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United States
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-K

(Mark One)
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 26, 2002

OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________

Commission File Number 1-3657

WINN-DIXIE STORES, INC.
(Exact name of registrant as specified in its charter)

Florida 59-0514290
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)

5050 Edgewood Court, Jacksonville, Florida 32254-3699
(Address of principal executive offices) (Zip Code)

Area Code (904) 783-5000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
-------------------
Common Stock Par Value $1.00 Per Share
8.875% Senior Notes due 2008


Name of each exchange on which registered
-----------------------------------------
New York Stock Exchange
New York Stock Exchange


Securities registered pursuant to Section 12(g) of the Act:

None
(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [|X|] No [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The aggregate market value of the voting stock held by non-affiliates of
the registrant, based upon the closing sale price of common stock on June 26,
2002, as reported on the New York Stock Exchange was approximately
$1,288,270,650. Shares of common stock held by each executive officer and
director and by principal shareholders filing Schedules 13D and 13G have been
excluded in that such persons may be deemed to be affiliates. The determination
of affiliate status is not necessarily a conclusive determination for other
purposes.

As of June 26, 2002, registrant had outstanding 140,592,009 shares of
common stock.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant's Proxy
Statement in respect to the 2002 Annual Meeting of Shareholders are incorporated
by reference in Part III hereof, as more specifically described herein.

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TABLE OF CONTENTS


Page
Number
------

PART I


Business.................................................................................................... 1

Properties.................................................................................................. 5

Legal Proceedings........................................................................................... 5

Submission of Matters to a Vote of Security Holders ........................................................ 5

Executive Officers of the Registrant ....................................................................... 6

PART II

Market for the Registrant's Common Equity and Related Shareholder Matters................................... 9

Selected Financial Data .................................................................................... 9

Management's Discussion and Analysis of Financial Condition and Results of Operations....................... 9

Quantitative and Qualitative Disclosure about Market Risk .................................................. 9

Financial Statements and Supplemental Data ................................................................. 9

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ....................... 9

PART III

Directors and Executive Officers of the Registrant ......................................................... 10

Executive Compensation ..................................................................................... 10

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.............. 10

Certain Relationships and Related Transactions ............................................................. 11

PART IV

Exhibits, Financial Statement Schedules and Reports on Form 8-K ............................................ 11

Signatures ................................................................................................. 16





PART I

ITEM 1: BUSINESS

General

Winn-Dixie Stores, Inc., organized in Florida on December 26, 1928, is a
major food and drug retailer with 1,073 stores in 12 states operating primarily
in the southeastern United States and the Bahama Islands. According to published
reports of sales at June 26, 2002, the Company is one of the nation's largest
food retailers and one of the largest supermarket chains in the southeastern
region of the United States.

All of the Company's subsidiaries except Bahamas Supermarkets Limited are
wholly-owned. Except where the context indicates otherwise, the term "Company"
includes Winn-Dixie Stores, Inc. and all of its subsidiaries, collectively.

During fiscal 2002, the Company converted 41 locations, of which 38 were in
the Atlanta area market, to the Save Rite Grocery Warehouse format. In April
2002, the Company sold the Deep South Products, Inc. plants and related assets
located in Gainesville, Georgia to Schreiber Foods, Inc.

In May 2002, the Company announced a formal plan to exit 71 locations, a
distribution center and a dairy plant in Texas and 5 locations in Oklahoma. The
Company's decision to exit these markets was a result of continued operating
losses and a reduction of market share.

Based upon information monitored by the Company's chief operating
decision-makers to manage the business, the Company has determined that its
operations are within one reportable segment. Accordingly, financial information
on industry segments is omitted because, apart from the principal business of
operating retail self-service food stores, the Company has no other industry
segments.

Store Formats and Business Strategy

The Company's retail stores sell groceries, meats, seafood, fresh produce,
floral, deli/bakery products, fuel, liquor, pharmaceutical products and general
merchandise items, such as magazines, soaps, paper products, health and cosmetic
products, hardware and numerous small household items. In addition, many
locations also offer broad lines of merchandise and services such as
company-operated photo labs and in-store banks operated by independent third
parties who rent space. The Company supports the retail operations through 15
strategically located warehouse distribution facilities and 16 manufacturing
facilities.




1




ITEM 1: BUSINESS, continued


Store locations by state and by format:

Winn- Market- Thrift- Save Sack & City Meat
State Total Dixie Place way Rite Save Markets
- ---------------------------------------------------------------------------------------------------

Florida 434 | 57 371 - 6 - -
Alabama 118 | 43 75 - - - -
North Carolina 106 | 50 56 - - - -
Georgia 95 | 4 53 - 38 - -
Louisiana 80 | 19 61 - - - -
Mississippi 69 | 42 19 - 1 7 -
South Carolina 61 | 23 38 - - - -
Kentucky 40 | 6 29 5 - - -
Virginia 28 | 10 18 - - - -
Ohio 17 | - - 17 - - -
Bahamas 12 | 3 - - - - 9
Tennessee 12 | 4 8 - - - -
Indiana 1 | - 1 - - - -
---------------------------------------------------------------------------------
1,073 261 729 22 45 7 9
=================================================================================


Stores average 44,200 square feet and range in size from 7,100 to 85,200
square feet.

Growth Strategy

The Company is committed to growth in customer base and market share in its
operating markets. Expansions through acquisitions are considered for prime
supermarkets that offer potential sales growth within the Company's core
operating market. The Company expects future growth to principally come from
developing existing stores rather than acquiring new stores.


Store and Other Data:

2002 2001 2000 1999 1998
---- ---- ---- ---- ----

Stores
In operation at year-end 1,073 1,153 1,079 1,188 1,168
Opened and acquired during year 5 94 34 79 84
Closed or sold during year 85 20 143 59 90
Enlarged or remodeled during year 29 11 42 64 136
New/enlarged/remodeled in last five years 578 706 790 908 912
Percent to total stores in operation 53.9 61.2 73.2 76.4 78.1
Year-end retail square footage (000,000) 47.5 51.1 48.1 52.0 49.6
Average store size at year-end (000) 44.2 44.3 44.6 43.7 42.4
Other Year-end Data
Associates (000) 113 119 120 132 139
Shareholder accounts (000) 46.5 48.8 45.7 48.1 52.0
Shareholders per store 43 42 42 40 45





2




ITEM 1: BUSINESS, continued

Support and Other Services

The following table shows the locations of the Company's distribution
centers and its manufacturing and processing plants, as well as the principal
products produced in the plants:

LOCATION FACILITIES
- ------------------------------------------------------------------

ALABAMA Montgomery Distribution center; Plants: milk bottling
and frozen pizza
- -------

FLORIDA Baldwin Distribution center
- ------- Jacksonville General merchandise distribution center;
Plant: coffee, tea and spices
Madison Plant: meat processing
Miami Distribution center; Plant: milk bottling
Orlando Distribution center
Plant City Plants: ice cream and milk bottling
Pompano Distribution center
Sarasota Distribution center

GEORGIA Atlanta Distribution center
- ------- Fitzgerald Plants: jams, jellies, mayonnaise, salad
dressing, peanut butter and condiments;
canned and bottled carbonated beverages
Valdosta Plants: crackers and cookies; and snacks

KENTUCKY Louisville Distribution center
- --------

LOUISIANA Hammond Distribution center; Plant: milk bottling
- ---------
New Orleans Distribution center

NORTH CAROLINA Charlotte Distribution center
- --------------
High Point Plants: milk bottling and cultured products
Raleigh Distribution center

SOUTH CAROLINA Greenville General merchandise distribution center;
- -------------- Plants: ice cream and milk bottling

BAHAMAS Nassau Distribution center
- -------



3




ITEM 1: BUSINESS, continued

The principal function of manufacturing operations is to purchase,
manufacture and process private label merchandise sold in stores operated by the
Company. An insignificant portion of the products produced by the manufacturing
plants is sold to others. In addition, an insignificant portion of sales are
derived from the Company's buy-resale operation.

Seasonality does not materially affect the business of the Company.
However, due to the influx of winter residents to the Sunbelt, Florida in
particular, and increased purchases of food items for the Thanksgiving and
Christmas holiday seasons, there is a seasonal sales increase from November -
April each fiscal year.

Competition

Retail businesses generally compete on the basis of location, quality of
products and service, price, convenience, product variety and store condition.
The number and type of competitors vary by location and competitive position
varies according to the individual markets in which the Company operates.

The retail merchandising business in general, and the supermarket industry
in particular, is highly and increasingly competitive and generally
characterized by high inventory turnover and narrow profit margins. The Company
competes directly with national, regional and local supermarket chains, as well
as independent supermarkets, discount stores, convenience stores and the newer
"alternative format" food stores, including warehouse club stores, deep discount
"supercenters" and conventional department stores. The Company also faces
increased competition from restaurants and fast food chains due to the
increasing proportion of consumer expenditures for food consumed away from home
as compared to food consumed at home.

Associates

At the end of fiscal 2002, the Company had 41,100 full-time and 71,400
part-time associates. None of the 112,500 associates are covered by a collective
bargaining agreement.

Bahamas

All sales of the Company are to customers within the United States and the
Bahama Islands. The Company exports an insignificant amount of merchandise to
its subsidiary in the Bahamas, which operates 12 retail food stores. Sales and
assets related to and located in the Bahama Islands represent less than 1% of
the Company's total sales and assets.

Management Actions

On April 20, 2000, the Company announced a major restructuring plan to
improve the support of the retail stores and the Company's overall efficiency.
The restructuring plan included the closing of certain manufacturing,
warehousing and retail locations as well as the retrofitting of over 50% of the
Company's retail stores to improve efficiency and customer service. As of June
27, 2001, the restructuring efforts were substantially complete.



4




ITEM 1: BUSINESS, continued

Management Actions, continued

In October 2000, the Company acquired nine supermarket operations of
Gooding's Supermarkets, Inc. located in the Orlando, Florida area and in January
2001, the Company acquired 68 stores from Jitney Jungle Stores of America, Inc.
located in Mississippi, Alabama and Louisiana.

On May 6, 2002, the Company announced its plans to exit the Texas and
Oklahoma operations. The Texas operation consists of 71 retail locations, a
dairy plant and a distribution center and the Oklahoma operation consists of 5
retail locations. As of June 26, 2002, the Company had exited the Texas and
Oklahoma operations.

ITEM 2: PROPERTIES

Stores

All but 11 of the retail stores operated by the Company are on premises
occupied on a rental basis. See Note 9 of the "Notes to Consolidated Financial
Statements," page F-37, included herein.

Support Properties

The warehouse and distribution centers, with the exception of the
facilities in Baldwin, FL; Montgomery, AL; New Orleans, LA; and Louisville, KY;
are rented under leases due to expire within 2 to 22 years. All of these contain
renewal options, which vary from lease to lease.

The Company's Valdosta, GA cracker and cookie bakery and snacks bakery;
Madison, FL meat processing plant; Plant City, FL ice cream and milk bottling
plants; Miami, FL reclaim center; and Montgomery, AL milk bottling and frozen
pizza plants are owned in fee. All other manufacturing facilities are rented
under leases due to expire in 22 years. All of these contain renewal options,
which vary from lease to lease.

All of the above support properties are considered to be in excellent
condition.

ITEM 3: LEGAL PROCEEDINGS

See Note 11(d) of the "Notes to Consolidated Financial Statements," page
F-41 included herein, regarding various claims and lawsuits pending against the
Company.

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

There were no matters submitted to a vote of security holders during the
quarter ended June 26, 2002.




5


Executive Officers of the Registrant


Set forth below is certain information concerning the executive officers of
the Company as of June 26, 2002:




AGE IN YEAR APPOINTED YEAR FIRST
YEARS AT TO CURRENT EMPLOYED BY
NAME 06-26-02 OFFICE HELD POSITION WINN-DIXIE
---- -------- ----------- -------------- -----------




A. Dano Davis 57 Chairman of the Board 1988 1968

A. R. Rowland 58 President and 1999 1999
Chief Executive Officer

F. Lazaran 46 Executive Vice President and 2002 2002
Chief Operating Officer

D. G. Lafever 53 Senior Vice President and 2001 1966
Director of Sales and Procurement

R. P. McCook 49 Senior Vice President and 1984 1984
Chief Financial Officer

D. M. Sheehan 47 Senior Vice President and 2000 2000
Director of Real Estate

J. R. Sheehan 44 Senior Vice President and 2001 2000
Director of Operations

A. B. Toscano 40 Senior Vice President and 2000 2000
Director of Human Resources

D. M. Byrum 49 Vice President, Corporate Controller 2000 1972
and Chief Accounting Officer

K. D. Ross 33 Vice President, Strategic Planning 2000 2000
and Treasurer




Division Managers:


W. R. Baxley 39 Vice President 2002 2000

J. D. Fitzgerald 52 Vice President 1998 1970

C. M. Gore 43 Vice President 2001 2001

G. T. Gue, Jr. 51 Vice President 2002 2002

M. J. Istre 51 Vice President 1999 1969

R. C. Lunn, Jr. 50 Vice President 1997 1969

M. A. Sellers 48 Vice President 1997 1973





6




Executive Officers of the Registrant, continued

All of the officers listed as executive officers of the registrant, with
the exception of Mr. Allen Rowland, Mr. Frank Lazaran, Mr. Dennis Sheehan, Mr.
John Sheehan, Mr. August Toscano, Ms. Kellie Ross, Mr. Robert Baxley, Mr. Curtis
Gore and Mr. George Gue, Jr. have been employed for the past five years in
either the same capacity as listed, or in a position with the Company which was
consistent in occupation with their present assignment.

Prior to becoming President and Chief Executive Officer, Mr. Rowland was
President and Chief Operating Officer of Smith's Food & Drug Centers from 1996
to 1997 and, prior to that, was a Senior Vice President with Albertson's.

Executive Vice President and Chief Operating Officer, Mr. Lazaran was
President of Randalls Food Market, Inc., a division of Safeway from 1999 to
2002. From 1997 to 1999, Mr. Lazaran was Senior Vice President Sales,
Merchandising and Logistics of Randalls Food Market, Inc. For the 23 years
proceeding, Mr. Lazaran was employed at Ralphs Grocery Company, most recently as
Group Vice President Sales, Advertising and Merchandising.

Senior Vice President and Director of Real Estate, Mr. Dennis Sheehan was a
private real estate developer for grocery and other retail facilities in the
southeast since 1987. For the 10 years preceding 1987, Mr. Sheehan was employed
at Albertson's, most recently as Director of Real Estate.

Senior Vice President and Director of Operations, Mr. John Sheehan was
Executive Vice President of Pathmark Stores, Inc. from 1997 to 2000. For the 16
years preceding 1997, Mr. Sheehan was employed at Albertson's, most recently as
Director of Operations, Southern California Division.

Senior Vice President and Director of Human Resources, Mr. Toscano was Vice
President, Human Resources of Burger King Corporation, from 1999 to 2000. From
1998 to 1999, Mr. Toscano was International Human Resources Vice President of
Citibank. Mr. Toscano was Senior Director of Human Resources for Tricon Global
Restaurants from 1994 to 1998.

Vice President, Strategic Planning and Treasurer, Ms. Ross was Audit
Manager of Arthur Andersen LLP, from 1999 to 2000. From 1997 to 1999, Ms. Ross
was Corporate Controller for Armor Holdings, Inc. Ms. Ross was Assistant
Controller for PSS World Medical, Inc. from 1995 to 1997.

Vice President and Division Manager, Mr. Baxley was Vice President of
Deli/Bakery Merchandising from 2000 to 2002. From 1996 to 2000, Mr. Baxley was
Vice President, Deli/Bakery and Manufacturing of Smith's Food and Drug Centers.
From 1993 to 1996, Mr. Baxley was Director of Deli/Food Service Marketing and
Procurement for H.E. Butt Grocery Company.


7



Executive Officers of the Registrant, continued

Vice President and Division Manager, Mr. Gore was Director of Corporate
Retail Merchandising of Nash-Finch from 1999 to 2001. For the 20 years preceding
1999, Mr. Gore was employed at Albertson's, most recently as Division
Grocery/Frozen/Dairy/Convenience Store/Coffee Bar Sales Manager.

Vice President and Division Manager, Mr. Gue was Senior Director of Retail
Operations of Nash-Finch from 1999 to 2002. For the 30 years preceding 1999, Mr.
Gue was employed at Giant Food, Inc., most recently as Zone Director.

Officers are elected annually by the Board of Directors and serve for a
one-year period or until their successors are elected. Dennis M. Sheehan and
John R. Sheehan are brothers. A. Dano Davis is the first cousin of T. Wayne
Davis, Director, and the first cousin of the spouse of Charles P. Stephens,
Director. No other executive officer has a family relationship with any other
executive officer or director.











8




PART II

ITEM 5: MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS

The principal market on which the Company's common stock is traded is the
New York Stock Exchange. The number of record holders of the Company's common
stock as of June 26, 2002 was 46,491.

There is a material restriction on the amount of dividends that can be paid
by the Company under the Company's debt facility. The restriction on dividends
is based on meeting a minimum adjusted free cash flow amount as further
described in detail in the Company's Prospectus Supplement previously filed as
Exhibit 4.2 (a) to Form 8-K filed on March 29, 2001 and credit agreement
previously filed as Exhibit 10.9 to Form 8-K filed on March 29, 2001.

Information required by this Item concerning sales prices of the Company's
common stock and the frequency and amount of dividends is in Note 15 of the
"Notes to Consolidated Financial Statements," on page F-45 included herein.

ITEM 6: SELECTED FINANCIAL DATA

The information required by this Item is on page F-1 included herein.

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

The information required by this Item begins on page F-2 included herein.

ITEM 7A: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The information required by this Item begins on page F-9 included herein.

ITEM 8: FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

Financial statements and supplemental data are set forth in the "Index to
Consolidated Financial Statements, Supporting Schedules and Supplemental Data"
on page 18 included herein.

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

There have been no disagreements on accounting and financial disclosure
between the Company and its auditors within the 24 months prior to June 26,
2002.



9




PART III

ITEM 10: DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this Item is incorporated herein by reference
to the Company's definitive proxy statement to be filed in connection with its
2002 Annual Meeting of Shareholders.

ITEM 11: EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference
to the Company's definitive proxy statement to be filed in connection with its
2002 Annual Meeting of Shareholders.

ITEM 12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS

The following table highlights equity compensation plans.


Number of securities
to be issued upon Weighted-
exercise of average exercise Number of securities
outstanding options price remaining available
--------------------- ------------------- --------------------------

Equity compensation plans
approved by security holders 1,550,045 $ 20.32 2,861,941

Equity compensation plans not
approved by security holders 1,080,864 22.91 2,271,400
----------------------- ------------------- --------------------------
Total 2,630,909 $ 21.38 5,133,341
======================= =================== ==========================


See Note - 8(b) of the "Notes to Consolidated Financial Statements," page
F-34 included herein, regarding the Company's Restricted Stock Plan which was
adopted by the Company without stockholders approval.

See Note - 8(c)2 of the "Notes of Consolidated Financial Statements," page
F-35 included herein, regarding the Company's Retention and Attraction Program
which was adopted by the Compensation Committee without shareholder approval.

See Note - 8(c)3 of the "Notes of Consolidated Financial Statements," page
F-35 included herein, regarding the CEO Stock Options which were awarded
pursuant to an employment agreement between the Company and the Company's CEO
and President.

Additional information required by this Item is incorporated herein by
reference to the Company's definitive proxy statement to be filed in connection
with its 2002 Annual Meeting of Shareholders.


10



PART III, continued


ITEM 13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Certain information required by this Item begins on page F-41 included
herein. Other information required by this Item is incorporated herein by
reference to the Company's definitive proxy statement to be filed in connection
with its 2002 Annual Meeting of Shareholders.


PART IV

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

(a) Financial Statements and Financial Statement Schedules:

(1) Financial Statements:

See "Index to Consolidated Financial Statements, Supporting
Schedules and Supplemental Data" on page 18 included herein.

(2) Financial Statement Schedules:

See "Index to Consolidated Financial Statements, Supporting
Schedules and Supplemental Data" on page 18 included herein.

(3) Exhibits:

Certain of the following exhibits which have heretofore been
filed with the Securities and Exchange Commission under the
Securities Act of 1933 or the Securities Exchange Act of
1934 and which are designated in prior filings as noted
below, are hereby incorporated by reference and made a part
hereof:










11



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



Exhibit
Number Description of Exhibit Incorporated by Reference From
- ------ ---------------------- ------------------------------


3.1 Restated Articles of Incorporation Previously filed as Exhibit 3.1 to
as filed with the Secretary of State Form 10-K for the year ended June
of Florida. 30, 1993, which Exhibit is herein
incorporated by reference.

3.1.1 Amendment adopted October 7, 1992, Previously filed as Exhibit 3.1.1 to
to Restated Articles of Incorporation. Form 10-K for the year ended June
30, 1993, which Exhibit is herein
incorporated by reference.

3.1.2 Amendment adopted October 5, 1994, Previously filed as Exhibit 3.1.2 to
to Restated Articles of Incorporation. Form 10-Q for the quarter ended
January 11, 1995, which Exhibit is
herein incorporated by reference.

3.1.3 Amendment adopted October 1, 1997, Previously filed as Exhibit 3.1.3 to
to Restated Articles of Incorporation. Form 10-Q for the quarter ended
September 17, 1997, which Exhibit is
herein incorporated by reference.

3.2 Restated By-Laws of the Registrant as Previously filed as Exhibit 3.2 to
amended through April 25, 2002. Form 10-Q for the quarter ended
April 3, 2002, which Exhibit is
herein incorporated by reference.

4.2 First Supplemental Indenture, dated Previously filed as Exhibit 4.2 (a)
March 29, 2001, among Winn-Dixie to Form 8-K filed on March 29, 2001,
Stores, Inc., the Guarantors named which Exhibit is herein incorporated
therein and Wilmington Trust Company, by reference.
as Trustee.

4.2.1 Second Supplemental Indenture, dated Previously filed as Exhibit 4.2.1 to
January 10, 2002, among Winn-Dixie Form 10-Q filed on April 3, 2002,
Stores, Inc., and Wilmington Trust which Exhibit is herein incorporated
Company, as Trustee. by reference.




12


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



Exhibit
Number Description of Exhibit Incorporated by Reference From
- ------ ---------------------- ------------------------------


9.1 Agreement of Shareholders of D.D.I., Previously filed as Exhibit 9.1 to
Inc. (formerly Vadis Investments, Inc.) Form 10-K for the year ended June
dated April 19, 1989. 30, 1993, which Exhibit is herein
incorporated by reference.

10.0* Employment Agreement of Allen R. Rowland Previously filed as Exhibit 10.0 to
effective November 23, 1999. Form 10-K for the year ended June
28, 2000, which Exhibit is herein
incorporated by reference.

10.1* Annual Officer Incentive Compensation Previously filed as Exhibit 10.1 to
Plan, effective June 15, 1998. Form 10-Q for the quarter ended
September 16, 1998, which Exhibit is
herein incorporated by reference.

10.2.1* Restricted Stock Plan, as amended Previously filed as Exhibit 10.2.1
effective August 2, 1999. to Form 10-Q for the quarter ended
September 22, 1999, which Exhibit is
herein incorporated by reference.

10.2.2* Performance-Based Restricted Stock Plan Previously filed as Exhibit 10.2.2
as amended effective August 2, 1999. to Form 10-Q for the quarter ended
September 22, 1999, which Exhibit is
herein incorporated by reference.

10.2.3* Amendment to the Performance-Based Previously filed as Exhibit 10.2.3
Restricted Stock Plan effective January to Form 10-K for the year ended June
26, 2000. 28, 2000, which Exhibit is herein
incorporated by reference.

10.2.4* Amendment to the Restricted Stock Plan Previously filed as Exhibit 10.2.4
effective August 9, 2000. to Form 10-K for the year ended June
27, 2001, which Exhibit is herein
incorporated by reference.
- ----------

* Management contract or compensatory plan or agreement.



13



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


Exhibit
Number Description of Exhibit Incorporated by Reference From
- ------ ---------------------- ------------------------------


10.3* Key Employee Stock Option Plan effective Previously filed as Exhibit 10.3 to
January 24, 1990 as amended effective Form 10-Q for the quarter ended
August 9, 2000. September 20, 2000, which Exhibit is
herein incorporated by reference.

10.4* Supplemental Retirement Plan dated Previously filed as Exhibit 10.4 to
July 1, 1994, as amended effective Form 10-K for the year ended June
June 15, 2000. 28, 2000, which Exhibit is herein
incorporated by reference

10.5* Management Security Plan as amended and Previously filed as Exhibit 10.5 to
restated effective June 30, 1982. Form 10-K for the year ended June
26, 1996, which Exhibit is herein
incorporated by reference.

10.5.1* Amendment effective May 1, 1992, to Previously filed as Exhibit 10.5.1
Management Security Plan. to Form 10-K for the year ended June
26, 1996, which Exhibit is herein
incorporated by reference.

10.6* Senior Corporate Officer's Management Previously filed as Exhibit 10.6 to
Security Plan as amended and restated Form 10-K for the year ended June
effective June 30, 1982. 26, 1996, which Exhibit is herein
incorporated by reference.

10.6.1* Amendment effective May 1, 1992, to Previously filed as Exhibit 10.6.1
Senior Corporate Officer's Management to Form 10-K for the year ended June
Security Plan. 26, 1996, which Exhibit is herein
incorporated by reference.

10.7 Winn-Dixie Stores, Inc. Directors' Previously filed as Exhibit 10.7 to
Deferred Fee Plan as amended through Form 10-Q for the quarter ended
October 4, 2000. September 20, 2000, which Exhibit is
herein incorporated by reference.

10.8 Winn-Dixie Stores, Inc. Stock Plan for Previously filed as Exhibit 10.8 to
Directors effective October 4, 2000. Form 10-Q for the quarter ended
September 20, 2000, which Exhibit is
herein incorporated by reference.

- ----------

* Management contract or compensatory plan or agreement.




14



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


Exhibit
Number Description of Exhibit Incorporated by Reference From
- ------ ---------------------- ------------------------------


10.9 Credit Agreement, dated March 29, 2001, Previously filed as Exhibit 10.9 to
among Winn-Dixie Stores, Inc., First Form 8-K filed on March 29,2001
Union National Bank and other lenders which Exhibit is herein incorporated
named therein, relating to Winn-Dixie by reference.
Stores, Inc.'s senior credit facility
in the amount of $800,000,000.

10.9.1 Amendment to the Credit Agreement dated Previously filed as Exhibit 10.9.1
March 29, 2001, among Winn-Dixie Stores, to Form 10-Q for the quarter ended
Inc., First Union National Bank and April 3, 2002, which Exhibit, is
other lenders named therein, relating to herein incorporated by reference.
Winn-Dixie Stores, Inc.'s senior credit
facility in the amount of $800,000,000
effective March 14, 2002.

10.9.2 Second Amendment to credit agreement dated
March 29, 2001, among Winn-Dixie Stores, Inc.,
Wachovia Bank, National Association and other
lenders named therein, relating to Winn-Dixie
Stores, Inc.'s senior credit facility in the
amount of $800,000,000 effective May 3, 2002.

12.0 Computation of Ratios of Earnings to Fixed
Charges for Winn-Dixie Stores, Inc.

21.1 Subsidiaries of Winn-Dixie Stores, Inc.

23.1 Consent of KPMG LLP.

99.1 Written Statement of the Chief Executive Officer,
Pursuant to 18 U.S.C. Section 1350.

99.2 Written Statement of the Chief Financial Officer,
Pursuant to 18 U.S.C. Section 1350.

(b) Reports on Form 8-K:


There were no reports on Form 8-K filed for the quarter ended June 26,
2002.


15



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.


WINN-DIXIE STORES, INC.



By /s/ Allen R. Rowland
--------------------
Allen R. Rowland
(Chief Executive Officer)


Date August 7, 2002
---------------------------------


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


/s/ A. Dano Davis Chairman and Director August 7, 2002
--------------------------
(A. Dano Davis)


/s/ Allen R. Rowland President and Director August 7, 2002
-------------------------- (Chief Executive Officer)
(Allen R. Rowland)


/s/ Richard P. McCook Senior Vice President August 7, 2002
-------------------------- (Chief Financial Officer)
(Richard P. McCook)


/s/ D. Michael Byrum Vice President August 7, 2002
-------------------------- (Corporate Controller and
(D. Michael Byrum) Chief Accounting Officer)








16




SIGNATURES, continued



/s/ T. Wayne Davis Director August 7, 2002
--------------------------
(T. Wayne Davis)


/s/ Charles P. Stephens Director August 7, 2002
--------------------------
(Charles P. Stephens)


/s/ Armando M. Codina Director August 7, 2002
--------------------------
(Armando M. Codina)


/s/ Carleton T. Rider Director August 7, 2002
--------------------------
(Carleton T. Rider)


/s/ Julia B. North Director August 7, 2002
--------------------------
(Julia B. North)


/s/ Tillie K. Fowler Director August 7, 2002
--------------------------
(Tillie K. Fowler)


/s/ Ronald Townsend Director August 7, 2002
--------------------------
(Ronald Townsend)






17




WINN-DIXIE STORES, INC. AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS,
SUPPORTING SCHEDULES AND SUPPLEMENTAL DATA






Selected Financial Data F-1

Management's Discussion and Analysis of Financial Condition and Results
of Operations F-2

Consolidated Financial Statements and Supplemental Data:

Report of Management F-13

Independent Auditors' Report F-14

Consolidated Statements of Operations, Years ended
June 26, 2002, June 27, 2001 and June 28, 2000 F-15

Consolidated Balance Sheets, Years ended June 26, 2002 and June 27, 2001 F-16

Consolidated Statements of Cash Flows, Years ended
June 26, 2002, June 27, 2001 and June 28, 2000 F-17

Consolidated Statements of Shareholders' Equity, Years ended
June 26, 2002, June 27, 2001 and June 28, 2000 F-18

Notes to Consolidated Financial Statements F-19

Financial Statement Schedules:

Independent Auditors' Report on Financial Statement Schedule S-1

Schedule II - Consolidated Valuation and Qualifying Accounts,
Years ended June 26, 2002, June 27, 2001 and June 28, 2000 S-2



All other schedules are omitted either because they are not applicable or
because information required therein is shown in the Financial Statements or
Notes thereto.


18




SELECTED FINANCIAL DATA**



2002 2001 2000 1999* 1998
---- ---- ---- ----- ----
Sales Dollars in millions except per share data


Sales from continuing operations $ 12,334 12,239 13,004 13,392 12,852
Percent increase (decrease) 0.8 (5.9) (2.9) 4.2 2.9
Earnings Summary
Gross profit from continuing operations $ 3,418 3,297 3,554 3,710 3,531
Percent of sales 27.7 26.9 27.3 27.7 27.5
Other operating and administrative expenses from continuing
operations $ 3,052 2,972 3,388 3,376 3,168
Percent of sales 24.7 24.3 26.1 25.2 24.7
Net earnings (loss) from continuing operations $ 189 77 (213) 187 198
(Loss) earnings from discontinued operations, net of taxes $ (100) (32) (16) (5) 1
Extraordinary item, net of taxes $ (2) - - - -
Net earnings (loss) $ 87 45 (229) 182 199
Percent of net earnings (loss) to sales 0.7 0.4 (1.8) 1.3 1.5
Common Stock Data
Earnings (loss) per share from continuing operations:
Basic $ 1.35 0.55 (1.47) 1.26 1.33
Diluted $ 1.35 0.55 (1.47) 1.26 1.32
(Loss) earnings per share from discontinued operations:
Basic $ (0.71) (0.23) (0.10) (0.03) 0.01
Diluted $ (0.71) (0.23) (0.10) (0.03) 0.01
Extraordinary item:
Basic $ (0.02) - - - -
Diluted $ (0.02) - - - -
Earnings (loss) per share:
Basic $ 0.62 0.32 (1.57) 1.23 1.34
Diluted $ 0.62 0.32 (1.57) 1.23 1.33
Cash Dividends
Dividends paid $ 50 143 149 151 151
Percent of net earnings from continuing operations (loss) 26.3 186.0 (69.8) 80.8 76.4
Percent of net earnings (loss) 57.4 315.3 (65.1) 82.9 76.0
Per share (present rate $0.20) $ 0.36 1.02 1.02 1.02 1.02
Financial Data
Cash flow information:
Net cash provided by operating activities $ 377 245 743 436 465
Net cash used in investing activities $ (65) (444) (196) (335) (326)
Net cash (used in) provided by financing activities $ (205) 290 (542) (100) (129)
Capital expenditures, net $ 84 313 213 334 369
Depreciation and amortization $ 176 184 257 292 330
Working capital $ 528 449 50 285 263
Current ratio 1.5 1.4 1.0 1.2 1.4
Total assets $ 2,938 3,042 2,747 3,149 3,069
Long-term obligations under capital leases $ 25 29 32 38 49
Present value of future rentals under operating leases $ 2,283 2,550 2,408 2,575 2,389
Long-term rental obligations on closed stores $ 181 154 220 35 34
Long-term debt $ 541 697 - - -
Total long-term obligations (Long-term debt + leases) $ 3,030 3,430 2,660 2,648 2,472
Long-term obligations to equity ratio $ 3.7 4.4 3.1 1.9 1.8
Comprehensive income (loss) $ 84 44 (232) 183 199
Shareholders' equity $ 812 772 868 1,411 1,369

- ----------

*53 weeks
**The selected data was reclassified to reflect the Texas and Oklahoma operation
exit as a discontinued operation.




F-1


Management's Discussion and Analysis of Financial Condition and Results of
Operations Results of Operations

Continuing Operations: Sales from continuing operations for fiscal 2002
were $12.3 billion, compared to $12.2 billion and $13.0 billion for fiscal years
2001 and 2000, respectively. This reflects an increase of 0.8% for fiscal 2002,
a decrease of 5.9% for fiscal 2001 and a decrease of 2.9% in fiscal 2000.
Average store sales from continuing operations, which is an average for all
continuing operating stores based on the number of weeks open during the fiscal
year, decreased 3.0% for the current year, remained relatively flat in fiscal
2001 and decreased 0.9% in fiscal 2000. Identical store sales from continuing
operations, which include enlargements and exclude the sales from stores that
opened or closed during the fiscal year, decreased 2.5% for the current year and
decreased 4.4% and 4.1%, for fiscal years 2001 and 2000, respectively.
Comparable store sales from continuing operations, which include replacement
stores, decreased 2.3% for the current year and decreased 4.1% and 3.2%, for
fiscal years 2001 and 2000, respectively.

Identical store sales improved during fiscal 2002 as a result of a new
marketing effort and the positive impact of the conversion of 41 locations to
the Save Rite Grocery Warehouse concept. As part of the new marketing effort,
the Company introduced a Customer Reward Card program which allows the customer
to receive ongoing benefits that include merchandise discounts, sweepstakes
entries, notification of special events, participation in specialty merchandise
clubs, discounts on services provided by select marketing partners and other
special incentives. The Customer Reward Card has been in use in the Company's
Florida area stores since March 2002. The Customer Reward Card was introduced to
the Company's Louisiana, Alabama, Mississippi and Georgia markets on June 27,
2002. The Company expects improvement in identical store sales to continue into
fiscal 2003 as a result of these efforts.

For the 52 weeks ended June 26, 2002, the Company opened 5 new stores,
averaging 45,900 square feet, closed 85 stores, averaging 45,100 square feet and
enlarged or remodeled 29 store locations, for a total of 1,073 locations in
operation on June 26, 2002, compared to 1,153 on June 27, 2001. As of June 26,
2002, retail space totaled 47.5 million square feet, a 7.0% decrease over the
prior year. The 85 store closings include 76 stores associated with the exiting
of the Texas and Oklahoma operations.

As a percent of sales from continuing operations, gross profit margins were
27.7%, 26.9% and 27.3% in fiscal 2002, 2001 and 2000, respectively. Gross profit
margin increased in the current year primarily as a result of a change in the
product sales mix and improvements in procurement obtained from the Company's
restructuring plan. The increase was partially offset by the increase in sales
markdowns associated with the Customer Reward Card program and merchandise
losses and markdown discounts incurred during the transition of 41 locations to
the Save Rite Grocery Warehouse format. Continued improvement in gross profit is
anticipated through enhanced procurement practices and promotional activities as
well as shrink reduction initiatives. The amount retained through improvements
in gross profit margin and not passed on to the customer will be determined by
competitive activity.

Approximately 84% of the Company's inventories are valued under the LIFO
(last-in, first-out) method. The LIFO reserve adjustment resulted in a pre-tax
increase in gross profit of $4.5 million in fiscal 2002 and $12.0 million in
fiscal 2001. The LIFO reserve adjustment resulted in a pre-tax decrease in gross
profit of $15.1 million in fiscal 2000.


F-2


Management's Discussion and Analysis of Financial Condition and Results of
Operations Results of Operations, continued

Other operating and administrative expenses from continuing operations
increased $79.9 million in fiscal 2002, decreased $415.9 million in fiscal 2001
and increased $11.7 million in fiscal 2000. As a percent of sales, other
operating and administrative expenses from continuing operations were 24.7%,
24.3% and 26.1% in fiscal 2002, 2001 and 2000, respectively.

The increase in other operating and administrative expenses from continuing
operations in fiscal 2002 was primarily due to retail and administrative
expenses, such as rent, salaries and supplies, associated with the operation of
77 additional stores acquired during fiscal 2001. The change in other operating
and administrative expenses from continuing operations for the 77 additional
stores totaled approximately $60.7 million.

The decrease in other operating and administrative expenses from continuing
operations in 2001 was primarily due to a decrease in retail and administrative
operating expenses, such as payroll, depreciation, rent and leasehold
improvement amortization. The expense reduction was an expected result of the
restructuring and came primarily from the elimination of high labor cost service
departments and expense reductions from the retrofit activity, certain labor
efficiency initiatives adopted by the Company and from the closing of the
division offices and retail stores.

Interest expense totaled $57.8 million, $52.8 million and $47.1 million in
fiscal 2002, 2001 and 2000, respectively. Interest expense is primarily interest
on short-term and long-term debt and interest on capital lease obligations.
Interest expense has increased in the current year as compared to the previous
year due to increased average debt outstanding and higher average interest rates
paid on debt. Interest in the fourth quarter of fiscal 2002 decreased $4.7
million as compared to fiscal 2001 primarily due to the prepayment of $150.0
million on the six-year term loan in January 2002. On July 29, 2002, the Company
prepaid an additional $100.0 million on the six-year term loan. The Company
expects a decrease in interest expense in fiscal 2003 due to the lower amount of
debt outstanding.

Earnings (loss) from continuing operations before income taxes were $308.2
million, $124.8 million and $(277.2) million in fiscal 2002, 2001 and 2000,
respectively. The increase in fiscal 2002 as compared to 2001 and 2000 is
primarily due to restructuring costs of $147.2 million and $396.0 million for
fiscal 2001 and 2000, respectively. No restructuring costs were incurred in
fiscal 2002. The effective income tax expense (benefit) rates were 38.5%, 38.5%
and (23.0)% for fiscal 2002, 2001 and 2000, respectively. The effective tax rate
for fiscal 2000 reflects the effects of certain restructuring expenses and COLI
adjustments.

Net earnings (loss) from continuing operations were $189.5 million, or
$1.35 per diluted share for fiscal 2002, $76.8 million, or $0.55 per diluted
share for fiscal 2001 and $(213.4) million, or $(1.47) per diluted share for
fiscal 2000. The LIFO reserve adjustment increased earnings from continuing
operations by $2.8 million, or $0.02 per diluted share in fiscal 2002, increased
earnings from continuing operations by $7.4 million, or $0.05 per diluted share
in fiscal 2001 and increased loss from continuing operations by $9.3 million, or
$0.06 per diluted share in fiscal 2000.


F-3


Management's Discussion and Analysis of Financial Condition and Results of
Operations Results of Operations, continued

Discontinued Operations: On May 6, 2002, the Company announced plans to
exit its Texas and Oklahoma operations which consisted of 76 stores, a
distribution center and a dairy plant. The decision resulted from continued
losses and a reduction of market share. Under SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets", the Texas and Oklahoma operations
are defined as components of an entity. Accordingly, the operating results from
current and prior periods are reported as discontinued operations on the
Consolidated Statements of Operations. The pre-tax loss from discontinued
operations was $46.4 million, $51.2 million and $25.2 million, for fiscal years
2002, 2001 and 2000, respectively. The loss in fiscal 2002 decreased from fiscal
2001 due to the early closures of several retail locations and the suspension of
depreciation for equipment and leaseholds in May 2002. The loss in fiscal 2001
increased from fiscal 2000 primarily due to deteriorating market conditions
after the planned sale of the Texas and Oklahoma operations was terminated in
fiscal 2000.

The pre-tax loss on disposal of $126.4 million includes employee
termination costs, lease termination costs, asset impairments, travel costs and
capital asset and inventory disposal costs. See Note 13 - Discontinued
Operations for further discussion.

Income tax benefit from the discontinued operations was $72.5 million,
$19.7 million and $9.7 million in fiscal years 2002, 2001 and 2000,
respectively. The effective income tax benefit rates were 41.9%, 38.5% and 38.5%
for fiscal years 2002, 2001 and 2000, respectively. The effective tax rate for
fiscal 2002 reflects the tax effect of certain disposal costs.

Net Earnings: Net earnings (loss) amounted to $86.9 million, or $0.62 per
diluted share for fiscal 2002, $45.3 million, or $0.32 per diluted share for
fiscal 2001 and $(228.9) million, or $(1.57) per diluted share for fiscal 2000.

Liquidity and Capital Resources

Cash and marketable securities amounted to $246.5 million, $121.1 million
and $29.6 million at the end of fiscal years 2002, 2001 and 2000, respectively.
Cash provided by operating activities amounted to $377.0 million in fiscal 2002,
$244.9 million in fiscal 2001 and $743.3 million in fiscal 2000. The increase in
net cash provided by operations in fiscal 2002 is largely due to a reduction in
merchandise inventories and an increase in net earnings.

Working capital amounted to $528.4 million, $449.3 million and $50.4
million in fiscal 2002, 2001 and 2000, respectively. The increase in the current
year was due in part to proceeds received from the sale of facilities of $65.5
million and an increase in cash from operations. The increase from fiscal 2000
to 2001 was due in part to the refinancing of the Company's short-term
borrowings into long-term debt.


F-4


Management's Discussion and Analysis of Financial Condition and Results of
Operations Liquidity and Capital Resources, continued

Net cash used in investing activities totaled $64.8 million, $443.6 million
and $196.1 million in fiscal 2002, 2001 and 2000, respectively. The decrease in
the current year was largely due to prior year acquisitions with a decrease in
capital expenditures in the current year and was offset by an increase in
proceeds from the sale of facilities. In the previous year, the Company acquired
77 retail locations totaling $123.8 million, which resulted in an increase in
cash used in investing activities in fiscal 2001. Net capital expenditures
totaled $83.5 million, $313.3 million and $213.0 million in fiscal 2002, 2001
and 2000, respectively. The current and previous year expenditures were for new
store locations, remodeling and enlarging of store locations, retrofits and
maintenance support facilities. In the previous year, additional capital
expenditures were made for a warehouse facility in Baldwin, Florida. The Company
has no material construction or purchase commitments outstanding as of June 26,
2002.

Net cash (used in) provided by financing activities was $(205.4) million,
$290.2 million and $(542.3) million in 2002, 2001 and 2000, respectively. The
decrease in the current year was due primarily to the prepayment of $150.0
million on the six-year term loan and was offset by the reduction of dividend
payments of $93.0 million. In the previous year, the Company received net
proceeds of $465 million from the credit facilities. See Note 6 - Debt for
further discussion on the credit facilities.

The Company is a party to various proceedings arising under federal, state
and local regulations protecting the environment. Management is of the opinion
that any liability that might result from any such proceedings will not have a
material adverse effect on the Company's financial condition or results of
operations.

Impact of Inflation

Winn-Dixie's primary costs, inventory and labor, increase with inflation.
Recovery of these costs has to come from improved operating efficiencies,
including improvements in merchandise procurement, and to the extent permitted
by the competition, through improved gross profit margins.

Critical Accounting Policies

The Consolidated Financial Statements and Notes to Consolidated Financial
Statements contain information that is pertinent to Management's Discussion and
Analysis. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions about future events that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities. Future events
and their effects cannot be determined with absolute certainty. Therefore, the
determination of estimates requires the exercise of judgment based on various
assumptions and other factors such as historical experience, current and
expected economic conditions, and in some cases, actuarial calculations. The
Company constantly reviews these significant factors and makes adjustments where
facts and circumstances dictate. Historically, actual results have not
significantly deviated from estimated results determined using the factors
described above.


F-5



Critical Accounting Policies, continued

The following is a discussion of the accounting policies considered to be
most critical to the Company. These accounting policies are both most important
to the portrayal of the Company's financial condition and results, and require
management's most difficult, subjective or complex judgments, often as a result
of the need to make estimates about the effect of matters that are inherently
uncertain.

Self-insurance reserves. It is the Company's policy to self insure for
certain insurable risks consisting primarily of physical loss to property,
business interruptions, workers' compensation, comprehensive general and auto
liability. Insurance coverage is obtained for catastrophic property and casualty
exposures as well as those risks required to be insured by law or contract.
Based on an independent actuary's estimate of the aggregate liability for claims
incurred, a provision for claims under the self-insured program is recorded and
revised annually. The actuarial estimates are subject to uncertainty from
various sources, including changes in claim reporting patterns, claim settlement
patterns, judicial decisions, legislation, and economic conditions. Although the
Company believes that the actuarial estimates are reasonable, significant
differences related to the items noted above could materially affect the
Company's self-insurance obligations and future expense.

Long-lived assets. The Company periodically evaluates the period of
depreciation or amortization for long-lived assets to determine whether current
circumstances warrant revised estimates of useful lives. The Company reviews its
property, plant and equipment for impairment whenever events or changes in
circumstances indicate the carrying value of an asset may not be recoverable.
Recoverability is measured by a comparison of the carrying amount to the net
undiscounted cash flows expected to be generated by the asset. An impairment
loss would be recorded for the excess of net book value over the fair value of
the asset impaired. The fair value is estimated based on expected discounted
future cash flows.

With respect to owned property and equipment associated with closed stores,
the value of the property and equipment is adjusted to reflect recoverable
values based on the Company's prior history of disposing of similar assets and
current economic conditions.

The results of impairment tests are subject to management's estimates and
assumptions of projected cash flows and operating results. The Company believes
that, based on current conditions, materially different reported results are not
likely to result from long-lived asset impairments. However, a change in
assumptions or market conditions could result in a change in estimated future
cash flows and the likelihood of materially different reported results.

Intangible assets and goodwill. In July 2001, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 142
("SFAS 142"), "Goodwill and Other Intangible Assets." SFAS 142 requires
companies to cease amortizing goodwill that existed at the time of adoption and
establish a new method for testing goodwill for impairment on an annual basis at
the reporting unit level (or an interim basis if an event occurs that might
reduce the fair value of a reporting unit below its carrying value). The Company
has determined that it is contained within one reporting unit and, as such,
impairment is tested at the company level. SFAS 142 also requires that an
identifiable intangible asset that is determined to have an indefinite useful
economic life not be amortized, but separately tested for impairment using a
fair value based approach.

F-6


Management's Discussion and Analysis of Financial Condition and Results of
Operations Critical Accounting Policies, continued

Intangible assets and goodwill, continued. The evaluation of goodwill and
intangibles with indefinite useful lives for impairment requires management to
use significant judgments and estimates including, but not limited to, projected
future revenue and cash flows. The Company believes that, based on current
conditions, materially different reported results are not likely to result from
goodwill and intangible impairments. However, a change in assumptions or market
conditions could result in a change in estimated future cash flows and the
likelihood of materially different reported results.

Store closing costs. The Company provides for closed store liabilities
relating to the estimated post-closing lease liabilities and other related exit
costs associated with the store closing commitments. The closed store
liabilities are usually paid over the lease terms associated with the closed
stores having remaining terms ranging from one to 20 years. The Company
estimates the lease liabilities, net of estimated sublease income only to the
extent of the liability, using a discount rate based on long-term rates with a
remaining lease term based on an estimated disposition date to calculate the
present value of the anticipated rent payments on closed stores. Other exit
costs include estimated real estate taxes, common area maintenance, insurance
and utility costs to be incurred after the store closes over the anticipated
lease term. Store closings are generally completed within one year after the
decision to close.

Adjustments to closed store liabilities and other exit costs primarily
relate to changes in subtenants and actual exit costs differing from original
estimates. Adjustments are made for changes in estimates in the period in which
the change becomes known. Any excess accrued store closing liability remaining
upon settlement of the obligation is reversed to income in the period that such
settlement is determined. Inventory write-downs, if any, in connection with
store closings, are classified in cost of sales. Costs to transfer inventory and
equipment from closed stores are expensed as incurred. Severance costs are
rarely incurred in connection with ordinary store closings.

Store closing liabilities are reviewed quarterly and adjusted to ensure
that any accrued amount is properly stated. Although the Company believes that
the estimates used are reasonable, significant differences related to the items
noted above or a change in market conditions could materially affect the
Company's reserve for store closing obligations and future expense.

COLI litigation. The Company was a party to litigation arising from its
interpretation of certain provisions of the U.S. tax code. The Company received
an unfavorable court decision related to the deduction of interest expense on
Company Owned Life Insurance (COLI). See Note 5 - Income Taxes for further
discussion. Appeals have been unsuccessful in reversing the decision. The
Company has recorded a reserve based on consultations with outside legal counsel
and historical negotiations of similar cases. The Company has and will continue
to negotiate the ultimate settlement of this matter. There are uncertainties in
any litigation of this nature and the ultimate settlement could vary from the
amounts recorded in the Consolidated Financial Statements. While the ultimate
outcome of this matter cannot be predicted with certainty, in the opinion of
management, the ultimate resolution of this matter will not have any additional
material adverse impact on the Company's financial condition or results of
operations.


F-7


Management's Discussion and Analysis of Financial Condition and Results of
Operations Recently Issued Accounting Standards

Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142") discontinued the practice of amortizing goodwill
on indefinite lived intangible assets and initiates an annual review of
impairment. The Company adopted SFAS 142 in July 2001. See Note 3 - Goodwill and
Other Intangible Assets for further discussion.

Statement of Financial Accounting Standards No. 143, "Accounting for Asset
Retirement Obligations" addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The Company has determined that the adoption
of this statement will not have a material impact on its financial position or
results of operations.

Statement of Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144") requires that
long-lived assets to be disposed of by sale are no longer measured on a net
realizable value basis, and future operating losses are no longer recognized
before they occur. In addition this statement modifies the reporting
requirements for discontinued operations. Long-lived assets, whether to be held
for sale or held and used should be measured at the lower of their carrying
amount or fair value less cost to sell. SFAS 144 is effective for financial
statements issued for fiscal years beginning after December 15, 2001 with
earlier adoption encouraged, and was adopted by the Company for its June 26,
2002 financial statements. The Company has determined that the adoption of this
standard will require the Company to disclose the Texas and Oklahoma operations
as a discontinued operation in fiscal 2002 and reclassify prior period
presentation. See Note 13 - Discontinued Operations for further discussion.

Statement of Financial Accounting Standards No. 145, "Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13 and Technical
Corrections" ("SFAS 145") becomes effective for the Company in July 2002. The
adoption of SFAS 145 will require that losses on early extinguishment of debt be
included in continuing operations rather than as an extraordinary item.

Statement of Financial Accounting Standards No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities" ("SFAS 146") provides guidance on
the recognition and measurement of liabilities for costs associated with exit or
disposal activities. The provisions of this Statement are effective for exit or
disposal activities that are initiated after December 31, 2002. The Company is
currently reviewing SFAS 146 to determine the impact upon adoption.

F-8


Management's Discussion and Analysis of Financial Condition and Results of
Operations Quantitative and Qualitative Disclosures About Market Risk

Cash Flow Hedge: The Company has outstanding a $246 million six-year term
loan with a variable interest rate based on the one-month LIBOR. The Company
utilizes derivative financial instruments to reduce its exposure to market risk
from changes in interest rates. The instruments primarily used to mitigate the
risk are interest rate swaps. The derivative instruments held on the $246
million six-year term loan are designated as highly effective cash flow hedges
of interest rate risk on variable rate debt and, accordingly, the change in fair
value of these instruments is recorded as a component of other comprehensive
income.

The Company has entered into two interest rate swap agreements to hedge the
interest rate risk associated with the $246 million outstanding in variable rate
debt. The purpose of these swaps is to fix interest rates on variable rate debt
and reduce certain exposures to interest rate fluctuation. At June 26, 2002, the
Company had interest rate swaps with a notional amount of $250 million. The
notional amounts do not represent a measure of exposure to the Company.

The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to these financial instruments. However,
counterparties to these agreements are major financial institutions and the risk
of loss due to nonperformance is considered by management to be minimal. The
Company does not hold or issue interest rate swaps for trading purposes.

The maturities and interest rates on the interest rate swaps for the
six-year term loan are shown in the following table. The Company will pay the
counterparty interest at a fixed rate as noted and the counterparty will pay the
Company interest at a variable rate equal to the one-month LIBOR (1.839% as of
June 26, 2002).



Notional Amount
(in thousands) Maturity Fixed Rate
-------------- -------------- ----------
$ 150,000 March 29, 2003 4.81%
------------ -------------- ----------
100,000 March 29, 2004 5.03%
------------ -------------- ----------
$ 250,000
============


The fair value of the Company's interest rate swaps is obtained from dealer
quotes. These values represent the estimated amount the Company would receive or
pay to terminate the agreement, taking into consideration the difference between
the contract rate of interest and rates currently quoted for agreements of
similar terms and maturities. At June 26, 2002, the fair value of the Company's
interest rate swaps resulted in an unrealized loss of $7.6 million ($4.7 million
after tax). The Company recorded the unrealized loss in accumulated other
comprehensive income in shareholders' equity. During the next 12 months, the
Company will incur interest expense, including the effect of interest rate
swaps, at a weighted average rate of 7.65% on the $246 million outstanding in
variable rate debt.

F-9


Management's Discussion and Analysis of Financial Condition and Results of
Quantitative and Qualitative Disclosures About Market Risk, continued

Cash Flow Hedge, continued: The Company measures effectiveness by the
ability of interest rate swaps to offset cash flows associated with changes in
the one-month LIBOR. To the extent that any of these contracts are not
considered effective, any changes in fair value relating to the ineffective
portion of these contracts are immediately recognized in income. However, all
the contracts were effective during the period and no gain or loss was reported
in earnings.

On July 26, 2002, the Company unwound the swap with a notional amount of
$150.0 million and a maturity of March 29, 2003. The swap was unwound in
conjunction with a $100.0 million pay down of the related debt on July 29, 2002.

Fair Value Hedge: In addition to the interest rate swaps for the six-year
term loan, on February 20, 2002, the Company entered into interest rate swap
agreements in which the Company effectively exchanged the $300 million fixed
rate 8.875% interest on the senior notes for two variable rates in the notional
amount of $200 and $100 million at six-month LIBOR plus 385 and 376 basis
points, respectively. The variable interest rates, which are based on six-month
LIBOR, are fixed semiannually on the first day of April and October. The
six-month LIBOR rate was 2.341% on April 1, 2002. The maturity dates of the
interest rate swap agreements match those of the underlying debt.

In accordance with SFAS 133, the Company designated the interest rate swap
agreements on the senior notes as perfectly effective fair value hedges and,
accordingly, uses the short-cut method of evaluating effectiveness. As permitted
by the short-cut method, the change in fair value of the interest rate swaps
will be reflected in earnings and an equivalent amount will be reflected as a
change in the carrying value of the swaps, with an offset to earnings. There is
no ineffectiveness to be recorded. At June 26, 2002, the Company decreased the
fair value of the 8.875% senior notes by $4.1 million and recorded the
corresponding interest rate swap liability of $4.1 million in the other
liabilities section of the Consolidated Balance Sheets.

The Company's objectives for entering into these swaps were to reduce the
Company's exposure to changes in the fair value of the debt and to obtain
variable rate financing at an attractive cost. The swaps effectively converted
the fixed-rate debt to a floating rate. The agreement involves receipt of fixed
rate amounts in exchange for floating rate interest payments over the life of
the agreement without an exchange of the underlying principal amount.

The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to these financial instruments. However,
counterparties to these agreements are major financial institutions and the risk
of loss due to nonperformance is considered by management to be minimal. The
Company does not hold or issue interest rate swaps for trading purposes.

F-10


Management's Discussion and Analysis of Financial Condition and Results of
Quantitative and Qualitative Disclosures About Market Risk, continued

The following table presents the future principal cash flows and
weighted-average interest rates expected on the Company's existing long-term
debt instruments and interest rate swap agreements. Fair values have been
determined based on quoted market prices as of June 26, 2002.



Expected Maturity Date
(Dollar amounts in thousands)

There- Fair
2003 2004 2005 2006 2007 after Total Value
---- ---- ---- ---- ---- ----- ----- -----

Liabilities:

Long-term debt
Fixed rate $ 279 276 273 270 267 300,069 $ 301,434 $ 315,054
Average interest rate 9.40% 9.40% 9.40% 9.40% 9.40% 8.88% 8.88%

Variable rate $ 2,460 2,460 2,460 2,460 236,160 - $ 246,000 $ 246,000
Average interest rate 4.93% 6.73% 7.76% 8.23% 8.57% - 8.51%

Interest rate derivatives

Interest rate swaps

Variable to Fixed $ 150,000 100,000 - - - - $ 250,000 $ (7,639)
Average pay rate 4.81% 5.03% - - - - 4.90%
Average receive rate 2.18% 3.98% - - - - 2.90%

Fixed to Variable $ - - - - - 300,000 $ 300,000 $ (4,083)
Average pay rate - - - - - 9.99% 9.99%
Average receive rate - - - - - 8.88% 8.88%



F-11


Management's Discussion and Analysis of Financial Condition and Results of
Cautionary Statement Regarding Forward-Looking Information and Statements

This Form 10-K contains certain information that constitutes
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. These forward-looking statements involve certain
risks and uncertainties. Actual results may differ materially from the results
described in the forward-looking statements.

Factors that may cause actual results to differ materially from those projected
include, but are not limited to:

o the Company's ability to achieve the benefits contemplated from the various
operational changes being implemented by management;

o heightened competition, including specifically the intensification of price
competition, the entry of new competitors, or the expansion of existing
competitors in one or more operating regions;

o changes in federal, state or local legislation or regulations affecting
food manufacturing, food distribution, or food retailing, including
environmental compliance;

o the possible impact of changes in the ratings assigned to the Company's
debt instruments by nationally recognized rating agencies; and

o general business and economic conditions in the Company's operating
regions, including conditions arising from the recession of 2001, recent
stock market decline, the rate of inflation/deflation, changes in
population, consumer demands and spending and the availability of new
employees.

Please refer to discussions of these and other factors in this Form 10-K
and other Company filings with the Securities and Exchange Commission. The
Company disclaims any intent or obligation to revise or update publicly these
forward-looking statements, whether as a result of new information, future
events or otherwise. Readers are cautioned not to place undue reliance on these
forward-looking statements.

F-12






REPORT OF MANAGEMENT


The Company is responsible for the preparation, integrity and objectivity
of the consolidated financial statements and related information appearing in
the Annual Report. The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis and include amounts that are based on management's best estimates and
judgments.

Management is also responsible for maintaining a system of internal
controls that provides reasonable assurance that the accounting records properly
reflect the transactions of the Company, that assets are safeguarded and that
the consolidated financial statements present fairly the financial position and
operating results. As part of the Company's controls, the internal audit staff
conducts examinations in each of the operations of the Company.

The Audit Committee of the Board of Directors, composed entirely of outside
directors, meets periodically to review the results of audit reports and other
accounting and financial reporting matters with the independent certified public
accountants and the internal auditors.




Allen R. Rowland Richard P. McCook
President and Senior Vice President
Chief Executive Officer and Chief Financial Officer


F-13




INDEPENDENT AUDITORS' REPORT


The Shareholders and the Board of Directors
Winn-Dixie Stores, Inc.:

We have audited the accompanying consolidated balance sheets of Winn-Dixie
Stores, Inc. and subsidiaries as of June 26, 2002 and June 27, 2001, and the
related consolidated statements of operations, shareholders' equity, and cash
flows for each of the years in the three-year period ended June 26, 2002. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Winn-Dixie
Stores, Inc. and subsidiaries at June 26, 2002 and June 27, 2001, and the
results of their operations and their cash flows for each of the years in the
three-year period ended June 26, 2002, in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note 3 to the consolidated financial statements, effective
June 28, 2001, Winn-Dixie Stores, Inc. and subsidiaries adopted the provision of
Statements of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets".




KPMG LLP


Jacksonville, Florida
August 7, 2002


F-14



WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended June 26, 2002, June 27, 2001 and June 28, 2000



2002 2001 2000
------------ ---------- ----------
Amounts in thousands except per share data


Net sales $ 12,334,353 12,238,874 13,004,194
Cost of sales, including warehouse and delivery expenses 8,916,507 8,942,043 9,450,463
------------ ---------- ----------
Gross profit on sales 3,417,846 3,296,831 3,553,731
Other operating and administrative expenses 3,051,840 2,971,917 3,387,798
Restructuring and other non-recurring charges - 147,245 396,029
------------ ---------- ----------
Operating income (loss) 366,006 177,669 (230,096)
Interest:
Interest on capital lease obligations 3,810 4,188 4,458
Other interest 54,029 48,657 42,630
------------ ---------- ----------
Total interest 57,839 52,845 47,088
------------ ---------- ----------
Earnings (loss) from continuing operations
before income taxes 308,167 124,824 (277,184)
Income taxes 118,644 48,036 (63,804)
------------ ---------- ----------
Net earnings (loss) from continuing operations 189,523 76,788 (213,380)
------------ ---------- ----------
Discontinued operations (Note 13)
Loss from discontinued operations (46,432) (51,182) (25,227)
Loss on disposal of discontinued operations (126,394) - -
Income tax benefit (72,479) (19,705) (9,712)
------------ ---------- ----------
Net loss from discontinued operations (100,347) (31,477) (15,515)
------------ ---------- ----------
Net earnings (loss) before extraordinary item 89,176 45,311 (228,895)
Extraordinary item (2,310) - -
------------ ---------- ----------
Net earnings (loss) $ 86,866 45,311 (228,895)
============ ====== ========
Basic earnings per share:
Earnings (loss) from continuing operations $ 1.35 0.55 (1.47)
Loss from discontinued operations
(including loss on disposal) (0.71) (0.23) (0.10)
Extraordinary item (0.02) - -
------------ ---------- ----------
Basic earnings (loss) per share $ 0.62 0.32 (1.57)
============ ==== =====

Diluted earnings per share:
Earnings (loss) from continuing operations $ 1.35 0.55 (1.47)
Loss from discontinued operations
(including loss on disposal) (0.71) (0.23) (0.10)
Extraordinary item (0.02) - -
------------ ---------- ----------
Diluted earnings (loss) per share $ 0.62 0.32 (1.57)
============ ==== =====

Dividends per share $ 0.36 1.02 1.02
============ ==== =====
Weighted average common shares outstanding-basic 140,290 139,824 145,445
============ ==== =====
Weighted average common shares outstanding-diluted 140,617 140,399 145,445
============ ==== =====


See accompanying notes to consolidated financial statements.



F-15



WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 26, 2002 and June 27, 2001



ASSETS 2002 2001
--------- ---------
Dollar amounts in thousands expect par value

Current Assets:
Cash and cash equivalents $ 227,846 121,061
Marketable securities 18,606 -
Trade and other receivables, less allowance for doubtful items of
$2,779 ($3,935 in 2001) 116,154 109,159
Merchandise inventories less LIFO reserve of
$215,873 ($220,411 in 2001) 1,063,288 1,198,602
Prepaid expenses and other assets 53,934 34,643
Deferred income taxes 158,478 135,736
----------- -------
Total current assets 1,638,306 1,599,201
----------- -------
Cash surrender value of life insurance, net 16,197 16,876
Property, plant and equipment, net 966,752 1,146,654
Goodwill 87,808 87,808
Non-current deferred income taxes 113,291 106,145
Other assets, net 115,224 84,986
----------- -------
Total assets $ 2,937,578 3,041,670
=========== =========

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Current portion of long-term debt $ 2,739 4,291
Current obligations under capital leases 3,471 3,270
Accounts payable 509,704 599,850
Reserve for insurance claims and self-insurance 98,450 100,850
Accrued wages and salaries 111,556 109,183
Accrued rent 144,597 131,837
Accrued expenses 174,805 176,332
Income taxes payable 64,582 24,294
----------- -------
Total current liabilities 1,109,904 1,149,907
----------- -------
Reserve for insurance claims and self-insurance 160,226 147,964
Long-term debt 540,612 697,414
Obligations under capital leases 24,787 28,953
Defined benefit plan 52,887 49,027
Lease liability on closed stores 180,785 153,874
Other liabilities 55,993 42,877
----------- -------
Total liabilities 2,125,194 2,270,016
----------- -------
Commitments and contingent liabilities (Notes 5, 6, 7, 9 and 11)
Shareholders' Equity:
Common stock $1 par value. Authorized 400,000,000 shares;
140,592,009 shares outstanding in 2002 and 140,466,235 in 2001 140,592 140,466
Retained earnings 676,322 634,694
Accumulated other comprehensive income (4,530) (1,587)
Associates' stock loans - (1,919)
----------- -------
Total shareholders' equity 812,384 771,654
----------- -------
Total liabilities and shareholders' equity $ 2,937,578 3,041,670
=========== =========



See accompanying notes to consolidated financial statements.

F-16



WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years ended June 26, 2002, June 27, 2001 and June 28, 2000


2002 2001 2000
--------- ------ --------
Dollar amounts in thousands

Cash flows from operating activities:
Net earnings (loss) $ 86,866 45,311 (228,895)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Extraordinary item 2,310 - -
Gain on sale of facilities (7,517) - -
Asset impairment write-off 36,959 - -
Depreciation and amortization 175,520 183,559 256,671
Deferred income taxes (28,141) 60,336 (189,046)
Defined benefit plan 3,860 3,786 4,007
Reserve for insurance claims and self-insurance (9,807) 5,689 75,408
Stock compensation plans 4,476 8,007 (1,144)
Change in operating assets and liabilities, net of effects
from acquisitions:
Trade and other receivables (6,995) (1,734) 80,888
Merchandise inventories 115,452 (39,962) 283,693
Prepaid expenses and other assets 8,521 25,416 (11,776)
Accounts payable (81,868) 23,009 (87,959)
Income taxes payable 41,734 (61,312) 74,867
Other current accrued expenses 35,579 (7,217) 486,565
Net cash provided by operating activities 376,949 244,888 743,279

Cash flows from investing activities:
Purchases of property, plant and equipment, net (83,541) (313,319) (212,990)
(Increase) decrease in investments and other assets (28,386) (6,519) 16,872
Marketable securities (18,333) - -
Proceeds from sale of facilities (including inventory) 65,472 - -
Acquisitions, net of cash acquired - (123,753) -
Net cash used in investing activities (64,788) (443,591) (196,118)

Cash flows from financing activities:
Decrease in short-term borrowings - (235,000) (230,000)
Proceeds from issuance of long-term debt - 700,000 -
Debt issuance costs (681) (24,210) -
Principal payments on long-term debt (154,271) (257) -
Principal payments on capital lease obligations (3,129) (2,857) (2,612)
Purchase of common stock (229) (17,003) (162,272)
Proceeds of sales under associates' stock purchase plan 1,919 11,833 164
Dividends paid (49,899) (142,853) (148,966)
Other 914 535 1,355
Net cash (used in) provided by financing activities (205,376) 290,188 (542,331)

Increase in cash and cash equivalents 106,785 91,485 4,830
Cash and cash equivalents at the beginning of the year 121,061 29,576 24,746
Cash and cash equivalents at the end of the year $ 227,846 121,061 29,576

Supplemental cash flow information:
Interest paid $ 58,073 37,064 23,058
Interest and dividends received $ 1,485 2,327 808
Income taxes paid $ 35,689 29,307 40,663




See accompanying notes to consolidated financial statements.

F-17



WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Years ended June 26, 2002, June 27, 2001, and June 28, 2000
(Amounts in thousands except per share data)



Number Dollar Accumulated
of Value of Other Associates' Total
Common Common Retained Comprehensive Stock Shareholders'
Shares Stock Earnings Income Loans Equity
---------- ------------- -------------- ----------------- -------------- --------------

Balances at June 30, 1999 148,577 $ 148,577 1,259,597 3,069 (164) $ 1,411,079
---------- ------------- -------------- ----------------- -------------- --------------

Comprehensive loss:
Net loss - - (228,895) - - (228,895)
Realized gain on securities,
net of tax - - - (3,069) - (3,069)
---------- ------------- -------------- ----------------- -------------- --------------
Total comprehensive loss - - (228,895) (3,069) - (231,964)
Cash dividends, $1.02 per share - - (148,966) - - (148,966)
Common stock issued and stock
compensation expense 131 131 (131) - - -
Common stock acquired (7,878) (7,878) (154,394) - - (162,272)
Stock options exercised - - (187) - - (187)
Associates' stock loans, payments - - - - 164 164
Other - - (19) - - (19)
---------- ------------- -------------- ----------------- -------------- --------------
Balances at June 28, 2000 140,830 $ 140,830 727,005 - - $ 867,835
---------- ------------- -------------- ----------------- -------------- --------------

Comprehensive income:
Net earnings - - 45,311 - - 45,311
Unrealized loss on derivative
instruments, net of tax - - - (1,587) - (1,587)
---------- ------------- -------------- ----------------- -------------- --------------
Total comprehensive income - - 45,311 (1,587) - 43,724
Cash dividends, $1.02 per share - - (142,853) - - (142,853)
Common stock issued and stock
compensation expense 811 811 20,988 - - 21,799
Common stock acquired (1,180) (1,180) (15,823) - - (17,003)
Stock options exercised 5 5 66 - - 71
Associates' stock loans outstanding - - - - (1,919) (1,919)
---------- ------------- -------------- ----------------- -------------- --------------
Balances at June 27, 2001 140,466 $ 140,466 634,694 (1,587) (1,919) $ 771,654
---------- ------------- -------------- ----------------- -------------- --------------

Comprehensive income:
Net earnings - - 86,866 - - 86,866
Unrealized loss on derivative
instruments, net of tax - - - (3,111) - (3,111)
Unrealized gain on marketable
securities, net of tax - - - 168 - 168
---------- ------------- -------------- ----------------- -------------- --------------
Total comprehensive income - - 86,866 (2,943) - 83,923
Cash dividends, $0.36 per share - - (49,899) - - (49,899)
Common stock issued and stock
compensation expense 110 110 4,261 - - 4,371
Common stock acquired (26) (26) (203) - - (229)
Stock options exercised 42 42 603 - - 645
Associates' stock loans, payments - - - - 1,919 1,919
---------- ------------- -------------- ----------------- -------------- --------------
Balances at June 26, 2002 140,592 $ 140,592 676,322 (4,530) - $ 812,384
========== ============= ============== ================= ============== ==============



See accompanying notes to consolidated financial statements

F-18



WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


1. Summary of Significant Accounting Policies and Other Information

(a) The Company: Winn-Dixie Stores, Inc. and its subsidiaries
(the "Company") operate as a major food retailer in twelve
states and the Bahama Islands. As of June 26, 2002, the
Company operated 1,073 retail stores, 34 fuel centers and 31
liquor stores. In support of its retail operations, the
Company has 15 warehouse distribution centers and 16
manufacturing plants.

(b) Fiscal Year: The fiscal year ends on the last Wednesday in
June. Fiscal years 2002, 2001 and 2000 are comprised of 52
weeks.

(c) Basis of Consolidation: The consolidated financial
statements include the accounts of Winn-Dixie Stores, Inc.
and its subsidiaries. All subsidiaries are wholly owned and
fully consolidated with the exception of Bahamas
Supermarkets Limited, which is owned approximately 78% by
W-D Bahamas Limited. Significant inter-company accounts and
transactions have been eliminated in consolidation.

(d) Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles
requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.

(e) Cash and Cash Equivalents: Cash equivalents consist of
highly liquid investments with maturity of three months or
less when purchased. Cash and cash equivalents are stated at
cost plus accrued interest, which approximates market.

(f) Marketable Securities: Marketable securities consist
principally of fixed income securities categorized as
available-for-sale. Available-for-sale securities are
recorded at fair value. Unrealized holding gains and losses,
net of the related tax effect, are excluded from earnings
and reported as a separate component of shareholders' equity
until realized. A decline in the fair value of
available-for-sale securities below cost that is deemed
other than temporary is charged to earnings, resulting in
the establishment of a new cost basis for the security.
Realized gains and losses are included in earnings and are
derived using the specific identification method for
determining the cost of securities sold.

(g) Inventories: Inventories are stated at the lower of cost or
market. The "dollar value" last-in, first-out (LIFO) method
is used to determine the cost of approximately 84% of
inventories consisting primarily of merchandise in stores
and distribution warehouses. Manufacturing, pharmacy and
produce inventories are valued at the lower of first-in,
first-out (FIFO) cost or market. Elements of cost included
in manufacturing inventories consist of material, direct
labor and plant overhead.

F-19


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


1. Summary of Significant Accounting Policies and Other Information, continued

(h) Revenue Recognition: Revenue is recognized at the point of
sale for retail sales. Sales discounts are offered to
customers at the time of purchase as part of the Company's
Customer Reward Card program as well as other promotional
events. All sales discounts are recorded as a reduction of
sales at the time of purchase.

Additionally, the Company offers awards to customers based
on an accumulation of points as part of its Customer Reward
Card program. The points accumulation and redemption occur
within the same reporting period with no free or discounted
products or services to be delivered in the future.
Accordingly, the Company had no liability established for
points redemption as of June 26, 2002.

(i) Merchandise Cost: Vendor allowances and credits that relate
to the Company's merchandising activities are recorded as a
reduction of cost of sales as they are earned according to
the underlying agreement with the vendor. Allowances consist
primarily of promotional allowances, quantity discounts and
payments under merchandising agreements. Amounts received
under promotional or other merchandising allowance
agreements that require specific performance are recognized
when the performance is satisfied, the amount is fixed and
determinable and the collection is reasonably assured. Lump
sum payments received in advance of performance are recorded
as deferred income in other liabilities, either current or
non-current as appropriate, and recognized over the life of
the agreement.

(j) Derivatives: The Company follows Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133
requires that all derivative instruments be recorded on the
balance sheet at their fair value. Changes in the fair value
of derivatives are recorded each period in current earnings
or other comprehensive income, depending on whether a
derivative is designated as part of a hedge transaction and,
if it is, the type of hedge transaction.

(k) Advertising: The Company expenses the costs of advertising
as incurred. Advertising and promotion expenses totaled
$141.0 million, $136.4 million and $135.6 million for fiscal
years 2002, 2001 and 2000, respectively.

(l) Income Taxes: Deferred tax assets and liabilities are
recognized for the estimated future tax consequences
attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and
their respective tax basis. Deferred tax assets and
liabilities are measured using the enacted tax rates in
effect for the year in which those temporary differences are
expected to be recovered or settled.


F-20


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted




1. Summary of Significant Accounting Policies and Other Information, continued

(m) Self-insurance: Self-insurance reserves are established for
automobile and general liability, workers' compensation and
property loss costs based on claims filed and claims
incurred but not reported, with a maximum per occurrence of
$2,000 for automobile and general liability and $1,000 for
workers' compensation. Self-insurance reserves are
established for property losses with a maximum annual
aggregate of $5,000 ($10,000 for named windstorm and wind
driven rain) and a $100 per occurrence deductible after the
aggregate is obtained. The Company is insured for losses in
excess of these limits.

(n) Property, Plant and Equipment: Property, plant and equipment
are stated at historical cost. Depreciation is provided over
the estimated useful lives by the straight-line method.
Store equipment depreciation is based on lives varying from
five to eight years. Transportation equipment is based on
lives varying from three to ten years. Warehouse and
manufacturing equipment is based on lives varying from five
to ten years. Amortization of improvements to leased
premises is provided principally by the straight-line method
over the periods of the leases or the estimated useful lives
of the improvements, whichever is less.

Interest costs on significant projects constructed for the
Company's own use are capitalized as part of the costs of
the newly constructed facilities.

The Company reviews its property, plant and equipment for
impairment whenever events or changes in circumstances
indicate the carrying value of an asset may not be
recoverable. Recoverability is measured by comparison of the
carrying amount to the net undiscounted cash flows expected
to be generated by the asset. An impairment loss would be
recorded for the excess of net book value over the fair
value of the asset impaired. The fair value is estimated
based on expected discounted future cash flows.

(o) Store Opening and Closing Costs: The costs of opening new
stores and closing old stores are charged to earnings in the
year incurred. An expense is recorded for the present value
of expected future net rent payments in the year that a
store closes.

(p) Earnings Per Share: Earnings per common share are based on
the weighted average number of common shares outstanding.
Diluted earnings per share amounts are based on the weighted
average number of common stock outstanding, plus the
incremental shares that would have been outstanding upon the
assumed exercise of all diluted stock options, subject to
anti-dilution limitations.



F-21


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted



1. Summary of Significant Accounting Policies and Other Information, continued

(p) Earnings Per Share, continued: The following weighted
average numbers of shares of common stock were used in the
calculations for earnings per share.

2002 2001 2000
-------- ------- -------
Basic 140,289,812 139,823,835 145,445,416
Diluted 140,616,941 140,399,055 145,445,416

(q) Comprehensive Income: Comprehensive income is reflected on
the ConsolidatedStatements of Shareholders' Equity.
Accumulated other comprehensive income is comprised of
unrealized gains/losses on derivative financial instruments
and unrealized gains/losses of available-for-sale
securities.

(r) Stock-Based Compensation: The Company follows Statement of
Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123"), which establishes a
fair value-based method of accounting for stock-based
compensation plans.

(s) Goodwill and Other Intangibles: The Company follows
Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142"), which
establishes intangible assets with an indefinite useful life
shall not be amortized until their useful life is determined
to be no longer indefinite and should be tested for
impairment annually or more frequently if events or changes
in circumstances indicate that the asset might be impaired.
SFAS 142 states that goodwill should not be amortized but
tested for impairment for each reporting unit, on an annual
basis and between annual tests in certain circumstances.

(t) New Accounting Pronouncements: Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"), discontinued the practice of
amortizing goodwill and indefinite lived intangible assets
and initiates an annual review of impairment. The Company
adopted SFAS 142 in July 2001. See Note 3 - Goodwill and
Other Intangible Assets for further discussion.

Statement of Financial Accounting Standards No. 143,
"Accounting for Asset Retirement Obligations" addresses
financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets
and the associated asset retirement costs. The Company has
determined that the adoption of this statement will not have
a material impact on its financial position or results of
operations.




F-22


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

1. Summary of Significant Accounting Policies and Other Information, continued

(t) New Accounting Pronouncements, continued: Statement of
Financial Accounting Standards No. 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets" ("SFAS 144"),
requires that long-lived assets to be disposed of by sale
are no longer measured on a net realizable value basis, and
future operating losses are no longer recognized before they
occur. In addition, this statement modifies the reporting
requirements for discontinued operations. Long-lived assets,
whether to be held for sale or held and used should be
measured at the lower of its carrying amount or fair value
less cost to sell. SFAS 144 is effective for financial
statements issued for fiscal years beginning after December
15, 2001 with earlier adoption encouraged, and was adopted
by the Company for its June 26, 2002 financial statements.
The Company has determined that the adoption of this
standard will require the Company to disclose the Texas and
Oklahoma operations as a discontinued operation in fiscal
2002 and reclassify prior period presentation. See Note 13 -
Discontinued Operations for further discussion.

Statement of Financial Accounting Standards No. 145,
"Rescission of FASB Statements No. 4, 44 and 64, Amendment
of FASB Statement No. 13 and Technical Corrections" ("SFAS
145"), becomes effective for the Company in July 2002. The
adoption of SFAS 145 will require that losses on early
extinguishment of debt be included in continuing operations
rather than as an extraordinary item.

Statement of Financial Accounting Standards No. 146,
"Accounting for Costs Associated with Exit or Disposal
Activities" ("SFAS 146"), provides guidance on the
recognition and measurement of liabilities for cost
associated with exit or disposal activities. The provisions
of this Statement are effective for exit or disposal
activities that are initiated after December 31, 2002. The
Company is currently reviewing SFAS 146 to determine the
impact upon adoption.

(u) Business Reporting Segments: Based on the information
monitored by the Company's chief operating decision-makers
to manage the business, the Company has identified that its
operations are within one reportable segment. Accordingly,
financial information on industry segments is omitted
because, apart from the principal business of operating
retail self-service food stores, the Company has no other
industry segments. All sales of the Company are to customers
within the United States and the Bahama Islands. All assets
of the Company are located within the United States and the
Bahama Islands. Sales and assets related to and located in
the Bahama Islands represent less than 1% of the Company's
total sales and assets.

(v) Reclassification: Certain other prior year amounts may
have been reclassified to conform to the current year's
presentation.


F-23



WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted



2. Merchandise Inventories

At June 26, 2002, inventories valued by the LIFO method would have been
$215,873 higher ($220,411 higher at June 27, 2001) if they were stated
at the lower of FIFO cost or market. If the FIFO method of inventory
valuation had been used, reported earnings from continuing operations
would have been $2,791, or $0.02 per diluted share, lower in fiscal
2002, $7,354, or $0.05 per diluted share, lower in fiscal 2001 and the
loss from continuing operations would have been $9,283, or $0.06 per
diluted share, lower in fiscal 2000.

3. Goodwill and Other Intangible Assets

At the beginning of fiscal 2002, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142, "Goodwill and
Other Intangible Assets" ("SFAS 142"). Under the provisions of SFAS
142, if an intangible asset is determined to have an indefinite useful
life, it shall not be amortized until its useful life is determined to
be no longer indefinite. An intangible asset that is not subject to
amortization shall be tested for impairment annually, or more
frequently if events or changes in circumstances indicate that the
asset might be impaired. Goodwill is not amortized but is tested for
impairment, for each reporting unit, on an annual basis and between
annual tests in certain circumstances. In accordance with the
guidelines in SFAS 142, the Company determined it has one reporting
unit.

During the quarter ended September 19, 2001, the Company performed its
annual impairment review by comparing the Company's net book value
including goodwill to the Company's market capitalization. No
impairment adjustment was necessary.

Other intangible assets consist of a non-compete fee and the cost of
purchasing pharmacy prescription files. Upon adoption of SFAS 142, the
Company reassessed the useful lives of other intangible assets and
determined the useful lives are appropriate in determining amortization
expense. The balance, which is a component of other assets on the
Consolidated Balance Sheets, as of June 26, 2002 is as follows:

Other
Intangible
Assets
-----------
Other intangibles $ 7,461
Less: Accumulated amortization 2,547
----------
$ 4,914
===========

F-24


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

3. Goodwill and Other Intangible Assets, continued

Amortization expense for other intangible assets for fiscal year-end
June 26, 2002, June 27, 2001 and June 28, 2000 was $1,201, $903 and
$193, respectively. The estimated remaining amortization expense for
each of the fiscal years subsequent to June 26, 2002 is as follows:


Amortization
Expense
---------------
For year-ended June 25, 2003 $ 1,206
For year-ended June 30, 2004 1,153
For year-ended June 29, 2005 1,099
For year-ended June 28, 2006 410
For year-ended June 27, 2007 103
Thereafter 943
---------------
$ 4,914
===============


The effects of adoption of SFAS 142 on net earnings from continuing
operations and earnings per share from continuing operations is as
follow:


June 26, 2002 June 27, 2001 June 28, 2000
------------------- -------------------- --------------------

Continuing Operations:
Reported net earnings (loss) $ 189,523 76,788 (213,380)
Goodwill amortization (net of tax) - 1,954 2,507
--------------- ------------------- -------------------
Adjusted net earnings (loss) $ 189,523 78,742 (210,873)
=============== ==================== ====================
Adjusted basic earnings (loss) $ 1.35 0.56 (1.45)
=============== ==================== ====================
Adjusted diluted earnings (loss) $ 1.35 0.56 (1.45)
=============== ==================== ====================




F-25



WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted



4. Property, Plant and Equipment


Property, plant and equipment consists of the following:

2002 2001
---------------- -------------


Land $ 42,188 47,389
Buildings 176,125 189,178
Furniture, fixtures, machinery and equipment 1,943,693 2,234,384
Transportation equipment 121,322 132,669
Improvements to leased premises 499,009 500,445
Construction in progress 15,507 26,432
---------------- -------------
2,797,844 3,130,497
Less: Accumulated depreciation 1,847,475 2,002,814
---------------- -------------
950,369 1,127,683
Leased property under capital leases, less accumulated
amortization of $36,287 ($34,833 in 2001) 16,383 18,971
-------------
----------------
Net property, plant and equipment $ 966,752 1,146,654
================ =============



In fiscal 2002, the Company took a non-cash charge of $15,393 and
$21,566 for impairment of long-lived assets related to the discontinued
operations and continuing operations, respectively. In fiscal 2001, the
Company incurred a non-cash charge of $43,277 due to losses on assets
disposed of as a result of store retrofits. See Note 13 and Note 14 -
Discontinued Operations and Restructuring and Other Non-recurring
Charges. 5.






F-26


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

Income Taxes

Income tax expense (benefit) consists of:

Current Deferred Total
-------------- ----------------- ----------------
2002
Federal $ 60,951 (22,126) 38,825
State 11,812 (5,918) 5,894
-------------- ----------------- ----------------
$ 72,763 (28,044) 44,719
============== ================= ================

2001
Federal $ (33,422) 58,508 25,086
State 1,416 1,829 3,245
-------------- ----------------- ----------------
$ (32,006) 60,337 28,331
============== ================= ================

2000
Federal $ 111,358 (182,074) (70,716)
State 4,172 (6,972) (2,800)
-------------- ----------------- ----------------
$ 115,530 (189,046) (73,516)
============== ================= ================


The following reconciles the expense (benefit) to the federal statutory
income tax rate:



2002 2001 2000
---------- ---------- ---------

Federal statutory income tax rate 35.0 % 35.0 % (35.0)%
State and local income taxes, net of federal
income tax benefits 2.9 2.8 (0.6)
Tax credits (1.4) (4.0) (0.9)
Company owned life insurance (COLI) - 2.8 9.6
Goodwill impairment - - 2.9
Other, net (2.5) 1.9 (0.3)
---------- ---------- ---------
34.0 % 38.5 % (24.3)%
========== ========== =========


The effective rate for fiscal 2002 reflects the tax benefit obtained
from the discontinued operations. The effective tax rate for fiscal
2000 reflects the effects of certain restructuring expenses and COLI
adjustments.



F-27


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


5. Income Taxes, continued


2002 2001 2000
-------------------- ------------------- -------------------
Deferred tax assets:

Reserve for insurance claims and self-insurance $ 82,504 82,092 79,039
Reserve for vacant store leases 72,496 21,511 38,308
Unearned promotional allowance 16,806 18,292 5,310
Reserve for accrued vacations 11,292 13,352 13,463
State net operating loss carry forwards 31,586 32,315 17,052
Excess of book over tax depreciation 64,335 10,150 12,032
Other comprehensive income 2,836 991 -
Excess of book over tax rent expense 857 997 956
Excess of book over tax retirement expense 23,773 21,046 19,452
Uniform capitalization of inventory 9,890 9,291 9,718
Restructuring costs 29,015 102,375 130,587
Other, net 66,872 50,701 52,730
--------- --------- ---------
Total gross deferred tax assets 412,262 363,113 378,647
Less: Valuation allowance 35,913 29,696 16,489
--------- --------- ---------
Net deferred tax assets 376,349 333,417 362,158
--------- --------- ---------
Deferred tax liabilities:
Excess of tax over book depreciation (85,111) (84,640) (46,308)
Undistributed earnings of the Bahamas
subsidiary (5,382) (4,783) (4,761)
Uniform capitalization of inventory (527) - -
Other, net (13,560) (2,113) (9,863)
--------- --------- ---------
Total gross deferred tax liabilities (104,580) (91,536) (60,932)
--------- --------- ---------
--------- --------- ---------
Net deferred tax assets $ 271,769 241,881 301,226
========= ========= =========


The Company believes the results of historical taxable income and the results of
future operations will generate sufficient taxable income to realize the
deferred tax assets.



F-28


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

5. Income Taxes, continued

The Company has established a reserve for taxes and interest related to
company owned life insurance (COLI) since it received an unfavorable
opinion in October 1999 and a computational decision on January 11,
2000 from the U.S. Tax Court. The Company held COLI policies and
deducted interest on outstanding loans from March 1993 through December
1997. In the fall of 1996, Congress passed legislation phasing out such
deductions over a three-year period. The Tax Court upheld the Internal
Revenue Service's position that interest related to loans on
broad-based, company owned life insurance policies in 1993 was not
deductible for income tax purposes. The Eleventh Circuit Court of
Appeals issued an opinion on June 28, 2001 affirming the Tax Court's
decision and on September 28, 2001 denied the Company's petition for a
rehearing. The Company filed a petition asking the United States
Supreme Court to hear the matter on appeal. The United States Supreme
Court denied this petition on April 15, 2002.

In the opinion of management, the United States Supreme Court's
decision will not have any additional material adverse impact on the
Company's financial condition or results of operations.


6. Debt


2002 2001
------------------ --------------------

364-day $175,000 revolving credit facility due 2003; $
interest payable at LIBOR plus 2.50% - -
Five-year $200,000 revolving credit facility due 2006;
interest payable at LIBOR plus 2.50% - -
Mortgage note payable with interest at 9.40% and
monthly $22 principal and interest payments 1,434 1,705
and 10.0% of principal paid annually each October
Six-year term loan due 2007; interest payable at
LIBOR plus 2.75% and .25% of principal
paid quarterly 246,000 400,000
8.875% senior notes due 2008; interest payable
semiannually on April 1 and October 1 295,917 300,000
-------- --------
Total 543,351 701,705
Less current portion 2,739 4,291
-------- --------
Long-term portion $540,612 697,414
======== ========






F-29


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

6. Debt, continued

On January 29, 2002, the Company prepaid $150.0 million on the six-year
term loan and incurred an extraordinary charge of $3.8 million ($2.3
million net of tax) primarily for the write-off of unamortized debt
issue cost associated with the early extinguishment of this debt. In
addition, on July 29, 2002, the Company prepaid $100.0 million of the
$246.0 million outstanding on the six-year term loan. The corresponding
interest rate swap due to mature on March 29, 2003 was unwound.

As of June 26, 2002, the Company had $49.7 million in outstanding
letters of credit used to support inventory purchases and insurance
obligations. The debt facilities are secured by a first lien on
essentially all of the Company's assets and are guaranteed by the
capital stock of the Company's subsidiaries.

The Company has interest rate swap agreements which expire in one to
two years on the six-year term loan and the senior notes. See Note 7 -
Derivatives for further discussion of the Company's interest rate swap
activity.

The Company's senior secured credit facility includes the 364-day,
five-year revolving credit facility and a six-year term note. The
senior secured credit facilities and senior unsecured notes contain
certain covenants as defined in the credit agreement and indenture, as
amended. The Company was in compliance with these covenants at June 26,
2002.

As of June 26, 2002, the carrying amount of the Company's six-year term
note approximates fair value. The carrying amount of the Company's
senior notes is $295.9 million and the fair market value is $315.1
million.

Aggregate principal maturities on long-term debt and capitalized lease
obligations for each of the twelve-month periods subsequent to June 26,
2002 are as follows:

Long-term
Debt
--------------

2003 $ 2,739
2004 2,736
2005 2,733
2006 2,730
2007 236,427
Thereafter 295,986
--------------
$ 543,351
==============

F-30



WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

7. Derivatives

Cash Flow Hedge: The Company has outstanding a $246 million six-year
term loan with a variable interest rate based on the one-month LIBOR.
The Company utilizes derivative financial instruments to reduce its
exposure to market risk from changes in interest rates. The instruments
primarily used to mitigate the risk are interest rate swaps. The
derivative instruments held on the $246 million six-year term loan are
designated as highly effective cash flow hedges of interest rate risk
on variable rate debt and, accordingly, the change in fair value of
these instruments is recorded as a component of other comprehensive
income.

The Company has entered into two interest rate swap agreements to hedge
the interest rate risk associated with the $246 million outstanding in
variable rate debt. The purpose of these swaps is to fix interest rates
on variable rate debt and reduce certain exposures to interest rate
fluctuation. At June 26, 2002, the Company had interest rate swaps with
a notional amount of $250 million. The notional amounts do not
represent a measure of exposure to the Company.

The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to these financial instruments.
However, counterparties to these agreements are major financial
institutions and the risk of loss due to nonperformance is considered
by management to be minimal. The Company does not hold or issue
interest rate swaps for trading purposes.

The maturities and interest rates on the interest rate swaps for the
six-year term loan are shown in the following table. The Company will
pay the counterparty interest at a fixed rate as noted and the
counterparty will pay the Company interest at a variable rate equal to
the one-month LIBOR (1.839% as of June 26, 2002).



Notional Amount Fixed
(in thousands) Maturity Rate
--------------- -------------- -----


$ 150,000 March 29, 2003 4.81%
100,000 March 29, 2004 5.03%
----------
$ 250,000
==========


F-31


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


7. Derivatives, continued

Cash Flow Hedge, continued: The fair value of the Company's interest
rate swaps is obtained from dealer quotes. These values represent the
estimated amount the Company would receive or pay to terminate the
agreement, taking into consideration the difference between the
contract rate of interest and rates currently quoted for agreements of
similar terms and maturities. At June 26, 2002, the fair value of the
Company's interest rate swaps resulted in an unrealized loss of $7.6
million ($4.7 million after tax). The Company recorded the unrealized
loss in accumulated other comprehensive income in shareholders' equity.
During the next 12 months, the Company will incur interest expense,
including the effect of interest rate swaps, at a weighted average rate
of 7.65% on the $246 million outstanding in variable rate debt.

The Company measures effectiveness by the ability of interest rate
swaps to offset cash flows associated with changes in the one-month
LIBOR. To the extent that any of these contracts are not considered
effective, any changes in fair value relating to the ineffective
portion of these contracts are immediately recognized in income.
However, all the contracts were effective during the period and no gain
or loss was reported in earnings.

On July 26, 2002, the Company unwound the swap with a notional amount
of $150.0 million and a maturity of March 29, 2003. The swap was
unwound in conjunction with a $100.0 million pay down of the related
debt on July 29, 2002.

Fair Value Hedge: In addition to the interest rate swaps for the
six-year term loan, on February 20, 2002, the Company entered into
interest rate swap agreements in which the Company effectively
exchanged the $300 million fixed rate 8.875% interest on the senior
notes for two variable rates in the notional amount of $200 and $100
million at six-month LIBOR plus 385 and 376 basis points, respectively.
The variable interest rates, which are based on six-month LIBOR, are
fixed semi-annually on the first day of April and October. The
six-month LIBOR rate was 2.341% on April 1, 2002. The maturity dates of
the interest rate swap agreements match those of the underlying debt.

In accordance with SFAS 133, the Company designated the interest rate
swap agreements on the senior notes as perfectly effective fair value
hedges and, accordingly, uses the short-cut method of evaluating
effectiveness. As permitted by the short-cut method, the change in fair
value of the interest rate swaps will be reflected in earnings and an
equivalent amount will be reflected as a change in the carrying value
of the swaps, with an offset to earnings. There is no ineffectiveness
to be recorded. At June 26, 2002, the Company decreased the fair value
of the 8.875% senior notes by $4.1 million and recorded the
corresponding interest rate swap liability of $4.1 million in the other
liabilities section of the Consolidated Balance Sheets.


F-32


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


7. Derivatives, continued

The Company's objectives for entering into these swaps were to reduce
the Company's exposure to changes in the fair value of the debt and to
obtain variable rate financing at an attractive cost. The swaps
effectively converted the fixed-rate debt to a floating rate. The
agreement involves receipt of fixed rate amounts in exchange for
floating rate interest payments over the life of the agreement without
an exchange of the underlying principal amount.

The Company is exposed to credit-related losses in the event of
nonperformance by counterparties to these financial instruments.
However, counterparties to these agreements are major financial
institutions and the risk of loss due to nonperformance is considered
by management to be minimal. The Company does not hold or issue
interest rate swaps for trading purposes.

8. Stock Compensation Plans

The Company has various stock option, stock purchase and incentive
plans to reward employees and key executives of the Company. Under SFAS
123, discounts on stock purchase plans, the fair value of restricted
stock and options at date of grant under the restricted stock plan and
the key employee stock option plan are charged to compensation costs
over the vesting or performance period.

Compensation cost charged against income was $4.5 million and $8.0
million in fiscal 2002 and 2001, respectively. Compensation costs
resulted in income of $1.1 million in fiscal 2000. The primary reason
for the income in fiscal 2000 was due to the reversal of compensation
expense previously recognized for restricted stock that did not vest.

The per share weighted fair value of the stock options granted was
$7.55, $3.09 and $6.62 for fiscal years 2002, 2001 and 2000,
respectively. These amounts were estimated on the date of the grant
using the Black-Scholes option pricing model under the following
assumptions: risk-free interest rate of 6.2% for fiscal years 2002 and
2001 and 6.7% for fiscal year 2000; dividend yield of 3.9%, 7.0% and
5.4%, respectively; expected lives of 6.5 years for fiscal years 2002
and 2001 and 7.0 years for fiscal year 2000; and volatility of 35.1%,
34.0% and 38.0%, respectively.

(a) Stock Purchase Plan: The Company has a stock purchase plan in
effect for associates. Under the terms of this Plan, the Company
may grant options to purchase restricted shares of the Company's
common stock at a price not less than the lesser of 85% of the
fair market value at the date of grant or 85% of the fair market
value at the time of exercise. There are 5,481,835 shares of the
Company's common stock available for the grant of options under
the Plan. Loans to associates for the purchase of the Company's
common stock are reported in the consolidated financial
statements as a reduction of Shareholders' Equity, rather than as
a current asset. There are no loans outstanding at June 26, 2002
as compared to $1.9 million in loans outstanding at June 27,
2001.


F-33


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

8. Stock Compensation Plans, continued

(b) Restricted Stock Plan: The Company has a restricted stock plan.
Under this plan, the Company may issue restricted shares of the
Company's common stock to certain eligible key employees
determined by the Company's compensation committee. The following
table shows the number of shares issued, forfeited, vested and
outstanding.




Weighted
Average Number of shares
Issue
Price Total FY 2002 FY 2001 FY 2000 FY 1999
----- ----- ------- ------- ------- -------
1999
- ----


Issued $ 41.12 252,097 - - - 252,097
Forfeited 239,389 6,987 169,263 18,592 44,547
-------
Outstanding 12,708
-------

2000
- ----
Issued $ 25.75 239,030 - - 239,030 -
Forfeited 131,910 3,952 34,834 93,124 -
-------
Outstanding 107,120
-------

2001
- ----
Issued $ 15.22 103,992 828 103,164 - -
Forfeited 7,257 5,065 2,192 - -
Shares Vested 62,706 30,452 32,254 - -
-------
Outstanding 34,029
-------

2002
- ----
Issued $ 20.28 128,413 128,413 - - -
Forfeited 7,594 7,594 - - -
Shares Vested 27,008 27,008 - - -
-------
Outstanding 93,811
-------

Shares outstanding, June 26, 2002 247,668
=======



The vesting of shares issued prior to January 2000 is contingent
upon certain specified goals being attained over a three-year
period. The shares issued after such date vest over time. Some of
the shares issued vest one-third each year beginning with the
third year from the date of issue, based on continued employment.
Some of the shares issued vest one-third each year beginning on
the first anniversary of the date of grant, based on continued
employment. Other shares issued vest one-fifth each year
beginning on the first anniversary date of the recipient's
employment with the company, based on continued employment. At
June 26, 2002 the Company had recorded $3.2 million of deferred
compensation.



F-34


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

8. Stock Compensation Plans, continued

(c) Stock Option Plans: The Company has made shares of the Company's
stock available for grant under stock plans described below.

1. Key Employee: Under the Company's Key Employee Stock Option
Plan, 5,000,000 shares of the Company's common stock were
made available for grant at an exercise price of no less
than the market value at date of grant. Options granted
under this plan prior to January 2000 are earned after three
years if certain performance goals are attained. Options
granted in or after January 2000 become exercisable over
time. Some of these options vest over a three-year period
with one-third of the options vesting each year beginning on
June 15, 2001, if the employee remains employed by the
Company in a key position. Other options vest over a
five-year period with one-fifth of the options vesting each
year beginning on the first anniversary date of the
recipient's employment with the company, if the employee
remains employed by the Company in a key position. The
Company's compensation committee has the discretion under
the plan to determine the eligible key employees, the
exercise price and the vesting requirements, if any.

2. Retention and Attraction Program: As part of the Company's
retention and attraction program, 1,200,000 shares of the
Company's common stock were made available for grant to key
employees beginning on January 28, 2000 at an exercise price
equal to the Company's stock price at date of grant. Options
granted as part of the program are earned over a five-year
period, with one-fifth of the options vesting each year
beginning on January 28, 2001 if the associate remains
employed in his or her position.

3. CEO Stock Options: Pursuant to an employment agreement, the
President and Chief Executive Officer of the Company
received an option to purchase 500,000 shares of the
Company's common stock at an exercise price of $27.00 per
share. Currently all 500,000 of the options are exercisable.

4. Directors' Stock Plan: The Company has a stock plan for
non-employee directors. Under this plan, the Company may
issue stock or grant options for the purchase of the
Company's common stock to eligible non-employee directors
determined by the Company's Corporate Governance Committee.
A total of 500,000 shares of the Company's common stock were
made available for issuance and option grants. Stock options
issued under the plan were exercisable immediately at an
exercise price equal to the Company's stock price at the
date of grant.


F-35


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted



8. Stock Compensation Plans, continued

(c) Stock Option Plans, continued

5. Options Outstanding:

Changes in options during the years ended June 26, 2002,
June 27, 2001 and June 28, 2000, were as follows:

Weighted
Average
Number of Option Price
Shares Per Share
---------------------- -------------------


Outstanding - June 30, 1999 437,435 $ 35.27
Granted 1,828,306 23.34
Exercised (50,000) 22.44
Forfeited (886,234) 27.43
---------- ---------
Outstanding - June 28, 2000 1,329,507 24.57
Granted 977,158 14.71
Exercised (5,000) 14.25
Forfeited (74,574) 19.37
---------- ---------
Outstanding - June 27, 2001 2,227,091 20.44
Granted 545,556 24.32
Exercised (41,756) 15.45
Forfeited (99,982) 18.97
---------- ---------
Outstanding - June 26, 2002 2,630,909 $ 21.38
========== =========
Exercisable - June 26, 2002 1,502,902 $ 20.60
========== =========
Shares available for additional grant 3,470,723
==========


The following table sets forth information regarding options
outstanding at June 26, 2002.


Weighted
Weighted Weighted Average
Average Average Number Exercise Prices
Number of Exercise Price Remaining Life Currently For Currently
Range Options Price (Years) Exercisable Exercisable
- ------------------- ------------- ------------ ---------------- ------------- ------------------

$ 11.10 to 16.63 992,412 $ 14.59 5.0 630,182 $ 14.49

$ 17.00 to 21.31 527,784 19.87 7.4 222,299 19.89

$ 25.95 to 41.51 1,110,713 28.16 6.0 650,421 26.77
------------- ------------ ---------------- ------------- ------------------
2,630,909 $ 21.38 5.9 1,502,902 $ 20.60
============= ============ ================ ============= ==================



F-36


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted



9. Leases

(a) Leasing Arrangements: There were 1,395 leases in effect on store
locations and other properties at June 26, 2002. Of these 1,395 leases,
25 store leases and 3 warehouse and manufacturing facility leases are
classified as capital leases. Substantially all store leases will
expire during the next twenty years and the warehouse and manufacturing
facility leases will expire during the next twenty-two years. However,
in the normal course of business, it is expected that these leases will
be renewed or replaced by leases on other properties.

The rental payments on substantially all store leases are based on a
minimum rental plus a contingent rental, which is based on a percentage
of the store's sales in excess of stipulated amounts. Most of the
Company's leases contain renewal options for five-year periods at fixed
rentals.

(b) Leases: Leased property under capital leases by major classes are:


2002 2001
----------- -----------

Store facilities $ 36,948 38,082
Warehouses and manufacturing facilities 15,722 15,722
----------- -----------
52,670 53,804
Less: Accumulated amortization 36,287 34,833
----------- -----------
$ 16,383 18,971
=========== ===========

The following is a schedule by year of future minimum lease payments on
open facilities under capital and operating leases, together with the
present value of the net minimum lease payments as of June 26, 2002.


F-37


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted



9. Leases, continued

(b) Leases, continued


Capital Operating
------------- ---------------
Fiscal Year:
2003 $ 7,139 338,741
2004 6,433 333,682
2005 5,876 324,189
2006 5,556 311,679
2007 4,933 299,402
Thereafter 16,552 2,604,924
------------- ---------------
Total minimum lease payments 46,489 4,212,617
===============

Less: Amount representing estimated
taxes, maintenance and insurance
costs included in total minimum
lease payments 813
-------------
Net minimum lease payments 45,676
Less: Amount representing interest 17,418
-------------
Present value of net minimum lease payments $ 28,258
=============


Rental payments and contingent rentals under operating leases are as follows:

2002 2001 2000
------------- --------------- -------------


Minimum rentals $ 357,136 347,130 323,117
Contingent rentals 899 878 1,380
------------- --------------- -------------
$ 358,035 348,008 324,497
============= =============== =============

F-38


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

9. Leases, continued

(c) Lease Liability on Closed Stores: The Company accrues for the
obligation related to closed store locations based on the present value
of expected future rental payments, net of sublease income. During the
first quarter of fiscal 2002, the remaining reserve for restructuring
expenses, which represented the present value of expected future rental
payments on stores closed as part of the restructuring, was
reclassified to accrued rent and lease liabilities on closed stores.
The following amounts are included in accrued rent and lease liability
on closed stores, as of June 26, 2002:

Closed
stores
Closed due to
stores restructure Total
---------------------------------------------

Balance at June 27, 2001 $ 59,381 162,130 221,511
Additions/adjustments 102,437 19,857 122,294
Utilization (35,736) (43,683) (79,419)
------------- ----------- ------------
Balance at June 26, 2002 $ 126,082 138,304 264,386
============= =========== ============


An expense is recorded for the present value of expected future net
rent payments in the year a store closes. The accrued balance at June
26, 2002 for stores that closed not related to the restructuring or
discontinued operations is $53,681.

The additions/adjustments amount includes the addition of leases on
closed locations in the Texas and Oklahoma operations of $74.7 million,
additional leases added to the non-restructure accrual, the effect on
earnings from the accretion of the present value of the expected future
rental payments, and adjustments due to the settlement of certain
existing leases. The utilization amounts include payments made for rent
and related costs.

The current portion of the accrued balance at June 26, 2002 totals
$83,602 and is included in accrued rent.


F-39


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


10. Shareholders' Equity

During the second quarter of fiscal 2001, approximately 910,000 shares
were purchased for cash and credit by associates under the Revised
Winn-Dixie Stock Purchase Plan for Employees, for an aggregate value of
$13.7 million. The total amount of cash received at the time of sale
was $10.3 million, with the remainder to be paid by associates over 12
months beginning January 2001.

Comprehensive income differs from net income because of the change in
the fair value of the Company's interest rate swaps in the current year
and a reclassification adjustment of an unrealized gain on investments
in the prior year. Comprehensive income (loss) was $83,923, $43,724 and
$(231,964) for fiscal 2002, 2001 and 2000, respectively.

11. Commitments and Contingent Liabilities

(a) Associate Benefit Programs: The Company has a noncontributory, trusteed
profit sharing retirement program and a contributory, trusteed 401(k)
retirement program, which are in effect for eligible associates and may
be amended or terminated at any time. Charges to earnings for
contributions to the programs amounted to $9,751, $42,317 and $17,625
in 2002, 2001 and 2000, respectively.

(b) Defined Benefit Plan Obligation: The Company has a Management Security
Plan (MSP), which is a non-qualified defined benefit plan providing
disability, death and retirement benefits to 314 qualified active
associates of the Company and 715 former participants. Total MSP cost
charged to operations was $7,621, $6,686 and $6,104 in 2002, 2001 and
2000, respectively. The projected benefit obligation at June 26, 2002
was approximately $52,887. The effective discount rate used in
determining the net periodic MSP cost was 8.0% for 2002, 2001 and 2000.

Life insurance policies, which are not considered MSP assets for
liability accrual computations, were purchased to fund the MSP
payments. These insurance policies are shown on the balance sheet at
their cash surrender values, net of policy loans aggregating $238,502
and $224,593 at June 26, 2002 and June 27, 2001, respectively.

During fiscal 2002, the Company modified its contributory early
retirement plan, which provides medical insurance to 1,118 qualified
active participants. In fiscal 2002, $2.3 million was charged to
earnings. The projected benefit obligation at June 26, 2002 was
approximately $20.2 million and was recorded as a component of reserve
for insurance claim and self-insurance. The Company has also recorded
the related unrecognized transition asset of $19.7 million in other
assets. The effective discount rate used in determining the net
periodic retirement cost was 8.0% for 2002.




F-40


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


11. Commitments and Contingent Liabilities, Continued

(c) Supplemental Retirement Plan: The Company has a deferred compensation
Supplemental Retirement Plan in effect for eligible management
associates. The Company recorded an asset and liability at June 26,
2002 and June 27, 2001 in the amount of $16.1 million and $16.6
million, respectively.

(d) Litigation: There are pending against the Company various claims and
lawsuits arising in the normal course of business, including actions
charging violations of certain civil rights and wage and hour laws and
various proceedings arising under federal, state or local regulations
protecting the environment.

Among the suits charging violations of certain civil rights and wage
and hour laws, there are actions that purport to be class actions, and
which allege sexual harassment, retaliation and/or a pattern and
practice of race-based and gender-based discriminatory treatment of
associates and applicants. The plaintiffs seek, among other relief,
certification of the suits as proper class actions, declaratory
judgment that the Company's practices are unlawful, back pay, front
pay, benefits and other compensatory damages, punitive damages,
injunctive relief and reimbursement of attorneys' fees and costs.

The Company is committed to full compliance with all applicable civil
rights and wage and hour laws. Consistent with this commitment, the
Company has firm and long-standing policies in place prohibiting
discrimination, harassment, retaliation and wage and hour violations.
The Company denies the allegations of the various complaints and is
vigorously defending the actions.

While the ultimate outcome of litigation cannot be predicted with
certainty, in the opinion of management, the ultimate resolution of
these actions will not have a material adverse effect on the Company's
financial condition or results of operations.


12. Related-Party Transactions

The Company retained the law firm Holland and Knight LLP for
representation in various tax matters. A director of Winn-Dixie is
currently and has been a partner of Holland and Knight LLP since April
2001. Holland and Knight LLP was paid an aggregate amount of $20 and
$103 for its services rendered to the Company during fiscal years 2002
and 2001, respectively.



F-41


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

13. Discontinued Operations

On May 6, 2002, the Company announced a formal plan to exit the Texas
and Oklahoma operations, which consisted of 71 locations, a dairy plant
and a distribution center in Texas and 5 locations in Oklahoma. In
addition, seven leases were in effect on stores that were previously
closed. The Company decided to exit these operations as a result of
continued operational losses and reductions in market share. In
accordance with SFAS 144, the Texas and Oklahoma operations are
considered components of an entity, which requires the Company to
disclose the exit as a discontinued operation.

At June 26, 2002, the Company had exited these operations, either by
sale or abandonment. The Company sold 36 retail locations and the dairy
plant to various unrelated buyers for total cash proceeds of $39,786,
sublet two retail locations, terminated five leases and two leases will
expire in early fiscal 2003. The sale resulted in a loss on long-lived
assets of $7,238, or $0.05 per diluted share. The remaining 38 unsold
locations were closed on or before June 26, 2002.

As a result of exiting the Texas and Oklahoma operations, the Company
recorded a net loss from discontinued operations of $172.8 million
($100.3 million after tax benefit, or $0.71 per diluted share). The net
loss from discontinued operations is comprised of a pretax loss from
discontinued operations of $46.4 million and a pretax loss on disposal
of discontinued operations of $126.4 million.

Gross revenues from discontinued operations were $608.5 million, $664.5
million and $693.4 million for fiscal years 2002, 2001 and 2000,
respectively.

A summary of the accruals and loss on disposal of discontinued
operations follows:



Employee Lease
Termination Termination Other Location Asset
Costs Costs Closing Cost Impairment Total
------------------ ------------------ ---------------------- ----------------- ------------

Additions $ 8,478 74,701 27,822 15,393 $ 126,394
Utilization (3,178) (2,300) (24,088) (15,393) (44,959)
------------------ ------------------ ---------------------- ----------------- ------------
June 26, 2002 $ 5,300 72,401 3,734 - $ 81,435
================== ================== ====================== ================= ============



In accordance with SFAS 144, long-lived assets held for sale were
tested for recoverability and adjusted to fair market value less cost
to sell. During the fourth quarter of fiscal 2002, operating equipment
in the closed locations was impaired resulting in a loss on disposal of
discontinued operations in the Consolidated Statements of Operations in
the amount of $15.4 million. The Company reviewed the previous sales of
operating equipment, in conjunction with market price quotes received,
to determine the fair value on long-lived assets classified as held for
sale.



F-42


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


13. Discontinued Operations, continued

The Company has $15.9 million in held for sale assets relating to the
exiting of the Texas and Oklahoma operations. The held for sale assets
are reported in the prepaid expenses and other assets section of the
Consolidated Balance Sheet. The held for sale assets consist mainly of
land, land improvements, building, leasehold improvements and store and
office equipment.

An employee termination cost of $8.5 million was recorded for severance
of eligible associates. At June 26, 2002, employee termination costs of
$5.3 million were included in accrued wages and salaries in the
Consolidated Balance Sheets. The other location closing costs include
inventory losses, asset disposal cost and travel expenses. At June 26,
2002, other location closing costs of $3.7 million were included in
accrued expenses.

The Company recorded $74.7 million in lease termination costs related
to 36 leases in Texas. The lease termination costs were included in the
loss on disposal of discontinued operations. At June 26, 2002, the
Company had an accrued balance of $72.4 million in lease termination
costs. The current portion of $24.5 million was included in accrued
rent and the long-term portion of $47.9 million was included in lease
liability on closed stores. See Note 9 - Leases for further discussion.

14. Restructuring and Other Non-recurring Charges

On April 20, 2000, the Board of Directors approved and the Company
announced a major restructuring to improve the support of the retail
stores and the Company's overall efficiency.

As a result of the restructuring, the Company recorded expenses of
approximately $396 million ($256 million after tax or $1.76 per diluted
share) in the fourth quarter of fiscal 2000 and charges totaling $147.2
million ($90.6 million after tax or $0.64 per diluted share) were
recorded in fiscal year 2001.

The Company has a remaining balance for lease liability on closed
stores in the amount of $137.9 million relating to the restructure in
fiscal 2000.

During fiscal 2002, the Company tested several long-lived assets for
recoverability. The Company recognized that the carrying amounts of
these long-lived assets were not recoverable, based on the impairment
test performed. For the assets that were determined to be impaired, the
impairment charge was calculated to be the difference between the
carrying value of the asset and their fair market value less cost to
sell. An impairment charge of $21.6 million was charged to other
operating and administrative expense in fiscal 2002. The assets
impaired were primarily inactive store operating equipment. The Company
reviewed the previous sales of store operating equipment, in
conjunction with market price quotes received, to determine the fair
value of the long-lived assets impaired.

F-43




WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


14. Restructuring and Other Non-recurring Charges, continued

The remaining net book value of $1.0 million for the long-lived assets
that were impaired was classified as held for sale assets. The Company
expects to dispose of these assets within a year.

















F-44


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

15. Quarterly Results of Operations (Unaudited)

The following is a summary of the unaudited quarterly results of
operations for the years ended June 26, 2002 and June 27, 2001:





Quarters Ended
-----------------------------------------------------------------
Sept. 19 Jan. 9 April 3 June 26
-----------------------------------------------------------------
2002 (12 Weeks) (16 Weeks) (12 Weeks) (12 Weeks)
---- -----------------------------------------------------------------

Sales from continuing operations $ 2,807,756 3,768,267 2,901,631 2,856,700
Gross profit on sales from continuing operations $ 751,360 1,053,068 797,383 816,035
Net earnings from continuing operations $ 31,065 51,986 53,682 52,791
Loss on discontinued operations $ (8,654) (9,887) (7,086) (74,721)
Extraordinary item, net of tax $ - - (2,310) -
Net earnings (loss) $ 22,411 42,099 44,286 (21,930)
Basic earnings per share from continuing
operations $ 0.22 0.37 0.38 0.37
Basic net earnings (loss) per share $ 0.16 0.30 0.32 (0.16)
Diluted earnings per share from continuing
operations $ 0.22 0.37 0.38 0.37
Diluted net earnings (loss) per share $ 0.16 0.30 0.31 (0.16)
Net LIFO charge (credit) $ 1,845 2,460 923 (8,018)
Net LIFO charge (credit) per diluted share $ 0.01 0.02 0.01 (0.06)
Dividends per share $ 0.170 0.085 0.050 0.050
Market price range $ 26.13-19.63 19.78-10.50 17.36-11.91 20.26-15.71





Quarters Ended
-----------------------------------------------------------------
Sept. 20 Jan. 10 April 4 June 27
-----------------------------------------------------------------
2001 (12 Weeks) (16 Weeks) (12 Weeks) (12 Weeks)
---- -----------------------------------------------------------------

Sales from continuing operations $ 2,785,835 3,745,261 2,866,478 2,841,300
Gross profit on sales from continuing operations $ 712,640 1,012,614 778,342 793,235
Net earnings from continuing operations $ 17,356 21,615 18,601 19,215
Loss on discontinued operations $ (7,943) (9,446) (7,877) (6,210)
Net earnings $ 9,413 12,169 10,724 13,005
Basic earnings per share from continuing
operations $ 0.12 0.15 0.13 0.14
Basic net earnings per share $ 0.07 0.09 0.08 0.09
Diluted earnings per share from continuing
operations $ 0.12 0.15 0.13 0.14
Diluted net earnings per share $ 0.07 0.09 0.08 0.09
Net LIFO charge (credit) $ 1,845 2,460 1,845 (13,504)
Net LIFO charge (credit) per diluted share $ 0.01 0.02 0.01 (0.10)
Dividends per share $ 0.170 0.340 0.255 0.255
Market price range $ 15.44-13.44 23.13-13.56 30.35-16.88 33.12-25.01



F-45



WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


15. Quarterly Results of Operations (Unaudited), continued

During 2002 and 2001, the fourth quarter results reflect a change from
the estimate of inflation used in the calculation of LIFO inventory to
the actual rate experienced by the Company of 1.0% to (0.3)% and 1.0%
to (0.8)%, respectively.



Fourth Quarter Results of
Operations
----------------------------------------
June 26, 2002 June 27, 2001
(12 Weeks) (12 Weeks)


Net sales $ 2,856,700 2,841,300
Cost of sales, including warehouse and delivery
expenses 2,040,665 2,048,065
Gross profit on sales 816,035 793,235
Other operating and administrative expenses 720,111 690,727
Restructuring and other non-recurring charges - 56,497
Operating income 95,924 46,011
Interest expense, net 10,087 14,802
Earnings from continuing operations before income
taxes 85,837 31,209
Income taxes 33,046 11,994
Net earnings from continuing operations 52,791 19,215
Discontinued operations:
Loss from discontinued operations (4,763) (10,097)
Loss on disposal of discontinued operations (126,394) -
Income tax benefit (56,436) (3,887)
Loss from discontinued operations (74,721) (6,210)
Net (loss) earnings $ (21,930) 13,005




F-46




WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted

16. Guarantor Subsidiaries

During the second quarter of fiscal 2001, the Company filed a
registration statement with the Securities and Exchange Commission to
authorize the issuance of up to $1 billion in debt securities. The debt
securities may be jointly and severally, fully and unconditionally
guaranteed by substantially all of the Company's operating
subsidiaries. The guarantor subsidiaries are 100% owned subsidiaries of
the Company. Condensed consolidating financial information for the
Company and its guarantor subsidiaries is as follows:


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS
(Amounts in thousands)


52 Weeks ended June 26, 2002 Guarantor
Parent Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------

Net sales $ 5,674,157 6,660,196 - 12,334,353
Cost of sales 4,110,352 4,806,155 - 8,916,507
----------- ---- --- ------
Gross profit 1,563,805 1,854,041 - 3,417,846
Other operating & administrative expenses 1,313,115 1,738,725 - 3,051,840
----------- ---- --- ------
Operating income 250,690 115,316 - 366,006
Equity in loss of consolidated subsidiaries (387) - 387 -
Interest expense, net 57,839 - - 57,839
----------- ---- --- ------
Earnings before income taxes 192,464 115,316 387 308,167
Income taxes 103,288 15,356 - 118,644
----------- ---- --- ------
Earnings from continuing operations 89,176 99,960 387 189,523
Net loss from discontinued operations - (100,347) - (100,347)
Extraordinary item: loss on early
extinguishment of debt, net of taxes (2,310) - - (2,310)
----------- ---- --- ------
Net earnings (loss) $ 86,866 (387) 387 86,866
=========== ==== === ======





52 Weeks ended June 27, 2001 Guarantor
Parent Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------

Net sales $ 5,735,327 6,503,547 - 12,238,874
Cost of sales 4,217,260 4,724,783 - 8,942,043
----------- ---- --- ------
Gross profit 1,518,067 1,778,764 - 3,296,831
Other operating & administrative expenses 1,298,295 1,673,622 - 2,971,917
Restructuring and other non-recurring charges 80,410 66,835 - 147,245
----------- ---- --- ------
Operating income 139,362 38,307 - 177,669
Equity in loss of consolidated subsidiaries (5,034) - 5,034 -
Interest expense, net 52,845 - - 52,845
----------- ---- --- ------
Earnings before income taxes 81,483 38,307 5,034 124,824
Income taxes 36,172 11,864 - 48,036
----------- ---- --- ------
Earnings from continuing operations 45,311 26,443 5,034 76,788
Net loss from discontinued operations - (31,477) - (31,477)
----------- ---- --- ------
Net earnings (loss) $ 45,311 (5,034) 5,034 45,311
=========== ====== ===== ======




F-47


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted




16. Guarantor Subsidiaries, continued


52 Weeks ended June 28, 2000 Guarantor
Parent Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------

Net sales $ 6,012,112 6,992,082 - 13,004,194
Cost of sales 4,426,602 5,023,861 - 9,450,463
----------- ---- --- ------
Gross profit 1,585,510 1,968,221 - 3,553,731
Operating & administrative expenses 1,525,112 1,862,686 - 3,387,798
Restructuring and other non-recurring charges 112,869 283,160 - 396,029
----------- ---- --- ------
Operating (loss) (52,471) (177,625) - (230,096)
Equity in loss of consolidated subsidiaries (155,776) - 155,776 -
Interest expense 44,132 2,956 - 47,088
----------- ---- --- ------
Loss before income taxes (252,379) (180,581) 155,776 (277,184)
Income taxes (23,484) (40,320) - (63,804)
----------- ---- --- ------
Loss from continuing operations (228,895) (140,261) 155,776 (213,380)
Net loss from discontinued operations - (15,515) - (15,515)
----------- ---- --- ------
Net loss $ (228,895) (155,776) 155,776 (228,895)
=========== ======== ======= ========





WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(Amounts in thousands)
June 26, 2002 Guarantor
Parent Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------

Merchandise inventories $ 320,515 742,773 - 1,063,288
Other current assets 387,696 187,322 - 575,018
------- ------- -------- -------
Total current assets 708,211 930,095 - 1,638,306
Property, plant and equipment, net 375,029 591,723 - 966,752
Other non-current assets 213,434 119,086 - 332,520
Investments in and advances to/from subsidiaries 900,911 - (900,911) -
------- ------- -------- -------
Total assets $ 2,197,585 1,640,904 (900,911) 2,937,578
============= ========= ======== =========

Accounts payable $ 146,128 363,576 - 509,704
Other current liabilities 461,251 138,949 - 600,200
------- ------- -------- -------
Total current liabilities 607,379 502,525 - 1,109,904
Long-term debt 540,612 - - 540,612
Other non-current liabilities 237,210 237,468 - 474,678
Common stock of $1 par value 140,592 6,238 (6,238) 140,592
Retained earnings 671,792 894,673 (894,673) 671,792
------- ------- -------- -------
Total liabilities and stockholders' equity $ 2,197,585 1,640,904 (900,911) 2,937,578
============= ========= ======== =========





F-48




WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted


16. Guarantor Subsidiaries, continued




June 27, 2001
Guarantor
Parent Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------

Merchandise inventories $ 311,974 886,628 - 1,198,602
Other current assets 256,186 144,413 - 400,599
-------------- ------ ------ -------
Total current assets 568,160 1,031,041 - 1,599,201
Property, plant and equipment, net 424,478 722,176 - 1,146,654
Other non-current assets 238,032 57,783 - 295,815
Investments in and advances to/from subsidiaries 935,225 - (935,225) -
-------------- ------ ------ -------
Total assets $ 2,165,895 1,811,000 (935,225) 3,041,670

Accounts payable $ 191,778 408,072 - 599,850
Other current liabilities 283,592 266,465 - 550,057
-------------- ------ ------ -------
Total current liabilities 475,370 674,537 - 1,149,907
Long-term debt 697,414 - - 697,414
Other non-current liabilities 221,457 201,238 - 422,695
Common stock of $1 par value 140,466 6,240 (6,240) 140,466
Retained earnings 631,188 928,985 (928,985) 631,188
-------------- ------ ------ -------
Total liabilities and stockholders' equity $ 2,165,895 1,811,000 (935,225) 3,041,670
============== ========= ======== =========




WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS
(Amounts in thousands)


Year ended June 26, 2002 Guarantor
Parent Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------

Net cash provided by operating activities $ 343,918 33,031 - 376,949
-------------- ------ ------ -------
Purchases of property, plant and equipment, net (15,029) (68,512) - (83,541)
Decrease (increase) in other assets 19,254 (13,326) (34,314) (28,386)
Increase in marketable securities (18,333) - - (18,333)
Proceeds from sale of facility - 65,472 - 65,472
-------------- ------ ------ -------
Net cash used in investing activities (14,108) (16,366) (34,314) (64,788)
-------------- ------ ------ -------
Dividends paid (49,899) - - (49,899)
Other (162,066) (27,725) 34,314 (155,477)
-------------- ------ ------ -------
Net cash provided by financing activities (211,965) (27,725) 34,314 (205,376)
-------------- ------ ------ -------

Increase (decrease) in cash and cash equivalents 117,845 (11,060) - 106,785
Cash and cash equivalents at the beginning of the year 111,136 9,925 - 121,061
-------------- ------ ------ -------
Cash and cash equivalents at end of the year $ 228,981 (1,135) - 227,846
============== ====== ====== =======



F-49


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Dollar amounts in thousands except per share data, unless otherwise noted



16. Guarantor Subsidiaries, continued


Year ended June 27, 2001 Guarantor
Parent Subsidiaries Eliminations Consolidated
--------------- ----------------- ----------------- ----------------

Net cash provided by operating activities $ 127,529 117,359 - 244,888
--------------- ----------------- ----------------- ----------------
Purchases of property, plant and equipment, net (69,348) (243,971) - (313,319)
Increase in other assets (218,241) (4,205) 215,927 (6,519)
Acquisition, net of cash acquired (30,942) (92,811) (123,753)
--------------- ----------------- ----------------- ----------------
Net cash used in investing activities (318,531) (340,987) 215,927 (443,591)
--------------- ----------------- ----------------- ----------------
Decrease in short-term borrowings (235,000) - - (235,000)
Proceeds from issuance of long-term debt 700,000 - - 700,000
Purchases of common stock (17,003) - - (17,003)
Dividends paid (142,853) - - (142,853)
Other (18,163) 219,134 (215,927) (14,956)
--------------- ----------------- ----------------- ----------------
Net cash used in financing activities 286,981 219,134 (215,927) 290,188
--------------- ----------------- ----------------- ----------------

Increase (decrease) in cash and cash equivalents 95,979 (4,494) - 91,485
Cash and cash equivalents at the beginning of the year 15,157 14,419 - 29,576
--------------- ----------------- ----------------- ----------------
Cash and cash equivalents at end of the year $ 111,136 9,925 - 121,061
=============== ================= ================= ================







Year ended June 28, 2000 Guarantor
Parent Subsidiaries Eliminations Consolidated
--------------- ----------------- ----------------- ----------------

Net cash (used in) provided by operating activities $ (7,582) 750,861 - 743,279
--------------- ----------------- ----------------- ----------------
Purchases of property, plant and equipment, net (90,857) (122,133) - (212,990)
Decrease in other assets 638,496 7,375 (628,999) 16,872
--------------- ----------------- ----------------- ----------------
Net cash provided by (used in) investing activities 547,639 (114,758) (628,999) (196,118)
--------------- ----------------- ----------------- ----------------
Decrease in short-term borrowings (230,000) - - (230,000)
Purchases of common stock (162,272) - - (162,272)
Dividends paid (148,966) - - (148,966)
Other (1,510) (628,582) 628,999 (1,093)
--------------- ----------------- ----------------- ----------------
Net cash used in financing activities (542,748) (628,582) 628,999 (542,331)
--------------- ----------------- ----------------- ----------------

(Decrease) increase in cash and cash equivalents (2,691) 7,521 - 4,830
Cash and cash equivalents at the beginning of the year 17,848 6,898 - 24,746
--------------- ----------------- ----------------- ----------------
Cash and cash equivalents at end of the year $ 15,157 14,419 - 29,576
=============== ================= ================= ================


The Company allocates all cost incurred by its headquarters which is
not specifically identifiable to each subsidiary based on its relative
size to the Company as a whole. Taxes payable and deferred taxes are
obligations of the Company. Expenses related to both current and
deferred income taxes are allocated to each subsidiary based on the
consolidated company's effective tax rates.

Expenses incurred by the guarantor subsidiaries, if they operated on a
stand-alone basis, may or may not have been higher were it not for the
benefit derived from related party transactions and the headquarters
functions described above.


F-50



INDEPENDENT AUDITORS' REPORT
ON FINANCIAL STATEMENT SCHEDULE



The Shareholders and Board of Directors
Winn-Dixie Stores, Inc.:


Under date of August 7, 2002, we reported on the consolidated balance sheets of
Winn-Dixie Stores, Inc. and subsidiaries as of June 26, 2002 and June 27, 2001,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the years in the three-year period ended June 26, 2002,
as contained in the annual report on Form 10-K for the year 2002. In connection
with our audits of the aforementioned consolidated financial statements, we also
audited the related consolidated financial statement schedule as listed in the
accompanying index on page 18 of the annual report on Form 10-K for the year
2002. This consolidated financial statement schedule is the responsibility of
the Company's management. Our responsibility is to express an opinion on this
consolidated financial statement schedule based on our audits.

In our opinion, the consolidated financial statement schedule, when considered
in relation to the basic consolidated financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.




KPMG LLP



Jacksonville, Florida
August 7, 2002




S-1


Schedule II
-----------


WINN-DIXIE STORES, INC. AND SUBSIDIARIES
Consolidated Valuation and Qualifying Accounts
Years Ended June 26, 2002, June 27, 2001 and June 28, 2000
(Amounts in thousands)






Balance Additions Deductions Balance
beginning charged to from at end of
Description of year income reserves year
- ---------------------------------------------------------- ------------- ------------- ------------- -----------

Year ended June 26, 2002:
Reserves deducted from assets to which they apply:
Allowance for doubtful receivables $ 3,935 16,957 18,113 2,779
============= ============= ============= ===========

Year ended June 27, 2001:
Reserves deducted from assets to which they apply:
Allowance for doubtful receivables $ 3,822 17,024 16,911 3,935
============= ============= ============= ===========


Year ended June 28, 2000:
Reserves deducted from assets to which they apply:
Allowance for doubtful receivables $ 3,615 19,021 18,814 3,822
============= ============= ============= ===========





S-2