##### 



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

FORM 10-Q

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

For the quarterly period ended September 28, 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 0-6080

DELHAIZE AMERICA, INC.
(Exact name of registrant as specified in its charter)

|                                |  |                    
|------------------------------- |  | -------------------
|NORTH CAROLINA                  |  | 56-0660192         
|(State or other jurisdiction of |  | (I.R.S. Employer   
|incorporation or organization)  |  | Identification No.)

|                                                   |  |           
|-------------------------------------------------- |  | ----------
|P.O. Box 1330, 2110 Executive Drive, Salisbury, NC |  | 28145-1330
|(Address of principal executive office)            |  | (Zip Code)

(704) 633-8250
(Registrants telephone number, including area code)

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 registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X]     No [ ]

Outstanding shares of common stock
of the Registrant as of November 11, 2002.

Class A Common Stock 
91,050,642,127
Class B Common Stock  75,287,145

THE REGISTRANT MEETS THE CONDITIONS SET FORTH IN GENERAL INSTRUCTION H(1)(a)
and (b) OF FORM 10-Q AND IS THEREFORE FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.





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DELHAIZE AMERICA, INC.
INDEX TO FORM 10-Q
SEPTEMBER 28, 2002

|              |  |                       |  |                                                                                                                                                                                                                                              |  |      
|------------- |  | --------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----
|              |  |                       |  |                                                                                                                                                                                                                                              |  | Page 
|              |  |                       |  |                                                                                                                                                                                                                                              |  |      
|PART I        |  | FINANCIAL INFORMATION |  |                                                                                                                                                                                                                                             
|             
|              |  | Item 1.               |  | Financial Statements                                                                                                                                                                                                                         |  |      
|             
|              |  |                       |  | Condensed Consolidated Statements of Income
for the 13 weeks ended September 28, 2002 (successor) and
September 29, 2001 (successor)                                                                                                         |  | 3    
|             
|              |  |                       |  | Condensed Consolidated Statements of Income/(Loss)
for the 39 weeks ended September 28, 2002 (successor), 22 weeks
from April 29, 2001 to September 29, 2001 (successor) and 17 weeks
from December 30, 2000 to April 28, 2001 (predecessor) |  | 4    
|             
|              |  |                       |  | Condensed Consolidated Balance Sheets as of
September 28, 2002 (successor) and December 29, 2001 (successor)                                                                                                                                 |  | 5    
|             
|              |  |                       |  | Condensed Consolidated Statements of Cash Flows
for the 39 weeks ended September 28, 2002 (successor), 22 weeks from
April 29, 2001 to September 29, 2001 (successor) and 17 weeks
from December 30, 2000 to April 28, 2001 (predecessor)    |  | 6    
|             
|              |  |                       |  | Notes to Condensed Consolidated
Financial Statements                                                                                                                                                                                         |  | 7-10 
|             
|              |  | Item 2.               |  | Managements Discussion and Analysis of
Financial Condition and Results of Operations                                                                                                                                                        |  | 11-20
|             
|              |  | Item 3.               |  | Quantitative and Qualitative Disclosures About
Market Risk                                                                                                                                                                                   |  | 20   
|             
|              |  | Item 4.               |  | Controls and Procedures                                                                                                                                                                                                                      |  | 20   
|             
|PART II       |  | OTHER INFORMATION     |  |                                                                                                                                                                                                                                             
|             
|              |  | Item 1.               |  | Legal Proceedings                                                                                                                                                                                                                            |  | 20   
|             
|              |  | Item 5.               |  | Other Information                                                                                                                                                                                                                            |  | 20   
|             
|              |  | Item 6.               |  | Exhibits and Reports on Form 8-K                                                                                                                                                                                                             |  | 20   
|             
|Signature     |  |                       |  |                                                                                                                                                                                                                                              |  | 21   
|             
|Certification |  |                       |  |                                                                                                                                                                                                                                              |  | 22   
|             
|Certification |  |                       |  |                                                                                                                                                                                                                                              |  | 23   
|             
|Exhibit Index |  |                       |  |                                                                                                                                                                                                                                              |  | 24   

2



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##### 



PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

DELHAIZE AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the 13 weeks ended September 28, 2002 and September 29, 2001
(Dollars in thousands)

|                                           |  |                |           |                |  |   |           | 
|------------------------------------------ |  | -------------- | --------- | -------------- |  | - | --------- | 
|                                           |  | 13 Weeks       |           | 13 Weeks      
|                                           |  | Successor Co.  |           | Successor Co. 
|                                           |  | Ended          |           | Ended         
|                                           |  | Sept. 28, 2002 |           | Sept. 29, 2001
|                                           |  |                |           |               
|Net sales and other revenues               |  | $              | 3,816,198 |                |  | $ | 3,822,390 | 
|Cost of goods sold                         |  |                | 2,856,531 |                |  |   | 2,851,378 | 
|Selling and administrative expenses        |  |                | 790,185   |                |  |   | 791,708   | 
|                                           |  |                |           |                |  |   |           | 
|Operating income                           |  |                | 169,482   |                |  |   | 179,304   | 
|Interest expense, net                      |  |                | 83,601    |                |  |   | 87,902    | 
|Net gain from extinguishment of debt       |  |                | 882       |                |  |   |          | 
|Net other loss from extinguishment of debt |  |                | (260      | )              |  |   |          | 
|                                           |  |                |           |                |  |   |           | 
|Income before income taxes                 |  |                | 86,503    |                |  |   | 91,402    | 
|Provision for income taxes                 |  |                | 34,445    |                |  |   | 45,508    | 
|                                           |  |                |           |                |  |   |           | 
|Net income                                 |  | $              | 52,058    |                |  | $ | 45,894    | 
|                                           |  |                |           |                |  |   |           | 

See notes to condensed unaudited consolidated financial statements.

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DELHAIZE AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME/(LOSS)
(Unaudited)
For the 39 weeks ended September 28, 2002 and September 29, 2001
(Dollars in thousands)

|                                                                                  |  |                |            |                   |  |                   |           |  |  |   |           | 
|--------------------------------------------------------------------------------- |  | -------------- | ---------- | ----------------- |  | ----------------- | --------- |  |  | - | --------- | 
|                                                                                  |  | 39 Weeks       |            | 22 Weeks          |  | 17 Weeks         
|                                                                                  |  | Successor Co.  |            | Successor Co.     |  | Predecessor Co.  
|                                                                                  |  | Ended          |            | Period from       |  | Period from      
|                                                                                  |  |                |            | April 29, 2001    |  | Dec. 30, 2000    
|                                                                                  |  | Sept. 28, 2002 |            | to Sept. 29, 2001 |  | to April 28, 2001
|                                                                                  |  |                |            |                   |  |                  
|Net sales and other revenues                                                      |  | $              | 11,317,410 |                   |  | $                 | 6,417,421 |  |  | $ | 4,734,816 | 
|Cost of goods sold                                                                |  |                | 8,442,575  |                   |  |                   | 4,775,814 |  |  |   | 3,556,170 | 
|Selling and administrative expenses                                               |  |                | 2,336,868  |                   |  |                   | 1,328,271 |  |  |   | 980,543   | 
|Merger expense                                                                    |  |                |           |                   |  |                   | 13,721    |  |  |   | 25,992    | 
|                                                                                  |  |                |            |                   |  |                   |           |  |  |   |           | 
|Operating income                                                                  |  |                | 537,967    |                   |  |                   | 299,615   |  |  |   | 172,111   | 
|Interest expense, net                                                             |  |                | 254,170    |                   |  |                   | 151,538   |  |  |   | 108,362   | 
|Net gain from extinguishment of debt                                              |  |                | 882        |                   |  |                   |          |  |  |   |          | 
|Net other loss from extinguishment of debt                                        |  |                | (260       | )                 |  |                   |          |  |  |   |          | 
|                                                                                  |  |                |            |                   |  |                   |           |  |  |   |           | 
|Income before income taxes                                                        |  |                | 284,419    |                   |  |                   | 148,077   |  |  |   | 63,749    | 
|Provision for income taxes                                                        |  |                | 112,307    |                   |  |                   | 72,786    |  |  |   | 29,551    | 
|                                                                                  |  |                |            |                   |  |                   |           |  |  |   |           | 
|Income before cumulative effect of
a change in accounting principle               |  |                | 172,112    |                   |  |                   | 75,291    |  |  |   | 34,198    | 
|Less cumulative effect of change in
accounting principle, net of tax
(See Note 7) |  |                | 284,097    |                   |  |                   |          |  |  |   |          | 
|                                                                                  |  |                |            |                   |  |                   |           |  |  |   |           | 
|Net(loss)income                                                                   |  | $              | (111,985   | )                 |  | $                 | 75,291    |  |  | $ | 34,198    | 
|                                                                                  |  |                |            |                   |  |                   |           |  |  |   |           | 

See notes to condensed unaudited consolidated financial statements.

4



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##### 



DELHAIZE AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)

|                                                         |                                     |                                            |           |                    |           |                   |           |           |           | 
|-------------------------------------------------------- | ----------------------------------- | ------------------------------------------ | --------- | ------------------ | --------- | ----------------- | --------- | --------- | --------- | 
|                                                         |                                     |                                            |           | Successor Co.      |           | Successor Co.    
|                                                         |                                     |                                            |           | September 28, 2002 |           | December 29, 2001
|                                                         |                                     |                                            |           |                    |           |                  
|ASSETS                                                   |                                     |                                            |           |                    |           |                   |           |          
|Current assets:                                          |                                     |                                            |           |                    |           |                   |           |          
|                                                         | Cash and cash equivalents           |                                            | $         | 249,581            |           |                   | $         | 137,206   |          
|                                                         | Receivables                         |                                            |           | 123,934            |           |                   |           | 198,158   |          
|                                                         | Receivable from affiliate           |                                            |           | 11,718             |           |                   |           | 14,718    |          
|                                                         | Inventories                         |                                            |           | 1,231,380          |           |                   |           | 1,239,470 |          
|                                                         | Income tax receivable               |                                            |           |                   |           |                   |           | 8,429     |          
|                                                         | Prepaid expenses                    |                                            |           | 42,800             |           |                   |           | 28,250    |          
|                                                         | Deferred tax assets                 |                                            |           | 9,206              |           |                   |           | 6,169     |          
|                                                         |                                     |                                            |           |                    |           |                   |           |          
|                                                         |                                     | Total current assets                       |           |                    | 1,668,619 |                   |           |           | 1,632,400 | 
|Property and equipment, net                              |                                     |                                            | 2,990,604 |                    |           |                   | 3,011,279 |          
|Goodwill, net                                            |                                     |                                            | 2,907,305 |                    |           |                   | 3,273,385 |          
|Intangibles, net                                         |                                     |                                            | 828,782   |                    |           |                   | 885,455   |          
|Reinsurance recoverable-affiliate                        |                                     |                                            | 106,065   |                    |           |                   | 104,118   |          
|Other assets                                             |                                     |                                            | 90,867    |                    |           |                   | 63,361    |          
|                                                         |                                     |                                            |           |                    |           |                   |           |          
|                                                         |                                     | Total assets                               |           | $                  | 8,592,242 |                   |           | $         | 8,969,998 | 
|                                                         |                                     |                                            |           |                    |           |                   |           |          
|LIABILITIES AND SHAREHOLDERS EQUITY                     |                                     |                                            |           |                    |           |                   |           |          
|Current liabilities:                                     |                                     |                                            |           |                    |           |                   |           |          
|                                                         | Short-term borrowings               |                                            | $         |                   |           |                   | $         | 140,000   |          
|                                                         | Accounts payable                    |                                            |           | 691,128            |           |                   |           | 693,729   |          
|                                                         | Dividend payable                    |                                            |           |                   |           |                   |           | 86,093    |          
|                                                         | Accrued expenses                    |                                            |           | 409,494            |           |                   |           | 305,364   |          
|                                                         | Capital lease obligations  current |                                            |           | 31,007             |           |                   |           | 38,118    |          
|                                                         | Long term debt  current            |                                            |           | 28,022             |           |                   |           | 17,890    |          
|                                                         | Other liabilities  current         |                                            |           | 30,915             |           |                   |           | 32,534    |          
|                                                         | Income taxes payable                |                                            |           | 60,684             |           |                   |           |          |          
|                                                         |                                     |                                            |           |                    |           |                   |           |          
|                                                         |                                     | Total current liabilities                  |           |                    | 1,251,250 |                   |           |           | 1,313,728 | 
|Long-term debt                                           |                                     |                                            | 2,998,652 |                    |           |                   | 3,065,446 |          
|Capital lease obligations                                |                                     |                                            | 700,452   |                    |           |                   | 675,746   |          
|Deferred income taxes                                    |                                     |                                            | 304,283   |                    |           |                   | 459,525   |          
|Other liabilities                                        |                                     |                                            | 251,255   |                    |           |                   | 265,784   |          
|                                                         |                                     |                                            |           |                    |           |                   |           |          
|                                                         |                                     | Total liabilities                          |           |                    | 5,505,892 |                   |           |           | 5,780,229 | 
|                                                         |                                     |                                            |           |                    |           |                   |           |          
|Shareholders equity:                                    |                                     |                                            |           |                    |           |                   |           |          
|Class A non-voting common stock                          |                                     |                                            | 53,222    |                    |           |                   | 53,149    |          
|Class B voting common stock                              |                                     |                                            | 37,645    |                    |           |                   | 37,645    |          
|Accumulated other comprehensive (loss), net of tax       |                                     |                                            | (60,816   | )                  |           |                   | (64,471   | )        
|Additional paid-in capital, net
of unearned compensation |                                     |                                            | 2,464,657 |                    |           |                   | 2,452,945 |          
|Retained earnings                                        |                                     |                                            | 591,642   |                    |           |                   | 710,501   |          
|                                                         |                                     |                                            |           |                    |           |                   |           |          
|                                                         |                                     | Total shareholders equity                 |           |                    | 3,086,350 |                   |           |           | 3,189,769 | 
|                                                         |                                     |                                            |           |                    |           |                   |           |          
|                                                         |                                     | Total liabilities and
shareholders equity |           | $                  | 8,592,242 |                   |           | $         | 8,969,998 | 
|                                                         |                                     |                                            |           |                    |           |                   |           |          

See notes to condensed unaudited consolidated financial statements.

5



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DELHAIZE AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the 39 weeks ended September 28, 2002 and September 29, 2001
(Dollars in thousands)

|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |            |          |          |  
|----------------------------------------------------------------------- | ------------------------------------------------------------------- | --------------------------------------------- | ------------------------------------- | -------- | -------------- | -------- | ----------------- | -------- | ----------------- | -------- | ------- | ---------- | -------- | -------- | -
|                                                                        |                                                                     |                                               |                                       |          | 39 Weeks       |          | 22 Weeks          |          | 17 Weeks         
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                  
|                                                                        |                                                                     |                                               |                                       |          | Successor Co.  |          | Successor Co.     |          | Predecessor Co.  
|                                                                        |                                                                     |                                               |                                       |          | Ended          |          | Period from       |          | Period from      
|                                                                        |                                                                     |                                               |                                       |          |                |          | April 29, 2001    |          | Dec. 30, 2000    
|                                                                        |                                                                     |                                               |                                       |          | Sept. 28, 2002 |          | to Sept. 29, 2001 |          | to April 28, 2001
|CASH FLOWS FROM OPERATING ACTIVITIES                                    |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|Net (loss)/ income                                                      |                                                                     | $                                             | (111,985                              | )        |                | $        | 75,291            |          |                   | $        | 34,198  |           
|Adjustments to reconcile net income/(loss)                              |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|                                                                        |                                                                     | to net cash provided by operating activities: |                                       |          |                |          |                   |          |                   |          |         |            |          |         
|                                                                        | Cumulative effect of change in accounting
principle, net of tax     |                                               |                                       | 284,097  |                |          |                   |         |                   |          |         |           |         
|                                                                        | Depreciation and amortization                                       |                                               |                                       | 345,080  |                |          |                   | 228,713  |                   |          |         | 162,259    |         
|                                                                        | Non-cash portion of merger expense                                  |                                               |                                       |         |                |          |                   |         |                   |          |         | 21,682     |         
|                                                                        | Non-cash portion of merger expense parent acquisition              |                                               |                                       |         |                |          |                   | 11,708   |                   |          |         |           |         
|                                                                        | Amortization of debt fees/costs                                     |                                               |                                       | 1,507    |                |          |                   | 850      |                   |          |         | 55         |         
|                                                                        | Non-cash portion of debt premium/discount                           |                                               |                                       | 852      |                |          |                   | 304      |                   |          |         | 430        |         
|                                                                        | Amortization of deferred loss on derivative                         |                                               |                                       | 6,378    |                |          |                   | 5,417    |                   |          |         | 523        |         
|                                                                        | Accrued interest on rate swap                                       |                                               |                                       | (4,780   | )              |          |                   |         |                   |          |         |           |         
|                                                                        | Loss (gain) on disposals of property and
capital lease terminations |                                               |                                       | 298      |                |          |                   | (2,258   | )                 |          |         | 2,048      |         
|                                                                        | Store closing provisions/recovery                                   |                                               |                                       | (3,293   | )              |          |                   | 2,962    |                   |          |         | 2,288      |         
|                                                                        | Net gain from extinguishment of debt                                |                                               |                                       | (882     | )              |          |                   |         |                   |          |         |           |         
|                                                                        | Net other loss from extinguishment of debt                          |                                               |                                       | 260      |                |          |                   |         |                   |          |         |           |         
|                                                                        | Deferred income taxes                                               |                                               |                                       | 5,035    |                |          |                   | (6,131   | )                 |          |         | (24        | )       
|                                                                        | Other                                                               |                                               |                                       | 9,726    |                |          |                   | 2,392    |                   |          |         | 1,273      |         
|Changes in operating assets and liabilities which provided
(used) cash: |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|                                                                        | Receivables                                                         |                                               |                                       | 78,789   |                |          |                   | (26,918  | )                 |          |         | 45,523     |         
|                                                                        | Net receivable from affiliate                                       |                                               |                                       | 2,930    |                |          |                   |         |                   |          |         |           |         
|                                                                        | Inventories                                                         |                                               |                                       | 8,090    |                |          |                   | 3,188    |                   |          |         | 53,504     |         
|                                                                        | Income tax receivable                                               |                                               |                                       | 8,429    |                |          |                   | 12,353   |                   |          |         | 70,130     |         
|                                                                        | Prepaid expenses                                                    |                                               |                                       | (14,550  | )              |          |                   | (14,824  | )                 |          |         | 3,519      |         
|                                                                        | Reinsurance recoverable                                             |                                               |                                       |         |                |          |                   | (107,426 | )                 |          |         |           |         
|                                                                        | Other assets                                                        |                                               |                                       | (1,544   | )              |          |                   | (2,880   | )                 |          |         | (1,243     | )       
|                                                                        | Accounts payable                                                    |                                               |                                       | (2,601   | )              |          |                   | 64,341   |                   |          |         | (62,844    | )       
|                                                                        | Accrued expenses                                                    |                                               |                                       | 109,413  |                |          |                   | 126,727  |                   |          |         | (49,376    | )       
|                                                                        | Income taxes payable                                                |                                               |                                       | 60,684   |                |          |                   | 27,037   |                   |          |         |           |         
|                                                                        | Other liabilities                                                   |                                               |                                       | (14,802  | )              |          |                   | (5,793   | )                 |          |         | (8,385     | )       
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|                                                                        |                                                                     | Total adjustments                             |                                       |          | 879,116        |          |                   |          | 319,762           |          |         |            | 241,362  |         
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|                                                                        |                                                                     | Net cash provided by operating activities     |                                       |          | 767,131        |          |                   |          | 395,053           |          |         |            | 275,560  |         
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|CASH FLOWS FROM INVESTING ACTIVITIES                                    |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|                                                                        | Capital expenditures                                                |                                               |                                       | (333,383 | )              |          |                   | (170,896 | )                 |          |         | (122,577   | )       
|                                                                        | Proceeds from disposal of property                                  |                                               |                                       | 11,654   |                |          |                   | 18,046   |                   |          |         | 4,230      |         
|                                                                        | Other investment activity                                           |                                               |                                       | (1,565   | )              |          |                   |         |                   |          |         | (816       | )       
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|                                                                        |                                                                     | Net cash used in investing activities         |                                       |          | (323,294       | )        |                   |          | (152,850          | )        |         |            | (119,163 | )       
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|CASH FLOWS FROM FINANCING ACTIVITIES                                    |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|                                                                        | Net payments under short-term borrowings                            |                                               |                                       | (140,000 | )              |          |                   | (105,000 | )                 |          |         | (2,495,000 | )       
|                                                                        | Proceeds from issuance of long-term debt                            |                                               |                                       |         |                |          |                   |         |                   |          |         | 2,600,000  |         
|                                                                        | Principal payments on long-term debt                                |                                               |                                       | (76,238  | )              |          |                   | (117,380 | )                 |          |         | (7,317     | )       
|                                                                        | Principal payments under capital lease obligations                  |                                               |                                       | (22,328  | )              |          |                   | (13,082  | )                 |          |         | (10,210    | )       
|                                                                        | Direct financing costs                                              |                                               |                                       |         |                |          |                   |         |                   |          |         | (23,105    | )       
|                                                                        | Dividends paid                                                      |                                               |                                       | (86,023  | )              |          |                   |         |                   |          |         | (28,572    | )       
|                                                                        | Parent common stock repurchased                                     |                                               |                                       | (11,459  | )              |          |                   | (16,723  | )                 |          |         |           |         
|                                                                        | Proceeds from issuance of Parent common stock
for options           |                                               |                                       | 4,586    |                |          |                   | 5,586    |                   |          |         | 2,031      |         
|                                                                        | Cash used to settle derivative instruments                          |                                               |                                       |         |                |          |                   |         |                   |          |         | (214,071   | )       
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|                                                                        |                                                                     |                                               | Net cash used in financing activities |          |                | (331,462 | )                 |          |                   | (246,599 | )       |            |          | (176,244 | )
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|Net increase (decrease)in cash and cash
equivalents                     |                                                                     |                                               | 112,375                               |          |                |          | (4,396            | )        |                   |          | (19,847 | )         
|Cash and cash equivalents at beginning
of period                        |                                                                     |                                               | 137,206                               |          |                |          | 115,789           |          |                   |          | 135,636 |           
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           
|Cash and cash equivalents at end of period                              |                                                                     | $                                             | 249,581                               |          |                | $        | 111,393           |          |                   | $        | 115,789 |           
|                                                                        |                                                                     |                                               |                                       |          |                |          |                   |          |                   |          |         |           

See notes to condensed unaudited consolidated financial statements.

6



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##### 



Notes to Condensed Unaudited Consolidated Financial Statements

1) Basis of Presentation:

On April 25, 2001, Delhaize America, Inc. (Delhaize America or the Company)
became a wholly-owned subsidiary of Delhaize Group as a result of the Delhaize
Group Share Exchange (see Note 5). This transaction was accounted for as a
purchase, and in connection with this treatment, a new entity has been deemed
created for financial reporting purposes. Accordingly, in these financial
statements, the periods prior to the date of the Delhaize Group Share Exchange
relate to the predecessor company and the periods subsequent to the date of
the Delhaize Group Share Exchange relate to the successor company and have
been labeled herein accordingly.

The accompanying financial statements are presented in accordance with the
requirements of Form 10-Q and, consequently, do not include all the disclosures
normally required by generally accepted accounting principles or those normally
made in the Annual Report on Form 10-K of Delhaize America. Accordingly, the
reader of this Form 10-Q should refer to the Companys Form 10-K for the year
ended December 29, 2001 for further information.

The financial information presented herein has been prepared in accordance with
the Companys customary accounting practices and has not been audited. In the
opinion of management, the financial information includes all adjustments,
consisting of only normal recurring items, necessary for a fair presentation of
interim results.

2) Supplemental Disclosure of Cash Flow Information:

Selected cash payments and non-cash activities during the period were as
follows:

|                                                                                                                                        |                            |   |                |  |                   |   |                   |  |  |   |         |   | 
|--------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | - | -------------- |  | ----------------- | - | ----------------- |  |  | - | ------- | - | 
|                                                                                                                                        |                            |   | Successor Co.  |  | Successor Co.     |   | Predecessor Co.  
|                                                                                                                                        |                            |   | 39 Weeks       |  | 22 Week Period    |   | 17 Weeks         
|                                                                                                                                        |                            |   |                |  | From              |   | From             
|                                                                                                                                        |                            |   | Ended          |  | April 29, 2001    |   | Dec. 30, 2000    
|                                                                                                                                        |                            |   | Sept. 28, 2002 |  | to Sept. 29, 2001 |   | to April 28, 2001
|(Dollars in thousands)                                                                                                                  |                            |   |                |  |                   |  
|Cash payments (refunds) for income taxes                                                                                                |                            | $ | 38,359         |  |                   | $ | 39,187            |  |  | $ | (40,206 | )
|Cash payments for interest, net of amounts
capitalized                                                                                  |                            |   | 191,415        |  |                   |   | 49,899            |  |  |   | 117,642 |  
|Non-cash investing and financing activities:                                                                                            |                            |   |                |  |                   |   |                   |  |  |   |         |  
|Capitalized lease obligations incurred for store
properties and equipment                                                               |                            |   | 37,331         |  |                   |   | 20,884            |  |  |   | 21,128  |  
|Capitalized lease obligations terminated for
store properties and equipment                                                             |                            |   | 1,882          |  |                   |   | 2,816             |  |  |   | 5,560   |  
|Change in reinsurance recoverable and other liabilities                                                                                 |                            |   | 1,947          |  |                   |   |                  |  |  |   |        |  
|Acquisition of Hannaford  final allocation of purchase
price                                                                           |                            |   |               |  |                   |   | 24,301            |  |  |   | 3,893   |  
|Excess purchase price related to parent acquisition                                                                                     |                            |   |               |  |                   |   | 913,969           |  |  |   |        |  
|LIFO fair value adjustment related to parent acquisition                                                                                |                            |   |               |  |                   |   | 78,623            |  |  |   |        |  
|Investment in WWRE                                                                                                                      |                            |   | 3,000          |  |                   |   |                  |  |  |   |        |  
|Delhaize Group Share Exchange  final adjustment to                                                                                     |                            |   |                |  |                   |   |                   |  |  |   |         |  
|                                                                                                                                        | purchase price allocation: |   |                |  |                   |   |                   |  |  |   |         |   | 
|Property                                                                                                                                |                            |   | 44,433         |  |                   |   |                  |  |  |   |        |  
|Deferred income taxes                                                                                                                   |                            |   | 43,752         |  |                   |   |                  |  |  |   |        |  
|Capital lease obligations                                                                                                               |                            |   | 4,475          |  |                   |   |                  |  |  |   |        |  
|Accrued expenses                                                                                                                        |                            |   | 5,156          |  |                   |   |                  |  |  |   |        |  
|Reclassification of deferred taxes to goodwill
related to intangible assets that did not meet the
separability criteria of SFAS No. 141 |                            |   | 117,895        |  |                   |   |                  |  |  |   |        |  

3) Inventories

Inventories are stated at the lower of cost or market. Inventories valued using
the last-in, first-out (LIFO) method comprised approximately 78% and 82% of
inventories on September 28, 2002 and September 29, 2001, respectively. Meat,
produce and deli inventories are valued on the first-in, first-out (FIFO)
method. If the FIFO method was used entirely, inventories would have been $67.3
million and $65.6 million greater as of September 28, 2002 and September 29,
2001, respectively. In connection with the final accounting for the Delhaize
Group Share Exchange discussed in Note 5, the Company recorded an adjustment to
the basis for the LIFO inventories in the amount of $78.6 million at April 25,
2001. Application of the LIFO method resulted in increases in the cost of goods
sold of $2.6 million for the 39 weeks ended September 28, 2002 (successor
company) and $0.8 million for the 17 weeks ended April 28, 2001 (predecessor
company) and $1.0 million for the 22 weeks ended September 29, 2001 (successor
company).

4) Reclassification

Certain financial statement items in the prior periods have been reclassified
to conform to the current periods presentation.

5) Acquisition

DELHAIZE GROUP SHARE EXCHANGE

On April 25, 2001, the Company and Delhaize Group consummated a share exchange
whereby Delhaize Group exchanged each outstanding share of the Companys Class
A and Class B common stock not already directly or indirectly held by Delhaize
Group for 0.4 Delhaize Group American Depository Shares listed on The New York
Stock Exchange or, at the option of each of our shareholders, 0.4 Delhaize
Group ordinary shares listed on Euronext Brussels. The Company became a
wholly-owned subsidiary of Delhaize Group as a

7



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##### 



result of the Delhaize Group Share Exchange. Prior to this time, Delhaize Group
owned approximately 44.88% of the Companys outstanding common stock. The
Delhaize Group Share Exchange was accounted for using the purchase method of
accounting. Effective as of the April 28, 2001 fiscal period end, the Company
recorded adjustments to reflect the historical basis of 44.88% owned by
Delhaize Group and the fair value of the purchased net assets as the new
accounting basis in the Companys financial statements.

As consideration, Delhaize Group issued approximately 40.2 million of its
ordinary shares having an aggregate value of approximately $1.9 billion for the
remaining 55.12% of the Companys stock not previously owned directly or
indirectly by Delhaize Group. Additional direct costs incurred in connection
with the acquisition, primarily legal and other professional fees, in the
amount of $26.4 million have been included in the purchase price allocation.
Additional goodwill related to prior step acquisitions by Delhaize Group in the
approximate amount of $198.1 million has also been reflected in the
accompanying financial statements of the Successor Company.

During the first quarter of 2002, the Company finalized its purchase price
allocation. The net purchase price was allocated as follows:

|                                                   |  |   |            |  
|-------------------------------------------------- |  | - | ---------- | -
|(Dollars in thousands)                             |  |   |            |  
|Current assets                                     |  | $ | 943,206    |  
|Property and equipment                             |  |   | 1,707,637  |  
|Goodwill                                           |  |   | 1,835,906  |  
|Identified intangible and
other non-current assets |  |   | 1,007,982  |  
|Current liabilities                                |  |   | (792,178   | )
|Non-current liabilities                            |  |   | (2,597,469 | )
|                                                   |  |   |            |  
|Purchase price                                     |  | $ | 2,105,084  |  
|                                                   |  |   |            |  

The Companys accounting for the share exchange transaction resulted in an
allocation of the purchase price to the Companys assets and liabilities, which
are comprised of 44.88% of historical basis and 55.12% of new basis as of the
transaction date.

Significant fair value step adjustments to property and equipment were
primarily related to buildings and improvements of approximately $141.3 million
and capital equipment of approximately $9.7 million. Increases to identified
intangible and other non-current assets consisted primarily of economic lease
values of approximately $310.7 million, trademarks of approximately $242.5
million, assembled workforce of approximately $52.7 million, distribution
network of approximately $84.3 million partially offset by reductions in the
fair value of the prescription files of approximately $11.7 million and
reductions in the fair value of the pension asset of approximately $12.7
million. The primary changes in the values of non-current liabilities as a
result of the share exchange were fair value adjustments to decrease long-term
debt by approximately $4.5 million, increase capital lease obligations by
approximately $63.3 million, increase deferred income tax liabilities by
approximately $313.4 million and to reduce approximately $73.0 million of the
deferred loss on settlement of a hedge arrangement.

6) Derivative Financial Instruments

On December 31, 2000, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 133, Accounting for Derivative Instruments and Hedging
Activities, as amended, which requires that all derivative instruments be
recognized as assets or liabilities in the financial statements. The Company
entered into interest rate hedge agreements against potential increases in
interest rates prior to the offering of debt securities in April 2001, which
were used to refinance short-term borrowings entered into in connection with
the Companys acquisition of Hannaford Bros. Co. (Hannaford). The notional
amount of the hedge agreements totaled $1.75 billion. These hedge agreements
were structured to hedge against the risk of increasing market interest rates
based on U.S. treasury rates, with the specified rates based on the anticipated
maturities of the securities that were expected to be issued. The hedge
agreements were settled as planned in connection with the completion of the
private offering of debt securities resulting in a payment in the amount of the
unrealized loss of approximately $214 million in April 2001. Upon adoption of
SFAS No. 133 at the beginning of fiscal 2001, the unrealized loss associated
with these hedge agreements was recorded in other comprehensive income, net of
deferred taxes, and is being amortized to interest expense over the term of the
associated debt securities. The Company amortized approximately $4.0 million,
net of tax, of the other comprehensive loss associated with these hedge
agreements to interest expense during the period from December 30, 2001 to
September 28, 2002 compared to $0.3 million for the 17 weeks ended April 28,
2001 (predecessor company) and $3.4 million for the 22 weeks ended September
29, 2001 (successor company). The unrealized loss was reduced as of the date of
the Delhaize Group Share Exchange (see Note 5). The remaining unrealized loss
at September 28, 2002 totaled approximately $51.7 million, net of deferred
taxes. In conjunction with debt retirement, the associated unrealized loss is
recorded in Net other loss from extinguishment of debt in the Companys
consolidated statement of income during the period of extinguishment.

The Company entered into interest rate swap agreements, during the fourth
quarter of 2001 and the third quarter of 2002, to manage its exposure to
interest rate movements by effectively converting a portion of its debt from
fixed to variable rates. Maturity dates of the Companys interest rate swap
arrangements match those of the underlying debt. These agreements involve the
exchange of fixed rate payments for variable rate payments without the exchange
of the underlying principal amounts. Variable rates for our agreements are
based on six-month or three-month U.S. dollar LIBOR and are reset on a
semiannual basis or quarterly basis. The differential between fixed and
variable rates to be paid or received is accrued as interest rates change in
accordance with the agreements and recognized over the life of the agreements
as an adjustment to interest expense. The notional amounts of interest rate
swap arrangements at September 28, 2002 were approximately $300 million
maturing in 2006 and $200 million maturing in 2011. These agreements are
accounted for as fair value hedges. For the 13 weeks and the 39 weeks ended
September 28, 2002, interest expense decreased by $3.2 million and $7.8
million, respectively, in connection with these agreements. These agreements
met the criteria for using the

8



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##### 



short-cut method, which assumes 100% hedge effectiveness, as prescribed by SFAS
No. 133. The fair value of the Companys debt has been increased by $19.9
million at September 28, 2002 in connection with these agreements. The Company
has also recorded a derivative asset in connection with these agreements in the
amount of $24.7 million recorded in other assets.

7) Recently Adopted Accounting Standards

In June 2001, the Financial Accounting Standards Board, or FASB, issued SFAS,
No. 141, Business Combinations. SFAS No. 141 addresses financial accounting
and reporting for business combinations and supersedes Accounting Principles
Board, or APB, Opinion No. 16, Business Combinations, and SFAS No. 38,
Accounting for Pre-acquisition Contingencies of Purchased Enterprises. All
business combinations that come within the scope of SFAS No. 141 are to be
accounted for using the purchase method of accounting. The provisions of SFAS
No. 141 apply to all business combinations initiated after June 30, 2001 and
all business combinations accounted for using the purchase method of accounting
for which the date of acquisition is July 1, 2001 or later. SFAS No. 141 also
sets forth new criteria for separability and in-separability of intangible
assets. The application of SFAS No. 141 resulted in the Companys
identification of certain intangible assets such as assembled work force and
distribution network that did not meet the separability criteria of SFAS No.
141, which were re-classified into goodwill.

On December 30, 2001, the Company adopted SFAS No. 142, Goodwill and Other
Intangible Assets, which required that we cease amortizing goodwill and other
intangible assets with indefinite lives, and begin an annual assessment of
potential impairment of goodwill and other intangible assets by comparing the
book value of these assets to their current fair value.

The Company performed its assessment for potential impairment at each of our
three operating banners, since each chain represents a separate operating
segment as defined by SFAS No. 131 and a separate reporting unit as defined by
SFAS No. 142. In performing its assessment, the carrying value of assets and
liabilities was determined for each reporting unit and compared to the fair
value of each reporting unit, which was obtained from independent appraisals.
If the carrying value of the reporting unit exceeded its fair value, an
assessment of impairment was then necessary.

The Companys impairment assessment at its individual operating banners, upon
adoption of SFAS 142, resulted in a non-cash impairment charge totaling
approximately $288 million before taxes ($284 million net of taxes), which was
recorded as a cumulative effect of change in accounting principle in the first
quarter 2002 condensed consolidated statements of income/(loss). This
impairment charge relates primarily to goodwill associated with the Delhaize
Group Share Exchange and with the Companys acquisitions of Kash n Karry and
Hannaford. Impairment at the Kash n Karry banner is due to a combination of
factors including post-acquisition capital expenditures and operating
performance. The Company has seen a heightened level of competition in the
Florida area, where Kash n Karry is concentrated. The Hannaford banner carries
a significant goodwill balance due to the initial acquisition in 2000 and the
allocation of goodwill to this banner related to the share exchange. The
Company has experienced changes in economic conditions subsequent to these
events. The Company plans to test goodwill for impairment again in the fourth
quarter of 2002.

As a result of the adoption of SFAS No. 142, amortization expense of
approximately $22 million and $66 million for goodwill and other indefinite
life assets was appropriately not reflected in the current quarter and for the
39 weeks ended September 28, 2002, respectively.

The following schedule reconciles the Income before cumulative effect of change
in accounting principle adjusted to exclude after-tax amortization expense in
the three months and nine months ended September 29, 2001 prior to the adoption
of SFAS No.142:

|                                        |                                |          |                |          |                |          |                |          |               |   |    |    |  |   |     |     | 
|--------------------------------------- | ------------------------------ | -------- | -------------- | -------- | -------------- | -------- | -------------- | -------- | ------------- | - | -- | -- |  | - | --- | --- | 
|(Dollars in millions)                   |                                | 13 Weeks |                | 39 Weeks |                | 13 Weeks |                | 39 Weeks
|                                        |                                | Ended    |                | Ended    |                | Ended    |                | Ended   
|                                        |                                |          | Sept. 28, 2002 |          | Sept. 28, 2002 |          | Sept. 29, 2001 |          | Sept. 29,2001
|                                        |                                |          |                |          |                |          |                |          |              
|Income Before Cumulative                |                                |          |                |          |                |          |                |          |               |   |    |    |  |   |     |    
|Effect of Change in                     |                                |          |                |          |                |          |                |          |               |   |    |    |  |   |     |    
|Accounting Principle                    |                                | $        | 52             |          |                | $        | 172            |          |               | $ | 46 |    |  | $ | 109 |    
|Add: Goodwill Amortization
[Net of Tax] |                                |          |               |          |                |          |               |          |               | $ | 14 |    |  | $ | 41  |    
|                                        |                                |          |                |          |                |          |                |          |               |   |    |    |  |   |     |    
|Adjusted Income Before                  |                                |          |                |          |                |          |                |          |               |   |    |    |  |   |     |    
|                                        | Cumulative Effect of           |          |                |          |                |          |                |          |               |   |    |    |  |   |     |     | 
|                                        | Change in Accounting
Principle |          | $              | 52       |                |          | $              | 172      |               |   | $  | 60 |  |   | $   | 150 | 
|                                        |                                |          |                |          |                |          |                |          |               |   |    |    |  |   |     |    

The carrying amount of goodwill and trademarks at each of the Companys
reporting units follows:

|                      |  |                |       |            |  |   |     | 
|--------------------- |  | -------------- | ----- | ---------- |  | - | --- | 
|                      |  | Sept. 28, 2002
|(Dollars in millions) |  | Goodwill       |       | Trademarks
|                      |  |                |       |           
|Food Lion             |  | $              | 1,142 |            |  | $ | 249 | 
|Hannaford             |  |                | 1,765 |            |  |   | 223 | 
|Kash n Karry         |  |                |      |            |  |   | 27  | 
|                      |  |                |       |            |  |   |     | 
|Total                 |  | $              | 2,907 |            |  | $ | 499 | 
|                      |  |                |       |            |  |   |     | 

9



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##### 



As of September 28, 2002 and September 29, 2001, the Companys amortized
intangible assets with definite lives consist of favorable leasehold
improvements, liquor licenses, pharmacy files, and developed software. The
components of its definite lived intangible assets are as follows:

|                             |  |                    |     |                    |  |     |     |       |  |              |     |             |  |   |     |  |  |   |     |   |  |   |     | 
|---------------------------- |  | ------------------ | --- | ------------------ |  | --- | --- | ----- |  | ------------ | --- | ----------- |  | - | --- |  |  | - | --- | - |  | - | --- | 
|                             |  | September 28, 2002 |     | September 29, 2001
|                             |  | Gross              |     |                    |  |     |     |       |  |              |     | Gross       |  |   |     |  |  |   |     |  
|                             |  | Carrying           |     | Accumulated        |  |     |     |       |  | Carrying     |     | Accumulated |  |   |     | 
|(Dollars in millions)        |  | Value              |     | Amortization       |  | Net |     | Value |  | Amortization |     | Net        
|                             |  |                    |     |                    |  |     |     |       |  |              |     |            
|Favorable Leasehold
Interest |  | $                  | 360 |                    |  | $   | (54 | )     |  | $            | 306 |             |  | $ | 437 |  |  | $ | (28 | ) |  | $ | 409 | 
|Other                        |  |                    | 30  |                    |  |     | (6  | )     |  |              | 24  |             |  |   | 37  |  |  |   | (3  | ) |  |   | 34  | 
|                             |  |                    |     |                    |  |     |     |       |  |              |     |             |  |   |     |  |  |   |     |   |  |   |     | 
|Total                        |  | $                  | 390 |                    |  | $   | (60 | )     |  | $            | 330 |             |  | $ | 474 |  |  | $ | (31 | ) |  | $ | 443 | 
|                             |  |                    |     |                    |  |     |     |       |  |              |     |             |  |   |     |  |  |   |     |   |  |   |     | 

Estimated amortization expense (for amortized intangibles) for the remainder of
2002 and the five succeeding fiscal years follows:

|                      |  |   |      | 
|--------------------- |  | - | ---- | 
|(Dollars in millions) |  |   |      | 
|2002(remainder)       |  | $ | 9.5  | 
|2003                  |  |   | 37.8 | 
|2004                  |  |   | 36.9 | 
|2005                  |  |   | 34.5 | 
|2006                  |  |   | 32.2 | 
|2007                  |  |   | 28.0 | 

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which is effective for financial statements
issued for years beginning after December 15, 2001. The objectives of SFAS No.
144 are to address significant issues relating to the implementation of SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and to develop a single accounting model, based on
the framework established in SFAS No. 121 for long-lived assets to be disposed
of by sale, whether previously held and used or newly acquired. SFAS No. 144
was effective as of the beginning of the current fiscal year. The effect of
adopting this standard did not have a significant effect on the Companys
financial statements. Management has selected the fourth quarter as the period
to conduct its annual impairment review under SFAS No. 144.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
This statement modifies the treatment of sale-leaseback transactions and
extinguishment of debt allowing gains and losses to be treated as income in
most circumstances. While SFAS No. 145 is effective for the Company for the
fiscal year 2003, early application is encouraged.

The Company has applied the provisions of SFAS No. 145 to its early
extinguishment of debt activity during the 13 weeks ended September 28, 2002
and has classified the gain related to early extinguishment in its income
statement below interest expense. See the Condensed Consolidated Statements of
Income/(Loss) for the 39 weeks ended September 28, 2002 (successor), 22 weeks
from April 29, 2001 to September 29, 2001 (successor) and 17 weeks from
December 30, 2000 to April 28, 2001 (predecessor). See further discussion in
Managements Discussion and Analysis  Debt.

8) Recently Issued Accounting Standards

In June 2001, the FASB also issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs, and applies to the legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development and/or normal operation of a
long- lived asset, except for certain obligations of lessees. SFAS No. 143 is
effective for financial statements issued for fiscal years beginning after June
15, 2002. The Company is currently assessing the potential effect of SFAS No.
143 on its financial statements.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, was issued by the FASB in June of 2002. SFAS No. 146 addresses
significant issues relating to the recognition, measurement and reporting of
costs associated with exit and disposal activities. SFAS No. 146 is effective
for exit or disposal activities initiated after December 31, 2002. The Company
is currently assessing the potential effect this standard will have on its
financial statements.

10



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##### 



Item 2.
Managements Discussion and Analysis of Financial Condition and Results of
Operations (13 weeks and 39 weeks ended September 28, 2002 compared to the 13
and 39 weeks ended September 29, 2001).

The accompanying financial statements are presented in accordance with the
requirements of Form 10-Q and, consequently, do not include all the disclosures
normally required by generally accepted accounting principles or those normally
made in the Companys Annual Report on Form 10-K. Accordingly, the reader of
this Form 10-Q should refer to the Companys Form 10-K for the year ended
December 29, 2001 for further information. Reclassifications have been made
for all current and historical information presented herein from that contained
in the Companys prior annual reports to shareholders and SEC filings on forms
10-Q, 10-K and 8-K.

On April 25, 2001, Delhaize America, Inc. became a wholly-owned subsidiary of
Delhaize Group as a result of the Delhaize Group Share Exchange. Effective as
of the end of our April 28, 2001 fiscal period, we recorded adjustments to
reflect the accounting basis of Delhaize Group in our financial statements (see
Note 5). This transaction was accounted for as a purchase and in connection
with this treatment, a new entity has been deemed created for financial
reporting purposes. Accordingly, in the financial statements, the periods prior
to the date of the Delhaize Group Share relate to the predecessor company and
the periods subsequent to the date of the Delhaize Group Share Exchange relate
to the successor company and have been labeled accordingly. The results of
the predecessor company and the successor company have been combined for the 13
and 39 weeks ended September 29, 2001, since separate results and discussions
of the predecessor company and the successor company are not meaningful in
comparison to the related periods of the current year.

CRITICAL ACCOUNTING POLICIES

We have chosen accounting policies that we believe are appropriate to
accurately and fairly report our operating results and financial position and
we apply those accounting policies in a consistent manner. The preparation of
financial statements in conformity with accounting principles generally
accepted in the United States of America requires that we make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses. These estimates and assumptions are based on historical and
other factors believed to be reasonable under the circumstances. We evaluate
these estimates and assumptions on an ongoing basis and may retain outside
consultants, lawyers and actuaries to assist in our evaluation. The reader
should refer to Note 1 to the consolidated financial statements in our Annual
Report on Form 10-K for the Fiscal year ended December 29, 2001 for further
information regarding significant accounting policies.

RESULTS OF OPERATIONS

The following tables set forth the unaudited condensed consolidated statements
of income/(loss) for the 13 and 39 weeks ended September 28, 2002 and for the
13 and 39 weeks ended September 29, 2001 (predecessor and successor companies
combined for the 39 weeks ended September 29, 2001) for informational purposes.

|                                           |            |   |                |        |                |   |           |        | 
|------------------------------------------ | ---------- | - | -------------- | ------ | -------------- | - | --------- | ------ | 
|                                           |            |   | 13 Weeks       |        | 13 Weeks      
|                                           |            |   | Ended          |        | Ended         
|                                           |            |   | Sept. 28, 2002 |        | Sept. 29, 2001
|                                           |            |   | unaudited      |        | unaudited     
|                                           |            |   |                |        |               
|Net sales and other revenues               |            | $ | 3,816,198      |        |                | $ | 3,822,390 |       
|Cost of goods sold                         |            |   | 2,856,531      |        |                |   | 2,851,378 |       
|Selling and administrative expenses        |            |   | 790,185        |        |                |   | 791,708   |       
|                                           |            |   |                |        |                |   |           |       
|Operating income                           |            |   | 169,482        |        |                |   | 179,304   |       
|Interest expense, net                      |            |   | 83,601         |        |                |   | 87,902    |       
|Net gain from extinguishment of debt       |            |   | 882            |        |                |   |          |       
|Net other loss from extinguishment of debt |            |   | (260           | )      |                |   |          |       
|                                           |            |   |                |        |                |   |           |       
|Income before income taxes                 |            |   | 86,503         |        |                |   | 91,402    |       
|Provision for income taxes                 |            |   | 34,445         |        |                |   | 45,508    |       
|                                           |            |   |                |        |                |   |           |       
|                                           | Net income |   | $              | 52,058 |                |   | $         | 45,894 | 
|                                           |            |   |                |        |                |   |           |       

11



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##### 



|                                                                     |  |                |            |                |  |   |            | 
|-------------------------------------------------------------------- |  | -------------- | ---------- | -------------- |  | - | ---------- | 
|                                                                     |  | 39 Weeks       |            | 39 Weeks      
|                                                                     |  | Ended          |            | Ended         
|                                                                     |  | Sept. 28, 2002 |            | Sept. 29, 2001
|                                                                     |  |                |            |               
|Net sales and other revenues                                         |  | $              | 11,317,410 |                |  | $ | 11,152,237 | 
|Cost of goods sold                                                   |  |                | 8,442,575  |                |  |   | 8,331,984  | 
|Selling and administrative expenses                                  |  |                | 2,336,868  |                |  |   | 2,308,814  | 
|Merger expense                                                       |  |                |           |                |  |   | 39,713     | 
|                                                                     |  |                |            |                |  |   |            | 
|Operating income                                                     |  |                | 537,967    |                |  |   | 471,726    | 
|Interest expense, net                                                |  |                | 254,170    |                |  |   | 259,900    | 
|Net gain from extinguishment of debt                                 |  |                | 882        |                |  |   |           | 
|Net other loss from extinguishment of debt                           |  |                | (260       | )              |  |   |           | 
|                                                                     |  |                |            |                |  |   |            | 
|Income before income taxes                                           |  |                | 284,419    |                |  |   | 211,826    | 
|Provision for income taxes                                           |  |                | 112,307    |                |  |   | 102,337    | 
|                                                                     |  |                |            |                |  |   |            | 
|Income before cumulative effect of
a change in accounting principle  |  |                | 172,112    |                |  |   | 109,489    | 
|Less Cumulative effect of change in
accounting principle, net of tax |  |                | 284,097    |                |  |   |           | 
|                                                                     |  |                |            |                |  |   |            | 
|Net (loss) / income                                                  |  | $              | (111,985   | )              |  | $ | 109,489    | 
|                                                                     |  |                |            |                |  |   |            | 

The following tables set forth, the percentage, which the listed captions bear
to net sales and other revenues for the periods indicated:

|                                           |            |  |                |      |                |  |        |      | 
|------------------------------------------ | ---------- |  | -------------- | ---- | -------------- |  | ------ | ---- | 
|                                           |            |  | 13 Weeks       |      | 13 Weeks      
|                                           |            |  | Ended          |      | Ended         
|                                           |            |  | Sept. 28, 2002 |      | Sept. 29, 2001
|                                           |            |  | %              |      | %             
|                                           |            |  |                |      |               
|Net sales and other revenues               |            |  | 100.00         |      |                |  | 100.00 |     
|Cost of goods sold                         |            |  | 74.85          |      |                |  | 74.60  |     
|Selling and administrative expenses        |            |  | 20.71          |      |                |  | 20.71  |     
|                                           |            |  |                |      |                |  |        |     
|Operating income                           |            |  | 4.44           |      |                |  | 4.69   |     
|Interest expense, net                      |            |  | 2.19           |      |                |  | 2.30   |     
|Net gain from extinguishment of debt       |            |  | 0.02           |      |                |  | 0.00   |     
|Net other loss from extinguishment of debt |            |  | 0.01           |      |                |  | 0.00   |     
|                                           |            |  |                |      |                |  |        |     
|Income before income taxes                 |            |  | 2.26           |      |                |  | 2.39   |     
|Provision for income taxes                 |            |  | 0.90           |      |                |  | 1.19   |     
|                                           |            |  |                |      |                |  |        |     
|                                           | Net income |  |                | 1.36 |                |  |        | 1.20 | 
|                                           |            |  |                |      |                |  |        |     

|                                                                     |  |                |        |                |  |  |        | 
|-------------------------------------------------------------------- |  | -------------- | ------ | -------------- |  |  | ------ | 
|                                                                     |  | 39 Weeks       |        | 39 Weeks      
|                                                                     |  | Ended          |        | Ended         
|                                                                     |  | Sept. 28, 2002 |        | Sept. 29, 2001
|                                                                     |  | %              |        | %             
|                                                                     |  |                |        |               
|Net sales and other revenues                                         |  |                | 100.00 |                |  |  | 100.00 | 
|Cost of goods sold                                                   |  |                | 74.60  |                |  |  | 74.71  | 
|Selling and administrative expenses                                  |  |                | 20.65  |                |  |  | 20.70  | 
|Merger expense                                                       |  |                | 0.00   |                |  |  | 0.36   | 
|                                                                     |  |                |        |                |  |  |        | 
|Operating income                                                     |  |                | 4.75   |                |  |  | 4.23   | 
|Interest expense, net                                                |  |                | 2.25   |                |  |  | 2.33   | 
|Net gain from extinguishment of debt                                 |  |                | 0.01   |                |  |  | 0.00   | 
|                                                                     |  |                |        |                |  |  |        | 
|Income before income taxes                                           |  |                | 2.51   |                |  |  | 1.90   | 
|Provision for income taxes                                           |  |                | 0.99   |                |  |  | 0.92   | 
|                                                                     |  |                |        |                |  |  |        | 
|Income before cumulative effect of
a change in accounting principle  |  |                | 1.52   |                |  |  | 0.98   | 
|Less Cumulative effect of change in
accounting principle, net of tax |  |                | 2.51   |                |  |  | 0.00   | 
|                                                                     |  |                |        |                |  |  |        | 
|Net (loss) / income                                                  |  |                | (0.99  | )              |  |  | 0.98   | 
|                                                                     |  |                |        |                |  |  |        | 

Sales

We record revenues primarily from the sale of products in over 1,450 retail
stores. Net sales and other revenues for the 13 weeks and for the 39 weeks
ended September 28, 2002 were $3.8 billion and $11.3 billion, respectively,
resulting in a decrease of 0.17% and an increase of 1.48% over the
corresponding periods of 2001. Comparable store sales decreased 2.0% during
the third quarter and decreased 0.6% for the 39 weeks ended September 28, 2002,
as compared with the corresponding periods of 2001. Sales

12



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##### 



performance during 2002 has been negatively impacted by soft economic
conditions and heightened competitive activity in the companys major operating
areas. Most of our stores are located in the Southeast region of the United
States, which is currently experiencing corporate layoffs, high unemployment,
and generally depressed economic conditions.

We continue to see an increase in competitive activity as all retailers battle
for the shrinking consumer dollar. During the first nine months of 2002, we
have experienced 45 net competitive openings in our operating area  increasing
the amount of grocery square footage available to consumers. Most major
supermarket retailers continued to engage in unplanned and nontraditional
promotional activity offering deep discounts on selected items. To date we have
maintained our commitment to consistent low price leadership and planned
promotional activity, avoiding high cost initiatives that provide only
short-term sales lifts.

As of September 28, 2002, we operated 1,475 stores, which consisted of 1,222
stores operating under the Food Lion banner, 116 stores operating under the
Hannaford and Shop n Save banners and 137 stores operating under the Kash n
Karry banner. During the third quarter we opened five new stores, of which four
were Food Lion stores and one a Hannaford store. In addition, we also remodeled
28 stores in the third quarter, of which 25 were Food Lion stores and three
were Kash n Karry stores. During the quarter we closed two Food Lion stores.

Gross profit for the 13 weeks and the 39 weeks ended September 28, 2002 was
25.15% of sales and 25.40% of sales, respectively, compared to 25.40% and
25.29% for the comparable periods of 2001. Despite lower than expected sales
volume, we continue to post solid gross profit performance as a result of the
continued implementation of zone pricing and improved private label product
penetration. Gross profit was negatively impacted during the quarter by an
increase in product shrink resulting from lower than expected sales volumes.
The change in basis of accounting related to the Delhaize Group Share Exchange
discussed above (see Financial Note 5) had no material impact on the reported
gross profits.

We have provided for a $0.6 million and $2.6 million LIFO provision during the
third quarter of 2002 and for the 39 weeks ended September 28, 2002,
respectively, compared with a LIFO provision of $0.6 million and $1.8 million
for the same periods last year. Currently, Delhaize America is experiencing no
inflation (flat) in total, with deflation in some categories including meat and
seafood.

Selling and administrative expenses during the third quarter of 2002 were
$790.2 million (including $115.5 in depreciation and amortization) or 20.71% of
sales compared to $791.7 million (including $136.3 in depreciation and
amortization) or 20.71% of sales for the third quarter of the prior year. For
the 39 weeks ended September 28, 2002, selling and administrative expenses were
$2,336.9 million (including $345.1 million in depreciation and amortization) or
20.65% of sales compared to $2,308.8 million (including $391.0 million in
depreciation and amortization) or 20.70% of sales for the corresponding period
in the prior year. Excluding depreciation and amortization, selling and
administrative expenses as a percentage of sales were 17.68% for the third
quarter of 2002 and 17.60% for the 39 weeks ended September 28, 2002 compared
to 17.15% and 17.20% for the corresponding periods of the prior year.
Excluding depreciation and amortization, the increase in selling and
administrative expenses in the third quarter compared to last year is
attributable primarily to increased store labor costs to support improved
customer service at all banners, and charges related to the
reorganization of the Company's senior executive team, which we
included in post-employment expense during the quarter (see discussion below), offset by lower medical costs
due to changes in medical plan provisions. We continue to demonstrate rigor in
cost control, even in an environment of soft sales.

Depreciation and amortization expense during the third quarter of 2002 was
$115.5 million or 3.03% of sales compared to $136.3 million or 3.57% of sales
for the third quarter of the prior year. For the 39 weeks ended September 28,
2002, depreciation and amortization expense was $345.1 million or 3.05% of
sales compared to $391.0 million or 3.51% of sales for the corresponding period
in the prior year. During the quarter ended March 30, 2002, we adopted SFAS
No. 142, Goodwill and Other Intangible Assets, effective December 30, 2001.
As a result, we no longer amortize goodwill and intangible assets with
indefinite lives. Under SFAS No. 142 the Company is required to annually assess
goodwill and other intangible assets with indefinite lives by comparing the
book value of these assets to their current fair value. The Companys
transitional impairment analysis (required upon adoption of the standard)
resulted in an impairment charge totaling $288 million before tax ($284 million
after tax) which was recorded in the first quarter of 2002 as a change in
accounting principle on the Companys Statement of Income/Loss (see Financial
Note 7). Depreciation and amortization was further impacted by the revaluation
performed in conjunction with the Delhaize Group Share Exchange (see Financial
Note 5). Excluding the impact of the discontinuance of goodwill and indefinite
lived intangibles amortization and the effects of additional depreciation and
amortization resulting from the valuation process, depreciation and
amortization would have been approximately $123.4 million or (3.23% of sales)
during the third quarter of 2002 and $367.0 million or (2.71% of sales) for the
39 weeks ended September 28, 2002.

During 2000 we closed a store previously operated by the Hannaford banner as
part of the merger related divestitures. At that time, we established the
required store closing reserves. The Company recently made the decision to
re-open the store under the Food Lion banner, and appropriately reversed these
store closing reserves. This adjustment of $6.6 million is included in selling
and administrative expenses during the 39 weeks ended September 28, 2002.

On August 19, 2002, the Company announced the reorganization of its senior
executive team in the United States. Bill McCanless, previously Chief Executive
Officer of Delhaize America, became Vice Chairman of Delhaize America and
Pierre-Olivier Beckers, Chief Executive Officer of Delhaize Group, assumed the
additional title of Chief Executive Officer of Delhaize America. During the
third quarter, the Company recorded a $9.5 million before-tax charge ($5.9
million after-tax) related to this reorganization (the related
severance agreement and release is attached as Exhibit 10). These costs are included in
selling and administrative expenses.

The change in basis of accounting related to the Delhaize Group Share Exchange
discussed above (see Financial Note 5) primarily impacted
depreciation/amortization expense and interest expense (as discussed below).
Selling and administrative expenses excluding depreciation and amortization
were not materially impacted and are therefore comparable year over year.

13



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##### 



Interest expense during the third quarter of 2002 was $83.6 million or 2.19% of
sales compared to $87.9 million or 2.30% of sales for the third quarter of the
prior year. For the 39 weeks ended September 28, 2002, interest expense was
$254.2 million or 2.25% of sales compared to $259.9 million or 2.33% of sales
for the corresponding period in the prior year. Interest expense was lower this
year primarily due to lower short-term borrowings and the interest reduction as
a result of the interest rate swap agreements (See Financial Note 6). Interest
expense was further impacted by the purchase price allocation performed in
conjunction with the Delhaize Group Share Exchange (see Financial Note 5).
Excluding the impact of the share exchange, interest expense would have been
approximately $87.5 million or (2.31% of sales) during the third quarter of
2002 and $266.0 million (or 2.38% of sales) for the 39 weeks ended September
28, 2002.

Third quarter included a net gain of $0.9 million for the early retirement of
$26.2 million in debt securities (see further discussion below in the Debt
section) recorded in net gain from extinguishment of debt. The $0.9 million
represents the difference between the reacquisition price of the debt and the
principal and remaining unamortized debt issuance costs.

Net other loss from extinguishment of debt represents the unamortized hedges
associated with debt retired. Third quarter included a $0.3 million loss for
the early retirement of the $26.2 million (see further discussion below in
Debt).

Store Closings

The following table summarizes the number of stores closed and planned to be
closed as of September 28, 2002.

|                             |  |        |     |          |  |         |    |   |  |  |     |  
|---------------------------- |  | ------ | --- | -------- |  | ------- | -- | - |  |  | --- | -
|                             |  |        |     |          |  | Planned |    |   |  | 
|                             |  | Closed |     | Closings |  | Total  
|                             |  |        |     |          |  | __     
|As of June 29, 2002          |  |        | 181 |          |  |         | 4  |   |  |  | 185 |  
|Store Closings added         |  |        |    |          |  |         | 4  |   |  |  | 4   |  
|Planned closings completed   |  |        | 2   |          |  |         | (2 | ) |  |  |    |  
|Stores sold/lease terminated |  |        | (3  | )        |  |         |   |   |  |  | (3  | )
|                             |  |        |     |          |  |         |    |   |  |  |     |  
|As of September 28, 2002     |  |        | 180 |          |  |         | 6  |   |  |  | 186 |  
|                             |  |        |     |          |  |         |    |   |  |  |     |  

The following table reflects closed store liabilities as of September 28, 2002
and activity during the quarter, including additions to closed store
liabilities charged to and adjustments to liabilities based on changes in facts
and circumstances and payments made.

|                                  |  |               |       |  
|--------------------------------- |  | ------------- | ----- | -
|                                  |  | September 28,
|(Dollars in millions)             |  | 2002         
|                                  |  |              
|Balance at beginning of quarter   |  | $             | 146.6 |  
|Additions charged to earnings:    |  |               |       |  
|Store closings lease obligation  |  |               | .9    |  
|Store closings  other exit costs |  |               | .1    |  
|Adjustment to Prior Year  lease  |  |               | .2    |  
|Adjustment to Prior Year  other  |  |               | .1    |  
|                                  |  |               |       |  
|Total charged to earnings         |  |               | 1.3   |  
|Reductions:                       |  |               |       |  
|Lease payments                    |  |               | (3.9  | )
|Payments for other exit costs     |  |               | (0.7  | )
|                                  |  |               |       |  
|Total reductions                  |  |               | (4.6  | )
|                                  |  |               |       |  
|Balance at end of quarter         |  | $             | 143.3 |  
|                                  |  |               |       |  

The September 28, 2002 balance of approximately $143.3 million consisted of
lease liabilities and other exit cost liabilities of $114.0 million and $29.3
million, respectively.

We provided for closed store liabilities in the quarter ended September 28,
2002 to reflect the estimated post-closing lease liabilities and other exit
costs associated with the related store closing commitments. These other exit
costs include estimated real estate taxes, common area maintenance fees,
insurance and utility costs to be incurred after the store closes. Store
closings are generally completed within one year after the decision to close.
The closed store liabilities are usually paid over the lease terms associated
with the closed stores having remaining terms ranging from one to 16 years.
Adjustments to closed store liabilities and other exit costs primarily relate
to changes in actual exit costs from original estimates. Adjustments are made
for changes in estimates in the period in which the change becomes known. Any
excess store closing liability remaining upon settlement of the obligation is
reversed to income in the period that such settlement is determined. We use a
discount rate based on the current treasury note rates to calculate the present
value of the remaining rent payments on closed stores.

14



---



##### 



The revenues and operating results for stores closed are not material to our
revenues and operating results for the quarter or year to date. Future cash
obligations for closed store liabilities are related principally to the
remaining non-cancelable lease payments less sublease payments to be received.

Asset Impairment Charge

We periodically evaluate the period of depreciation or amortization for
long-lived assets to determine whether current circumstances warrant revised
estimates of useful lives. We monitor the carrying value of our long-lived
assets, including amortizable intangible assets, for potential impairment based
on projected undiscounted cash flows. If impairment is identified for
long-lived assets other than real property, we compare the assets future
discounted cash flows to its current carrying value and record provisions for
impairment as appropriate. 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 our previous efforts to dispose
of similar assets and current economic conditions. Impairment of real property
is recognized for the excess of carrying value over estimated fair market
value.

Goodwill and other intangible assets are tested annually for potential
impairment by comparing the book value of these assets to their current fair
market value.

Liquidity and Capital Resources

We fund our operations and expenditures from cash generated from our operations
and borrowings.
At September 28, 2002, we had cash and cash equivalents of $249.6 million. Cash
provided by operating activities totaled $767.1 million for the 39 weeks ended
September 28, 2002, compared with $670.6 million for the corresponding period
last year. The increase was primarily due to the reinsurance recoverable. Last
year, during the third quarter, the Company transferred its year-to-date loss
reserves and premiums for workers compensation and general liability to the
Pride Reinsurance Company, fully owned by an affiliated company of Delhaize
Group. Additional increase to cash provided by operating activities was due to
increases in accrued expenses and income taxes payable and a decrease in
receivables, inventories, and income tax receivable.

Cash used in investing activities increased to $323.3 million for the 39 weeks
ended September 28, 2002, compared with $272.0 million for the corresponding
period last year primarily due to capital expenditures of $333.4 million for
the 39 weeks ended September 28, 2002, compared to $293.5 million for the
corresponding period in 2001. For the 39 weeks ended September 28, 2002, we
have opened 26 new stores and completed the renovation of 92 existing stores
compared to 40 openings and 117 renovations completed for the corresponding
period of last year.

With our 2002 growth plan, we anticipate a net increase in store square footage
of approximately 2.5%. This plan is subject to review and change as conditions
warrant. Capital expenditures currently estimated for fiscal 2002 are
approximately $500 million and will be financed through funds generated from
operations and existing bank credit facilities, if necessary.

Cash flows used in financing activities for the quarter ended September 28,
2002 were $331.5 million compared to $422.8 million for the same period last
year. The decrease in cash used in financing activities was primarily the
result of a cash settlement on April 19, 2001 for the hedge contracts related
to the $2.6 billion bond offering used as long-term financing for the Hannaford
acquisition. In addition, the Company made a dividend payment of $86.0 million
this year compared to $28.6 million last year.

Adjusted EBITDA was $882.3 million for the 39 weeks ended September 28, 2002,
compared to $909.4 million for the 39 weeks ended September 29, 2001.
Management and industry analysts generally consider adjusted EBITDA to be a
measurement of the financial performance of the Company that provides a
relevant basis for comparison among companies. Adjusted EBITDA is not a
measurement of financial performance under U.S. GAAP and should not be
considered as a substitute for net income as a measure of performance, or for
cash flow as a measure of liquidity. Investors should note that our calculation
of adjusted EBITDA might differ from similarly titled measures for other
companies. The following table sets forth, for the periods indicated, a
calculation of our adjusted EBITDA:

|                                                             |                                                     |                |                |                |   |   |       |       | 
|------------------------------------------------------------ | --------------------------------------------------- | -------------- | -------------- | -------------- | - | - | ----- | ----- | 
|                                                             |                                                     |                | 39 Weeks Ended
|(Dollars in millions)                                        |                                                     | Sept. 28, 2002 |                | Sept. 29, 2001
|                                                             |                                                     | (unaudited)    |                | (unaudited)   
|                                                             |                                                     |                |                |                |  
|Net (loss)/income                                            |                                                     | $              | (112.0         | )              |   | $ | 109.5 |      
|                                                             | Add                                                 |                |                |                |   |   |       |       | 
|                                                             | Cumulative effect of change in
accounting principle |                |                | 284.1          |   |   |       |      | 
|                                                             | LIFO provision                                      |                |                | 2.6            |   |   |       | 1.8   | 
|                                                             | Depreciation                                        |                |                | 316.6          |   |   |       | 299.3 | 
|                                                             | Amortization of intangible assets                   |                |                | 28.4           |   |   |       | 91.7  | 
|                                                             | Store closing provision/(recoveries)                |                |                | (3.3           | ) |   |       | 5.2   | 
|                                                             | Merger expense                                      |                |                |               |   |   |       | 39.7  | 
|                                                             | Net gain from extinguishment of debt                |                |                | (0.9           | ) |   |       |      | 
|                                                             | Net other loss from extinguishment of debt          |                |                | 0.3            |   |   |       |      | 
|                                                             | Interest expense, net                               |                |                | 254.2          |   |   |       | 259.9 | 
|                                                             | Income taxes                                        |                |                | 112.3          |   |   |       | 102.3 | 
|                                                             |                                                     |                |                |                |   |   |       |      
|Adjusted EBITDA                                              |                                                     | $              | 882.3          |                |   | $ | 909.4 |      
|                                                             |                                                     |                |                |                |   |   |       |      
|Adjusted EBITDA as a percent of
net sales and other revenues |                                                     |                | 7.8            | %              |   |   | 8.2   | %    

15



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##### 



Debt

We maintain a revolving credit facility with a syndicate of commercial banks
providing $500.0 million in committed lines of credit, which expires in July
2005. During the quarter ended September 28, 2002, there were no outstanding
borrowings under this arrangement. The credit facility contains affirmative and
negative covenants. The Company must be in compliance with these covenants in
order to have access to the credit facility. A deteriorating economic
or operating environment can subject the Company to a risk of
continuing compliance with the covenants. As of September 28, 2002, the
Company was in compliance with all covenants contained in the credit facility.
There were borrowings of $55.0 million outstanding at September 29, 2001. This
facility is utilized to provide short-term capital to meet liquidity needs of
the Company as necessary.

At March 31, 2001 we had $2.4 billion in outstanding borrowings at 8.19% under
a $2.5 billion 364-day term loan facility that expired in July 2001. The
borrowings under this facility were used to initially fund the cash portion of
the purchase price of the Hannaford acquisition in fiscal 2000. On April 19,
2001, we completed a private offering of $600 million of 7.375% notes due 2006,
$1.1 billion of 8.125% notes due 2011 and $900 million in 9.000% debentures due
2031, all fixed rate borrowings which we refer to in this report as the
original debt securities. The Company used the proceeds of this offering to
repay in full the $2.4 billion outstanding under the term loan facility. On
November 16, 2001, we offered to exchange the original debt securities for
exchange securities that were identical in all material respects to the
original debt securities except that such debt securities are registered under
the Securities Act, are not subject to the transfer restrictions applicable to
the original debt securities and are not subject to any covenants regarding
exchange or registration rights. The exchange offer expired on December 17,
2001. $2,542,142,000 of original debt securities were tendered for exchange
securities and $57,858,000 in original debt securities were not exchanged.

At September 28, 2002, we had outstanding medium-term notes of $15.9 million
due from 2003 to 2006 at interest rates of 8.53% to 8.73% and outstanding other
notes of $85.1 million due from 2003 to 2016 at interest rates of 6.16% to
14.15%. The Company had mortgage notes payable of $37.6 million due from 2003
to 2016 at interest rates of 7.5% to 10.2% at September 28, 2002. We also had
long-term debt securities outstanding of $278.3 million, of which $149.5
million matures in 2007 at an interest rate of 7.55%, and $128.7 million
matures in 2027 at an interest rate of 8.05%.

During the third quarter of 2002, the Company repurchased $10 million of its
$900 million in 9.00% debentures and $16.150 million of its 8.05% debt
securities resulting in a $1.8 million gain from the early extinguishment of
debt offset by $0.9 million in expenses for the write-off of the related
unamortized debt issuance costs and discount. Other income/loss from
extinguishment of debt included a net loss of $0.3 million for the write-off of
its related hedge.

On December 12, 2001, the Company was granted a term loan facility by Delhaize
The Lion Coordination Center S.A., a Belgian company wholly-owned by Delhaize
Group, in the amount of $38 million intended for general corporate and working
capital requirements. On September 19, 2002, the Company repaid the $38 million
loan plus accrued interest totaling $1.1 million.

As mentioned above, the Company entered into interest rate swap agreements,
during the fourth quarter of 2001 and the third quarter of 2002, to manage its
exposure to interest rate movements by effectively converting a portion of its
debt from fixed to variable rates. Maturity dates of the Companys interest
rate swap arrangements match those of the underlying debt. These agreements
involve the exchange of fixed rate payments for variable rate payments without
the exchange of the underlying principal amounts. Variable rates for our
agreements are based on six-month or three-month U.S. dollar LIBOR and are
reset on a semiannual basis or quarterly basis. The differential between fixed
and variable rates to be paid or received is accrued as interest rates change
in accordance with the agreements and recognized over the life of the
agreements as an adjustment to interest expense. The notional amounts of
interest rate swap arrangements at September 28, 2002 were approximately $300
million maturing in 2006 and $200 million maturing in 2011. These agreements
are accounted for as fair value hedges. For the 13 weeks and the 39 weeks ended
September 28, 2002, interest expense decreased by $3.2 million and $7.8
million, respectively, in connection with these agreements. These agreements
met the criteria for using the short-cut method, which assumes 100% hedge
effectiveness, as prescribed by SFAS No. 133. The fair value of the Companys
debt has been increased by $19.9 million at September 28, 2002 in connection
with these agreements. The Company has also recorded a derivative asset in
connection with these agreements in the amount of $24.7 million recorded in
other assets.

We enter into significant leasing obligations related to our store properties.
Capital lease obligations outstanding at September 28, 2002 were $731.5 million
compared with $641.4 million at September 29, 2001. These leases generally have
original terms of up to 20 years.

As set forth in the tables below, we also have periodic short-term borrowings
under informal credit arrangements that are available to us at our lenders
discretion.

Informal Credit Arrangements

|                                                       |  |          |      |          |  |   |      |  
|------------------------------------------------------ |  | -------- | ---- | -------- |  | - | ---- | -
|(Dollars in millions)                                  |  | Sept 28, |      | Sept 29,
|                                                       |  | 2002     |      | 2001    
|                                                       |  |          |      |         
|Outstanding borrowings
at the end of the third quarter |  | $        |     |          |  | $ | 85.0 |  
|Average borrowings                                     |  | $        | 2.4  |          |  | $ | 33.4 |  
|Maximum amount outstanding                             |  | $        | 80.0 |          |  | $ | 95.0 |  
|Daily weighted average interest rate                   |  |          | 2.84 | %        |  |   | 5.65 | %

Market Risk

We are exposed to changes in interest rates primarily as a result of our
long-term debt requirements. Our interest rate risk management objectives are
to limit the effect of interest rate changes on earnings and cash flows and to
lower overall borrowing costs. We maintain certain variable-rate debt to

16



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##### 



take advantage of lower relative interest rates currently available. We have
not entered into any of our financial instruments for trading purposes.

As mentioned above, the Company entered into interest rate swap agreements,
during the fourth quarter of 2001 and the third quarter of 2002, to manage its
exposure to interest rate movements by effectively converting a portion of its
debt from fixed to variable rates. Maturity dates of the Companys interest
rate swap arrangements match those of the underlying debt. These agreements
involve the exchange of fixed rate payments for variable rate payments without
the exchange of the underlying principal amounts. Variable rates for our
agreements are based on six-month or three-month U.S. dollar LIBOR and are
reset on a semiannual basis or quarterly basis. The differential between fixed
and variable rates to be paid or received is accrued as interest rates change
in accordance with the agreements and recognized over the life of the
agreements as an adjustment to interest expense. The notional amounts of
interest rate swap arrangements were approximately $300 million to mature in
2006 and $200 million to mature in 2011 at September 28, 2002. These agreements
are accounted for as fair value hedges. For the 13 weeks and the 39 weeks ended
September 28, 2002, interest expense decreased by $3.2 million and $7.8
million, respectively, in connection with these agreements. These agreements
met the criteria for using the short-cut method, which assumes 100% hedge
effectiveness, as prescribed by SFAS No. 133. The fair value of the Companys
debt has been increased by $19.9 million at September 28, 2002 in connection
with these agreements. The Company has also recorded a derivative asset in
connection with these agreements in the amount of $24.7 million recorded in
other assets.

Prior to the offering of the original debt securities discussed under the
heading Debt above, we entered into interest rate hedge agreements to hedge
against potential increases in interest rates. The notional amount of these
hedge agreements was $1.75 billion. These hedge agreements were structured to
hedge against the risk of increasing market interest rates based on U.S.
treasury rates, with the specified rates based on the expected maturities of
the related securities. These hedge agreements were settled in connection with
the completion of the offering of the original debt securities, resulting in a
payment in the amount of an unrealized loss of approximately $214 million. As a
result of the adoption of SFAS No. 133 at the beginning of fiscal 2001, the
unrealized loss was recorded in Other Comprehensive Loss, net of taxes and is
being amortized to interest expense over the term of the associated debt
securities. The unrealized loss was reduced as of the date of the Delhaize
Group Share Exchange as a result of the application of purchase accounting. The
remaining unrealized loss at the end of third quarter 2002 was approximately
$51.7 million, net of deferred taxes. In conjunction with debt
retirement, the associated unrealized loss is recorded in net
other loss from extinguishment of debt in the Company's
consolidated statement of income during the period of extinguishment.

The table set forth below provides the expected principal payments (net of
related discounts or premiums) and related interest rates of our long-term debt
by fiscal year of maturity as of December 29, 2001.

|                           |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  |   |       |   |  |   |         |   |  |      |         |    
|-------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ---- | ---------- |  | ----- | ---- | - |  | - | ----- | - |  | - | ------- | - |  | ---- | ------- | ---
|                           |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  |   |       |   |  |   |         |   |  | Fair
|(Dollars in millions)      |  | 2002 |       | 2003 |  | 2004 |       | 2005 |  | 2006 |      | Thereafter |  | Value
|                           |  |      |       |      |  |      |       |      |  |      |      |            |  |      
|Notes, due 2006            |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  | $ | 600.0 |   |  |   |         |   |  | $    | 635.3   |    
|Average interest rate      |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  |   | 7.38  | % |  |   |         |   |  |      |         |    
|Notes, due 2011            |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  |   |       |   |  | $ | 1,100.0 |   |  | $    | 1,201.3 |    
|Average interest rate      |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  |   |       |   |  |   | 8.13    | % |  |      |         |    
|Debentures, due 2031       |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  |   |       |   |  | $ | 900.0   |   |  | $    | 1,059.5 | (1)
|Average interest rate      |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  |   |       |   |  |   | 9.00    | % |  |      |         |    
|Medium term notes          |  | $    | 1.1   |      |  | $    | 10.7  |      |  |      |      |            |  |       |      |   |  | $ | 5.2   |   |  |   |         |   |  | $    | 17.8    |    
|Average interest rate      |  |      | 8.58  | %    |  |      | 8.63  | %    |  |      |      |            |  |       |      |   |  |   | 8.71  | % |  |   |         |   |  |      |         |    
|Debt securities (discount) |  | $    | (0.3  | )    |  | $    | (0.3  | )    |  | $    | (0.3 | )          |  | $     | (0.3 | ) |  | $ | (0.3  | ) |  | $ | 295.0   |   |  | $    | 316.1   | (2)
|Average interest rate      |  |      | 7.89  | %    |  |      | 7.89  | %    |  |      | 7.89 | %          |  |       | 7.89 | % |  |   | 7.89  | % |  |   | 7.80    | % |  |      |         |    
|Note to Parent Co.         |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  | $ | 38.0  |   |  |   |         |   |  | $    | 38.0    | (3)
|Average interest rate      |  |      |       |      |  |      |       |      |  |      |      |            |  |       |      |   |  |   | 3.69  | % |  |   |         |   |  |      |         |    
|Mortgage payables          |  | $    | 6.0   |      |  | $    | 6.2   |      |  | $    | 5.4  |            |  | $     | 3.0  |   |  | $ | 3.2   |   |  | $ | 16.0    |   |  | $    | 42.5    |    
|Average interest rate      |  |      | 9.60  | %    |  |      | 9.65  | %    |  |      | 9.64 | %          |  |       | 9.10 | % |  |   | 9.09  | % |  |   | 8.80    | % |  |      |         |    
|Other notes                |  | $    | 9.5   |      |  | $    | 10.0  |      |  | $    | 7.9  |            |  | $     | 11.3 |   |  | $ | 11.4  |   |  | $ | 41.4    |   |  | $    | 97.8    |    
|Average interest rate      |  |      | 6.88  | %    |  |      | 6.85  | %    |  |      | 6.91 | %          |  |       | 6.59 | % |  |   | 7.00  | % |  |   | 7.16    | % |  |      |         |    
|Other note Payable         |  | $    | 1.6   |      |  | $    | 1.9   |      |  |      |      |            |  |       |      |   |  |   |       |   |  |   |         |   |  | $    | 3.5     |    
|Average interest rate      |  |      | 11.25 | %    |  |      | 11.25 | %    |  |      |      |            |  |       |      |   |  |   |       |   |  |   |         |   |  |      |         |    

Note 1  During third quarter of 2002, the Company repurchased $10 million of
its $900 million in 9.000% debentures. (See further discussion under Debt)

Note 2  During the third quarter of 2002, the Company paid $16.150 million of
its then outstanding $150.0 million in 8.05% debt securities. (See further
discussion under Debt)

Note 3  On September 19, 2002, the Company repaid the $38 million loan. (See
further discussion under Debt)

We do not trade in foreign markets or in commodities, nor do we have
significant concentrations of credit risk. Accordingly, we do not believe that
foreign exchange risk, commodity risk or credit risk pose a significant threat
to our Company.

We are exposed to market risk associated with the
defined benefit plan at the Hannaford banner (the Hannaford
Plan). Due to the recent declines in the U.S. equity markets and interest rates, we anticipate recording an additional minimum pension
liability adjustment related to the Hannaford Plan in the fourth
quarter of 2002 through a charge to Other Comprehensive Income. Our other banners, Food Lion and Kash n'
Karry, who employ the majority of our associates, maintain defined
contribution plans. Hannaford, in addition to the Hannaford Plan,
also maintains a defined contribution plan. We do not bear any market
risk associated with the defined contribution plans.

Contractual Obligations and Commitments

The following table summarizes our contractual obligations and commitments as
of December 29, 2001. Note that the $140 million in Lines of Credit was paid
down subsequent to December 29, 2001:

|                                      |  |       |         |      |  |      |       |      |  |      |       |      |  |            |       |  |  |  |       |  |  |  |       |  |  |  |         | 
|------------------------------------- |  | ----- | ------- | ---- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---------- | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ------- | 
|                                      |  | Total |         | 2002 |  | 2003 |       | 2004 |  | 2005 |       | 2006 |  | Thereafter
|                                      |  |       |         |      |  |      |       |      |  |      |       |      |  |           
|(Dollars in millions)
Lines of credit |  | $     | 140.0   |      |  |      |       |      |  |      |       |      |  |            |       |  |  |  | 140.0 |  |  |  |       |  |  |  |         | 
|Long-term debt                        |  |       | 3,083.3 |      |  |      | 17.9  |      |  |      | 28.5  |      |  |            | 13.0  |  |  |  | 14.0  |  |  |  | 657.5 |  |  |  | 2,352.4 | 
|Capital lease payments                |  |       | 1,500.2 |      |  |      | 111.8 |      |  |      | 111.6 |      |  |            | 110.8 |  |  |  | 109.9 |  |  |  | 109.3 |  |  |  | 946.8   | 
|Operating lease payments              |  |       | 2,881.8 |      |  |      | 234.6 |      |  |      | 230.9 |      |  |            | 225.7 |  |  |  | 220.5 |  |  |  | 213.2 |  |  |  | 1,756.9 | 

17



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Recently Adopted Accounting Standards

In June 2001, the Financial Accounting Standards Board, or FASB, issued SFAS,
No. 141, Business Combinations. SFAS No. 141 addresses financial accounting
and reporting for business combinations and supersedes Accounting Principles
Board, or APB, Opinion No. 16, Business Combinations, and SFAS No. 38,
Accounting for Pre-acquisition Contingencies of Purchased Enterprises. All
business combinations that come within the scope of SFAS No. 141 are to be
accounted for using the purchase method of accounting. The provisions of SFAS
No. 141 apply to all business combinations initiated after June 30, 2001 and
all business combinations accounted for using the purchase method of accounting
for which the date of acquisition is July 1, 2001 or later. SFAS No. 141 also
sets forth new criteria for separability and in-separability of intangible
assets. The application of SFAS No. 141 resulted in the Companys
identification of certain intangible assets such as assembled work force and
distribution network that did not meet the separability criteria of SFAS No.
141, which were re-classified into goodwill.

On December 30, 2001, the Company adopted SFAS No. 142, Goodwill and Other
Intangible Assets, which required that we cease amortizing goodwill and other
intangible assets with indefinite lives, and begin an annual assessment of
potential impairment of goodwill and other intangible assets by comparing the
book value of these assets to their current fair value.

The Company performed its assessment for potential impairment at each of our
three operating banners, since each chain represents a separate operating
segment as defined by SFAS No. 131 and a separate reporting unit as defined by
SFAS No. 142. In performing its assessment, the carrying value of assets and
liabilities was determined for each reporting unit and compared to the fair
value of each reporting unit, which was obtained from independent appraisals.
If the carrying value of the reporting unit exceeded its fair value, an
assessment of impairment was then necessary.

The Companys impairment assessment at its individual operating banners, upon
adoption of SFAS 142, resulted in a non-cash impairment charge totaling
approximately $288 million before taxes ($284 million net of taxes), which was
recorded as a cumulative effect of change in accounting principle in the first
quarter 2002 condensed consolidated statements of income/(loss). This
impairment charge relates primarily to goodwill associated with the Delhaize
Group Share Exchange and with the Companys acquisitions of Kash n Karry and
Hannaford. Impairment at the Kash n Karry banner is due to a combination of
factors including post-acquisition capital expenditures and operating
performance. The Company has seen a heightened level of competition in the
Florida area, where Kash n Karry is concentrated. The Hannaford banner carries
a significant goodwill balance due to the initial acquisition in 2000 and the
allocation of goodwill to this banner related to the share exchange. The
Company has experienced changes in economic conditions subsequent to these
events. The Company plans to test goodwill for impairment again in
the fourth quarter of 2002.

As a result of the adoption of SFAS No. 142, amortization expense of
approximately $22 million and $66 million for goodwill and other indefinite
life assets was appropriately not reflected in the current quarter and for the
39 weeks ended September 28, 2002, respectively.

The following schedule reconciles the Income before cumulative effect of change
in accounting principle adjusted to exclude after-tax amortization expense in
the three months and nine months ended September 29, 2001 prior to the adoption
of SFAS No. 142:

|                                                                           |  |                |    |                |  |                |     |                |  |   |    |  |  |   |     | 
|-------------------------------------------------------------------------- |  | -------------- | -- | -------------- |  | -------------- | --- | -------------- |  | - | -- |  |  | - | --- | 
|(Dollars in millions)                                                      |  | 13 Weeks       |    | 39 Weeks       |  | 13 Weeks       |     | 39 Weeks      
|                                                                           |  | Ended          |    | Ended          |  | Ended          |     | Ended         
|                                                                           |  | Sept. 28, 2002 |    | Sept. 28, 2002 |  | Sept. 29, 2001 |     | Sept. 29, 2001
|                                                                           |  |                |    |                |  |                |     |               
|Income Before Cumulative                                                   |  |                |    |                |  |                |     |                |  |   |    |  |  |   |     | 
|Effect of Change in
Accounting Principle                                   |  | $              | 52 |                |  | $              | 172 |                |  | $ | 46 |  |  | $ | 109 | 
|Add: Goodwill Amortization
[Net of Tax]                                    |  |                |   |                |  |                |    |                |  | $ | 14 |  |  | $ | 41  | 
|                                                                           |  |                |    |                |  |                |     |                |  |   |    |  |  |   |     | 
|Adjusted Income Before
Cumulative Effect of
Change in Accounting
Principle |  | $              | 52 |                |  | $              | 172 |                |  | $ | 60 |  |  | $ | 150 | 
|                                                                           |  |                |    |                |  |                |     |                |  |   |    |  |  |   |     | 

The carrying amount of goodwill and trademarks at each of the Companys reporting units follows:

|                      |  |                |       |            |  |   |     | 
|--------------------- |  | -------------- | ----- | ---------- |  | - | --- | 
|                      |  | Sept. 28, 2002
|(Dollars in millions) |  | Goodwill       |       | Trademarks
|                      |  |                |       |           
|Food Lion             |  | $              | 1,142 |            |  | $ | 249 | 
|Hannaford             |  |                | 1,765 |            |  |   | 223 | 
|Kash n Karry         |  |                |      |            |  |   | 27  | 
|                      |  |                |       |            |  |   |     | 
|Total                 |  | $              | 2,907 |            |  | $ | 499 | 
|                      |  |                |       |            |  |   |     | 

As of September 28, 2002 and September 29, 2001, the Companys amortized
intangible assets with definite lives consist of favorable leasehold
improvements, liquor licenses, pharmacy files, and developed software. The
components of its definite lived intangible assets are as follows:

|                      |          |       |                    |              |                    |     |     |       |   |              |          |     |             |   |     |     |  |   |     |     |   |   |     |     | 
|--------------------- | -------- | ----- | ------------------ | ------------ | ------------------ | --- | --- | ----- | - | ------------ | -------- | --- | ----------- | - | --- | --- |  | - | --- | --- | - | - | --- | --- | 
|                      |          |       | September 28, 2002 |              | September 29, 2001
|                      |          |       | Gross              |              |                    |     |     |       |   |              |          |     | Gross       |   |     |     |  |   |     |     |  
|                      |          |       | Carrying           |              | Accumulated        |     |     |       |   |              | Carrying |     | Accumulated |   |     |     | 
|(Dollars in millions) |          | Value |                    | Amortization |                    | Net |     | Value |   | Amortization |          | Net
|                      |          |       |                    |              |                    |     |     |       |   |              |          |    
|Favorable Leasehold   |          |       |                    |              |                    |     |     |       |   |              |          |     |             |   |     |     |  |   |     |     |   |   |     |    
|                      | Interest |       | $                  | 360          |                    |     | $   | (54   | ) |              | $        | 306 |             |   | $   | 437 |  |   | $   | (28 | ) |   | $   | 409 | 
|Other                 |          |       | 30                 |              |                    |     | (6  | )     |   |              | 24       |     |             |   | 37  |     |  |   | (3  | )   |   |   | 34  |    
|                      |          |       |                    |              |                    |     |     |       |   |              |          |     |             |   |     |     |  |   |     |     |   |   |     |    
|Total                 |          | $     | 390                |              |                    | $   | (60 | )     |   | $            | 330      |     |             | $ | 474 |     |  | $ | (31 | )   |   | $ | 443 |    
|                      |          |       |                    |              |                    |     |     |       |   |              |          |     |             |   |     |     |  |   |     |     |   |   |     |    

18



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##### 



Estimated amortization expense (for amortized intangibles) for the remainder of
2002 and the five succeeding fiscal years follows:

|                      |  |   |      | 
|--------------------- |  | - | ---- | 
|(Dollars in millions) |  |   |      | 
|2002 (remainder)      |  | $ | 9.5  | 
|2003                  |  |   | 37.8 | 
|2004                  |  |   | 36.9 | 
|2005                  |  |   | 34.5 | 
|2006                  |  |   | 32.2 | 
|2007                  |  |   | 28.0 | 

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which is effective for financial statements
issued for years beginning after December 15, 2001. The objectives of SFAS No.
144 are to address significant issues relating to the implementation of SFAS
No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of, and to develop a single accounting model, based on
the framework established in SFAS No. 121 for long-lived assets to be disposed
of by sale, whether previously held and used or newly acquired. SFAS No. 144
was effective as of the beginning of the current fiscal year. The effect of
adopting this standard did not have a significant effect on the Companys
financial statements. Management has selected the fourth quarter as the period
to conduct its annual impairment review under SFAS No. 144.

In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
This statement modifies the treatment of sale-leaseback transactions and
extinguishment of debt allowing gains and losses to be treated as income in
most circumstances. While SFAS No. 145 is effective for the Company for the
fiscal year 2003, early application is encouraged.

The Company has applied the provisions of SFAS No. 145 to its early
extinguishment of debt activity during the 13 weeks ended September 28, 2002
and has classified the gain related to early extinguishment in its income
statement below interest expense. See the Condensed Consolidated Statements of
Income/(Loss) for the 39 weeks ended September 28, 2002 (successor), 22 weeks
from April 29, 2001 to September 29, 2001 (successor) and 17 weeks from
December 30, 2000 to April 28, 2001 (predecessor). See further discussion in
Managements Discussion and Analysis  Debt.

Recently Issued Accounting Standards

In June 2001, the FASB also issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs, and applies to the legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development and/or normal operation of a
long- lived asset, except for certain obligations of lessees. SFAS No. 143 is
effective for financial statements issued for fiscal years beginning after June
15, 2002. The Company is currently assessing the potential effect of SFAS No.
143 on its financial statements.

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal
Activities, was issued by the FASB in June of 2002. SFAS No. 146 addresses
significant issues relating to the recognition, measurement and reporting of
costs associated with exit and disposal activities. SFAS No. 146 is
effective for exit or disposal activities initiated after December
31, 2002. The Company is currently
assessing the potential effect this standard will have on its financial
statements.

Other

All statements in this report, other than statements of historical facts, which
address activities, events or developments that the Company expects or
anticipates will or may occur in the future, including such things as expansion
and growth of the Companys business, future capital expenditures and the
Companys business strategy, are forward-looking statements within the
meaning of the Securities Litigation Reform Act. In reviewing such information,
it should be kept in mind that actual results may differ materially from those
projected or suggested in such forward-looking statements. This forward-looking
information is based on various factors and was derived utilizing numerous
assumptions. Many of these factors have previously been identified in filings
or statements made by or on behalf of the Company, including filings with the
Securities and Exchange Commission of Forms 10-Q, 10-K and 8-K.

Important assumptions and other important factors that could cause actual
results to differ materially from those set forth in the forward-looking
statements include: changes in the general economy or in the Companys primary
markets, changes in consumer spending, competitive factors, the nature and
extent of continued consolidation in the industry, changes in the rate of
inflation and interest costs on borrowed funds, changes in state or federal
legislation or regulation, changes in the availability and cost of labor,
adverse determinations with respect to litigation or other claims, inability to
develop new stores or complete remodels as rapidly as planned, the ability to
integrate and achieve operating improvements at Hannaford as well as other
companies Delhaize America, Inc. acquires, and stability of product costs 
supply or quality control problems with the Companys vendors detailed from
time-to-time in the Companys filings with the Securities and Exchange
Commission.

The Company does not undertake to update forward-looking information contained
herein or elsewhere to reflect actual results, changes in assumptions or
changes in other factors affecting such forward-looking information.

19



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##### 



Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information set forth under the heading Market Risk under Item 2 of
this Form 10-Q is hereby incorporated herein by reference.

Item 4. Controls and Procedures

Based on their evaluation, as of a date within 90 days of the filing date of
this Form 10-Q, our Chief Executive Officer and Chief Accounting Officer have
concluded that our disclosure controls and procedures (as defined in Rule
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended)
are effective. There have been no significant changes in internal controls or
in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

|        |  |                                                                                         
|------- |  | ----------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                             
|        |  |                                                                                         
|10      |  | Severance Agreement and Release dated August 18, 2002 between Delhaize America, Inc. and
|        |  | R. William McCanless                                                                    
|99.1    |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley  
|        |  | Act of 2002                                                                             
|99.2    |  | Certification of Chief Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley 
|        |  | Act of 2002                                                                             

(b) Reports on Form 8-K

The Company filed a report on Form 8-K on August 20, 2002 to announce the
reorganization of its senior executive team at Delhaize America effective
September 1, 2002.

20



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##### 



SIGNATURE

PURSUANT TO THE REQUIREMENTS 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.

|      |                   |  |     |                                                                                                   | 
|----- | ----------------- |  | --- | ------------------------------------------------------------------------------------------------- | 
|      |                   |  |     | DELHAIZE AMERICA, INC.                                                                           
|     
|DATE: | November 12, 2002 |  | BY: | /s/ Carol M. Herndon                                                                             
|      |                   |  |     | Carol M. Herndon
Executive Vice President of
Accounting and Analysis and
Chief Accounting Officer

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Certification

I, Pierre-Olivier Beckers, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Delhaize America,
Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date: November 12, 2002



/s/   Pierre-Olivier Beckers
Pierre-Olivier Beckers
Chief Executive Officer

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Certification

I, Carol M. Herndon, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of Delhaize America,
Inc.;

2.     Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;

3.     Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.     The registrants other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrants disclosure controls and
procedures as of a date within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and

c) presented in this quarterly report our conclusions about the effectiveness
of the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of registrants board of directors (or persons performing the
equivalent function):

a) all significant deficiencies in the design or operation of internal controls
which could adversely affect the registrants ability to record, process,
summarize and report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrants internal controls;
and

6.     The registrants other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.

Date:  November 12, 2002



/s/   Carol M. Herndon
Carol M. Herndon
Chief Accounting Officer and
Executive Vice President of Accounting and Analysis

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Exhibit Index

|        |  |                                                                                         
|------- |  | ----------------------------------------------------------------------------------------
|Exhibit |  | Description                                                                             
|        |  |                                                                                         
|10      |  | Severance Agreement and Release dated August 18, 2002 between Delhaize America, Inc. and
|        |  | R. William McCanless                                                                    
|99.1    |  | Certification of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley  
|        |  | Act of 2002                                                                             
|99.2    |  | Certification of Chief Accounting Officer Pursuant to Section 906 of the Sarbanes-Oxley 
|        |  | Act of 2002                                                                             

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