574,445  $2,420,727  $2,356,468

Gross margins                     $  196,636  $  202,068       $  223,331  $  217,921  $  216,608

Net margins                       $   52,410  $   59,037       $   60,318  $   57,023  $   60,629

Total assets                      $  853,985  $  819,576       $  868,785  $  803,528  $  833,372

Member payout:                                                                                   
   Patronage dividend             $   53,320  $   60,140       $   60,421  $   54,440  $   60,901
   Interest paid to Members           18,460      20,627           22,894      24,458      25,716
                                  ----------  ----------       ----------  ----------  ----------

                                  $   71,780  $   80,767       $   83,315  $   78,898  $   86,617
                                  ----------  ----------       ----------  ----------  ----------

Member cash payout:                                                                              
   Patronage dividend in cash     $   16,142  $   18,315       $   18,383  $   16,614  $   18,570
   Interest paid to Members           18,460      20,627           22,894      24,458      25,716
                                  ----------  ----------       ----------  ----------  ----------

                                  $   34,602  $   38,942       $   41,277  $   41,072  $   44,286
                                  ----------  ----------       ----------  ----------  ----------

Member investment:                                                                               
   Promissory (subordinated) and                                                                 
     instalment notes             $  185,366  $  186,335       $  199,099  $  217,996  $  235,695
   Class A common stock                4,876       5,294            6,370       6,633       6,857
   Class B common stock              114,053     113,062          116,663     110,773     108,982
                                  ----------  ----------       ----------  ----------  ----------

                                  $  304,295  $  304,691       $  322,132  $  335,402  $  351,534
                                  ==========  ==========       ==========  ==========  ==========

BACK COVER:                                                                     
Cotter & Company                                                                
8600 West Bryn Mawr Avenue, Chicago, Illinois 60631-3505                        

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K405 Filing		Date		First		Last			Other Filings
		1/1/94		17		18			10-K
		12/31/94		17		18			10-K405
		1/13/95		18
		1/31/95		18
		12/30/95		18		24			10-K405
		10/1/96		20
		12/9/96		18
For The Period Ended		12/28/96		17		24
		12/31/96		21
		2/10/97		25
Filed On / Filed As Of		3/27/97
		7/1/97		18
		10/1/97		20
		12/31/97		21					10-K405, 10-K405/A
		12/31/98		21					10-K405
		12/31/99		21					10-K405, NT 10-K
		12/31/00		21					10-K405, 10-K405/A, NT 10-K
		12/31/01		21					10-K, 8-K, NT 10-K
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