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

                                    FORM 10-K

(Mark One)

 [  X  ]  Annual  Report  Pursuant  to  Section  13 or 15(d)  of the  Securities
          Exchange Act of 1934 for the fiscal year ended March 31, 2001.

 [     ]  Transition  Report  Pursuant to Section 13 or 15(d) of the  Securities
          Exchange Act of 1934

                        Commission File Number: 333-74589

                          NATIONAL WINE & SPIRITS, INC.
             (Exact name of registrant as specified in its charter)


           Indiana                                         35-2064429
-------------------------------                ---------------------------------
(State or other jurisdiction of                (IRS Employer Identification No.)
 incorporation or organization)


700 W. Morris Street, P.O. Box 1602, Indianapolis, Indiana           46206
-----------------------------------------------------------        ----------
        (Address of principal executive offices)                   (Zip Code)

                                 (317) 636-6092
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

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

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

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

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

The registrant is a privately held corporation. As such, there is no practicable
method to  determine  the  aggregate  market  value of the voting  stock held by
non-affiliates of the registrant.

The  number of shares  of Common  Stock,  $.01 par  value,  of  National  Wine &
Spirits,  Inc.  outstanding as of June 29, 2001 was 5,330,521,  of which 104,520
were voting stock.

Documents Incorporated by Reference:  None


                                     - 1 -
<PAGE>

                                TABLE OF CONTENTS
                                -----------------


                                                                            Page
                                                                            ----
PART I
Item 1.   Business                                                             3
Item 2.   Properties                                                          15
Item 3.   Legal Proceedings                                                   16
Item 4.   Submission of Matters to a Vote of Security Holders                 17

PART II
Item 5.   Market for Registrant's Common Equity and Related
          Stockholder Matters                                                 18
Item 6.   Selected Consolidated Financial Data                                18
Item 7.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations                                 20
Item 7a.  Quantitative and Qualitative Disclosures About
          Market Risk                                                         27
Item 8.   Financial Statements and Supplementary Data                         28
Item 9.   Changes in and Disagreements with Accountants
          on Accounting and Financial Disclosure                              46

PART III
Item 10.  Directors and Executive Officers of the Registrant                  47
Item 11.  Executive Compensation                                              49
Item 12.  Security Ownership of Certain Beneficial Owners
          and Management                                                      50
Item 13.  Certain Relationships and Related Transactions                      51

PART IV
Item 14.  Exhibits, Financial Statement Schedules and
          Reports on Form 8-K                                                 53


                                     - 2 -
<PAGE>


                                     PART I

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

     This Form 10-K, including,  but not limited to the "Management's Discussion
and Analysis of Financial  Condition and Results of  Operations"  and "Business"
sections,  contains  "forward-looking  statements"  within  the  meaning  of the
Private Securities Litigation Reform Act of 1995, which can be identified by the
use of forward-looking  terminology,  such as "may," "intend," "will," "expect,"
"anticipate,"  "should,"  "plans to,"  "estimate"  or "continue" or the negative
thereof or other variations  thereon or comparable  terminology.  In particular,
any statement,  express or implied,  concerning  future operating results or the
ability to generate revenues,  income or cash flow to service the Company's debt
are forward-looking  statements.  A variety of factors could cause the Company's
actual  results  to  differ  from  the  reported   results   expressed  in  such
forward-looking  statements.  These  factors  are  discussed  in the  cautionary
statements   contained  in  Exhibit  99  to  this  filing.  All  forward-looking
statements  are  expressly  qualified  by such  cautionary  statements,  and the
Company undertakes no obligation to update such forward-looking statements.

ITEM 1. BUSINESS

GENERAL

     National Wine & Spirits,  Inc. (NWS) is one of the largest  distributors of
wine and spirits in the United States. NWS is the largest distributor of spirits
in Indiana with 54% market share and Michigan with 52% market share,  and one of
the largest in Illinois with 30% market share.  NWS' markets include Chicago and
Detroit,  which are the largest and the sixth largest  metropolitan  markets for
spirits in the United States, respectively.  NWS conducts its operations through
its wholly owned  subsidiaries,  NWS Corporation in Indiana  (NWS-Indiana),  NWS
Illinois, LLC (NWS-Illinois) and NWS Michigan, Inc. (NWS-Michigan).

     NWS is the exclusive  distributor in one or more of its markets for many of
the world's  leading  suppliers of brand name  domestic  and  imported  spirits,
including  Diageo-UDV  (Diageo),  formed through the merger of United Distillers
(Guinness)  and  International  Distillers  and Vintners  (Grand  Metropolitan),
Fortune Brands, Allied Domecq, and Seagram. NWS' featured brands include:

     o   Absolut
     o   Chivas Regal
     o   Crown Royal
     o   DeKuyper
     o   Jim Beam
     o   Jose Cuervo
     o   Smirnoff
     o   Kahlua
     o   Maker's Mark
     o   Canadian Club

     NWS also is the exclusive  distributor  in Indiana and Illinois for many of
the world's leading wineries, including:



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<PAGE>

     o   Banfi Vintners, featuring Riunite and other Italian and Chilean wines
     o   Canandaigua, featuring Sebastiani, Inglenook, Paul Masson, and  Almaden
         wines
     o   Seagram, featuring premium European and California wines
     o   Kendall Jackson

     NWS operates 12 strategically  located distribution  facilities and a fleet
of  approximately  334  delivery  vehicles to provide  overnight  or  second-day
delivery to over 36,000 retail locations,  including package liquor stores, drug
and grocery stores,  mass  merchandisers,  hotels and restaurants and bars. NWS'
customers include both local and regional  businesses as well as national chains
such as American Stores (Osco),  Walgreens,  CVS, Sam's Club, Meijer,  Morton's,
Ruth's  Chris,  T.G.I.  Friday's,  and  Hyatt.  In  select  locations,  NWS also
distributes premium domestic and imported beer and other products.

     From 1997 to 2001,  NWS'  total  revenue  increased  steadily  from  $490.8
million to $660.8  million,  representing a compound annual growth rate of 7.7%,
while NWS' EBITDA increased from $14.2 million to $28.1 million,  representing a
compound  annual  growth  rate  of  18.6%.  NWS  achieved  this  performance  by
successfully integrating several strategic acquisitions, actively developing new
geographic  market  areas,   pursuing  new  supplier  and  brand  relationships,
implementing  advanced product handling  technology and proprietary  information
systems, and providing high levels of supplier and customer service.

     Under the three-tier  regulatory framework established by federal and state
law, suppliers of alcohol-based  beverages are generally prohibited from selling
their products  directly to retail outlets or consumers,  effectively  requiring
suppliers to use distributors such as NWS. This regulatory framework effectively
insulates  distributors  from  vertical  competition  from  suppliers  or retail
customers.  In some  states,  referred  to as  "control  states,"  state law has
historically  mandated the state to act as the exclusive  wholesale  distributor
and/or retailer of alcohol-based  beverages.  In 1996, Michigan became the first
control state to privatize aspects of the wholesale distribution of spirits, and
NWS has become the leading distributor of spirits in that state.

INDUSTRY OVERVIEW

     The United States  alcohol-based  beverage industry  generated total retail
sales of  approximately  $122.3  billion  in  calendar  2000.  Sales of wine and
spirits,  in which NWS primarily  competes,  accounted for approximately 15% and
31%, respectively, or $55.4 billion of total retail sales in 2000. In the United
States spirits  market,  total revenues on a per case basis have increased since
1994, more than offsetting a general decline in the volume of spirits sold. Wine
consumption has increased nationally and in Indiana, Illinois and Michigan since
1993, and management  believes the demand for high quality wine will continue to
grow. In both the wine and spirits  industries,  consumers have been  purchasing
higher quality and more expensive products.

     In June of 2000,  Seagram announced its intention to merge with Vivendi and
divest of their  wine and  spirits  business.  Subsequently,  Diageo  and Pernod
Ricard  jointly bid and agreed to  purchase  the brands  with the  intention  of
assigning them to their  respective  companies.  The most notable Seagram brands
that Diageo  purchased are Crown Royal,  Seagrams V.O., 7 Crown,  Captain Morgan
and Myers's Rum. The notable brands Pernod  purchased  include Chivas Regal, The
Glenlivet,  Martell Cognacs and Seagrams Gin. The purchase  agreement is subject
to final  regulatory  approval  which is expected in late summer  2001.  Absolut
Vodka,  which had a marketing  arrangement  with Seagram,  has assigned the U.S.
marketing  rights to Future Brands L.L.C., a joint venture with V & S (parent of
Absolut) and Jim Beam Brands.

     Since the repeal of Prohibition in 1933, the federal and state  governments
have regulated the sale of spirits,  wine, and beer. State regulatory frameworks
fall  into  three  types:  control,  open  and  open-franchise.  In  nearly  all
circumstances,  suppliers may not legally sell directly to retailers.  In the 18
control states,  the state controls either the  distribution or the retail sale,
or both. In open states,  including  Indiana and Illinois,  the distributors and
retailers are privately owned businesses.  In the open-franchise  states,  there
are  laws and  regulations  that  restrict  the  suppliers'  ability  to  change
distributors.



                                     - 4 -
<PAGE>

     Given  the  three  tier   regulatory   structure,   the  wine  and  spirits
distribution  industry varies greatly from other industries such as food, drugs,
non-alcohol-based  beverages  and  paper  products.  As  suppliers  can  compete
directly with the distributors in these other industries by shipping directly to
retailers,  distributor  margins  can be much  lower  than those in the wine and
spirits  industry.  In  addition,  the  liquor  industry  as a whole has shown a
remarkable resilience to economic downturns relative to other industries.

COMPETITIVE STRENGTHS

     Market Leadership. NWS is the largest distributor of spirits in Indiana and
Michigan and one of the largest in Illinois. NWS' market leadership reflects its
strong  relationships  with both  suppliers  and customers and provides NWS with
numerous advantages over smaller  distributors,  including significant economies
of scale and increased  purchasing power. NWS maintains and seeks to enhance its
market  leadership  by  providing  high levels of service to its  suppliers  and
customers and through its investments in technology and information systems.

     Strong  Supplier  Relationships.  NWS'  success  is  due  in  part  to  its
long-standing  relationships with its major wine and spirits suppliers,  many of
which extend back more than 25 years.  The strength of these  relationships  was
recently  demonstrated  when  each of NWS'  three  largest  suppliers,  Seagram,
Fortune  Brands and Diageo,  selected NWS over  numerous  competitors  to be its
exclusive  distributor of spirits in Michigan.  In Indiana and Michigan,  NWS is
the exclusive  distributor of eight out of the top ten brands of spirits sold in
the United States,  including  Absolut,  Jim Beam,  Jose Cuervo,  Seagram's Gin,
Seagram's  7  Crown,  Captain  Morgan  and  Smirnoff.  In  Illinois,  NWS is the
exclusive distributor of six out of the top ten U.S. brands. NWS also represents
a  significant  share  of each  of its  major  suppliers'  total  United  States
business.

     Stable  Industry  and  Diversified  Customer  Base.  Total wine and spirits
industry  revenues  have  grown  steadily  over the past 25 years,  even  during
periods of economic decline. NWS offers products to over 36,000 retail locations
and no single  customer or chain  represented  more than 6.7% of NWS' 2001 total
revenue.  Moreover,  the three-tier  regulatory framework established by federal
and  state  law  generally  prohibits  vertical  integration  by  suppliers  and
retailers   and  thereby   enhances  the  stability  of  the  wine  and  spirits
distribution  industry.  NWS  believes  that the nature of the wine and  spirits
distribution  industry and NWS' diverse  customer base provide it with increased
stability and predictability of cash flow relative to distributors in many other
industries.

     Customer  Service  Focus.  NWS'  commitment  to highly  effective  customer
service  has also been a major  factor  in its  historical  success.  Management
emphasizes  on-time  delivery,  product  availability,  the  ability  to  accept
last-minute  orders and  special  orders for low  volume or unusual  items,  and
reliability on a long-term basis. NWS provides numerous  value-added services to
its  customers,  including  category  management,   customized  advertising  and
point-of-sale  materials,  customized packaging and on-line electronic ordering.
Management believes that highly effective customer service strengthens  customer
relationships,  thereby  improving  product  positioning and sell-through to the
consumer.

     Advanced Infrastructure,  Distribution Network and Information Systems. NWS
maintains an extensive  distribution  network  consisting of master  warehouses,
hyper-terminals  and  cross-docking   facilities  strategically  located  across
Indiana,  Illinois  and  Michigan  and a fleet  of  approximately  334  delivery
vehicles.  This distribution system generates  significant operating leverage by
enabling  NWS to  deliver  hundreds  of  suppliers'  products  from each  master
warehouse and optimize  delivery  routes by  maximizing  the density of customer
locations served from each facility.  NWS is investing more than $6 million over
18 months to expand  existing  Indianapolis  facilities  as well as upgrade  and
computerize  material handling systems.  NWS also utilizes supplier and customer
ordering  via  electronic  data  interchange,  Internet  interfaces  and on-line
reporting  systems used by  suppliers  to track sales.  In addition to enhancing
supplier and customer  relationships,  the  implementation  of these systems has
improved NWS' efficiency and enabled NWS to remain a low cost provider.



                                     - 5 -
<PAGE>

     Experienced Management Team. The seven individuals who comprise NWS' senior
management  team  have  an  average  of  over  25  years  of  experience  in the
alcohol-based  beverage  industry  and 15  years  of  experience  with  NWS.  In
addition,   NWS'  senior  management  team  has  successfully  integrated  eight
acquisitions since 1992.  Management's experience and expertise have enabled NWS
to establish  and  maintain  long-term  relationships  with both  suppliers  and
customers and take advantage of consolidation and privatization opportunities.

OPERATING STRATEGY

     Continue  to  Maximize  Operating  Leverage.  As the  largest or one of the
largest wine and spirits  distributors in each of its markets,  NWS continuously
seeks to minimize its operating  costs by leveraging  its resources in the areas
of  warehousing,   transportation,  general  and  administrative  functions  and
information  systems to create  economies of scale.  The fixed nature of many of
these  costs  enables  NWS to  generate  a  higher  level  of  profitability  on
incremental  increases in volume and price.  In  addition,  NWS'  facilities  in
Illinois and Michigan  have  additional  capacity,  which  positions NWS to take
advantage of future expansion opportunities in these markets with relatively low
capital expenditures.

     Growth through Addition of New Brands. Long-term relationships are critical
to maintaining  supplier and brand continuity with distributors.  Although brand
movements  among  distributors  are  relatively  rare  as the  result  of  these
relationships,  consolidation  of  distributors or suppliers can affect existing
relationships  and present NWS with  opportunities to add brands affected by the
consolidation.

     Selectively Pursue Strategic  Acquisitions and Joint Ventures. NWS plans to
continue to strengthen its competitive  position by selectively  acquiring other
distributors  and entering  into  strategic  joint  ventures both in its current
markets and in contiguous markets.  These strategic  opportunities may arise for
several reasons, including:

     (1)  Suppliers  sometimes  encourage the  consolidation  of distributors in
          order to reduce costs and improve efficiency.

     (2)  Most distributors are family businesses, and acquisition opportunities
          can  develop  as owners  approach  retirement  age  without a definite
          succession plan.

     (3)  Many  distributors lack the resources and supplier support to meet the
          demands of large suppliers, including expanding outside of their brand
          lines or geographic markets.

     Management  believes NWS' reputation with suppliers and customers,  as well
as its financial position, market share and established infrastructure, make NWS
an attractive buyer of, or strategic partner for, other distributors.

     As an example of this strategy, in December 1998, NWS formed a new Kentucky
distributorship,  Commonwealth  Wine & Spirits,  LLC,  in  partnership  with two
existing  Kentucky-based  distributors,  The Vertner  Smith Company and Kentucky
Wine & Spirits.  NWS  invested  $7.5  million  ($4.5  million in cash and a $3.0
million cash franchise fee), in exchange for 25% of the new company. Vertner and
Kentucky W&S equally own the remaining 75%.



                                     - 6 -
<PAGE>

     Continue to Invest in Logistics  Technology and  Information  Systems.  The
wine and spirits distribution industry is a relatively mature industry, which is
not extensively  automated.  Many of NWS' competitors continue to rely primarily
on manual  processes and limited  technology.  NWS plans to expand on its recent
investments   in  sales  and  logistics   technology  and  sales  and  marketing
information systems to further reduce costs and improve service to its customers
and suppliers.

     Capitalize  on Further  Privatizations.  NWS'  established  reputation  and
relationships  with  its  major  suppliers  has  made  it  the  leading  spirits
distributor  in Michigan,  the first control  state to privatize  aspects of its
wholesale spirits distribution  business. NWS believes that other control states
may choose to privatize all or part of their  wholesale  distribution  business,
which may allow  NWS to expand  its  geographic  markets  without  acquiring  or
merging with existing distributors.  Should any such privatization opportunities
arise,  particularly  in the central  United  States,  NWS plans to  selectively
pursue such  opportunities by leveraging its experience in Michigan,  its strong
relationships with suppliers and its distribution expertise.

SUPPLIERS AND PRODUCTS

<TABLE>
<CAPTION>
     NWS  represents  many of the largest  suppliers  of wine and spirits in the
United  States,  and offers  hundreds of brands and more than 12,000  individual
products.  The  breakdown  of sales  among  wine,  spirits  and  other  products
distributed by NWS in 1999, 2000 and 2001 is as follows:

                            Wine (in thousands)            Spirits (in thousands)            Other (in thousands)
                            -------------------            ----------------------            --------------------
                          1999       2000     2001         1999      2000      2001         1999     2000    2001
                          ----       ----     ----         ----      ----      ----         ----     ----    ----

<S>                     <C>       <C>       <C>          <C>       <C>       <C>          <C>      <C>      <C>
Product sales...........$143,339  $149,160  $160,840     $355,807  $377,437  $397,754     $36,375  $78,390  $80,646
Distribution fees.......     ---       ---       ---     $ 17,832    20,770    21,573         ---      ---      ---

Percentage of total
  Company revenue.......   25.9%     23.8%     24.3%        67.5%     63.6%     63.5%        6.6%    12.6%    12.2%
</TABLE>

     In  Michigan,   spirits  distributors  have  exclusive  relationships  with
suppliers by law,  and receive  distribution  fees from  suppliers as set by the
state,  rather than purchasing from the suppliers for resale to customers.  This
arrangement  has the effect of  understating  the  importance of spirits in NWS'
overall product mix. For purposes of  illustrating  the scale of NWS' operations
in  Michigan,  the total  wholesale  prices  of  products  delivered  by NWS for
Michigan in 1999,  2000 and 2001 was $305.2  million,  $365.1 million and $355.0
million,  respectively,  based on the  fixed  wholesale  prices  of the  spirits
delivered by NWS.

     NWS' products include the following brands, among many others:

PRODUCT TYPE                                     BRAND NAMES
Vodka:                               Absolut                  Popov
                                     VOX                      Smirnoff
                                     Grey Goose               Stolichnaya
                                     Gordons                  Belvedere

Bourbon and Blended Whiskey:         Crown Royal              Seven Crown
                                     Jim Beam                 Wild Turkey
                                     Seagram's V.O.           Windsor Canadian
                                     Old Grand Dad            Knob Creek

Scotch and Single Malt Whiskey:      Chivas Regal             Glenlivet
                                     Grant's                  Isle of Jura
                                     Balvenie                 J&B Rare
                                     Bowmore                  Dalmore
                                     Glenfiddich              Macallan


                                     - 7 -
<PAGE>

Gin:                                 Boodles                  Gilbey's
                                     Seagram's                Gordons

Rum:                                 Captain Morgan           Myers
                                     Malibu                   Ronrico

Tequila:                             Herradura                Patron
                                     Jose Cuervo              Margaritaville

Cognacs/Brandy:                      Hine                     Martell
                                     Remy Martin              Paul Masson

Specialty Spirits:                   Chambord                 DeKuyper Cordials
                                     Bailey's Irish Cream     Jagermeister
                                     Campari                  TGI Friday's
                                     Hiram Walker Cordials    Kahlua

Wine:                                Almaden                  Inglenook
                                     Banfi                    Perrier Jouet
                                     Beringer                 Sebastiani
                                     Caymus                   Stags Leap
                                     Chateau Lafite           Sterling
                                     Rothschild               Veuve Clicquot
                                     Gundlach Bundschu        Kendall Jackson

Specialty Beer:                      Goose Island             Rogue Ales
                                     Grolsch                  Sierra Nevada
                                     K Cider                  Hooper's Hooch

Non-Alcohol:                         Evian                    Stewart's
                                     Perrier                  Nantucket Nectars

     NWS has entered into written  distribution  agreements  with several of its
principal  suppliers  that  generally may be extended on an annual basis but are
terminable  upon 30 days or 60 days written notice to NWS. In addition,  NWS has
informal  arrangements  with many of its suppliers  whereby NWS  distributes the
suppliers'  products  pursuant to purchase orders without  written  distribution
agreements.  Although the written  agreements provide NWS with the non-exclusive
right to distribute the suppliers'  products in a particular  state, in practice
the  suppliers  have  generally  selected  a  distributor  to be  the  exclusive
distributor of specified  products in each state.  In each of Indiana,  Illinois
and Michigan,  NWS is presently acting as the exclusive distributor with respect
to virtually all of the products it distributes in that state.

     The  following  chart  summarizes  information  about the  leading  spirits
suppliers in the United  States,  their rank in Indiana,  Illinois and Michigan,
the length of NWS'  relationship  with those  suppliers and their impact on 2001
case sales.



                                     - 8 -
<PAGE>
<TABLE>
<CAPTION>
                                                      Length of
                   U.S.                                Company
                   Rank     State Representation     Relationship         Representative
Supplier           (1)      IN       IL       MI     (in years)(2)             Brands
--------           ---      --       --       --     -------------        --------------

<S>                 <C>     <C>      <C>      <C>         <C>          <C>
Diageo (3)........  1       X                 X           27           Smirnoff, Jose Cuervo
Seagram...........  2       X        X        X           27           Absolut, Crown Royal
Fortune Brands....  6       X        X        X           25           Jim Beam, DeKuyper's

<FN>
(1)  Source: 2001 Adams Handbook Advance.

(2)  All of the  relationships  expressed  in this  column  represent  the  duration  of NWS'
     relationship with the suppliers or their predecessors in the Indiana market.

(3)  Diageo  represents that portion of Diageo PLC formed by merger between United Distillers
     and International Distillers & Vintners. NWS does not represent Diageo's interest in the
     Schieffelin & Somerset joint venture that remains a separate organization.
</FN>
</TABLE>

<TABLE>
<CAPTION>
     Top United  States  wine  brands and  wineries  represented  by NWS include
Beringer, Canandaigua, Inglenook, Sebastiani, and Kendall Jackson. NWS currently
does not  distribute  wine in Michigan.  Major wine  producers  served by NWS in
Indiana and Illinois include:

                                                        Length of
                           U.S.         State            Company
                           Rank     Representation     Relationship             Representative
Supplier                   (1)      IN          IL     (in years)(2)                Brands
--------                   ---      --          --     -------------            --------------

<S>                        <C>     <C>          <C>         <C>         <C>
Constellation Brands.....    2      X           X           27          Inglenook, Paul Masson, Sebastiani
Beringer Wine Estates....    6      X                       26          Beringer, Meridian
Banfi Vintners...........    7      X           X           27          Riunite, Concha y Toro
Seagram..................    9      X           X           27          Sterling, Mumm
Southcorp Wines (3)......   10      X           X           10          Lindeman's, Rosemount Estate
Kendall Jackson..........   11      X           X            2          Kendall Jackson, Cambria
Stimson Lane.............   12      X                       15          Chateau St. Michelle, Columbia Crest

<FN>
(1)  Source: 2001 Adams Handbook Advance.

(2)  All of the  relationships  expressed in this column represent the duration of NWS' relationship with the
     suppliers or their predecessors in the Indiana market.

(3)  NWS does not represent the entire brand portfolio in Illinois.
</FN>
</TABLE>


                                     - 9 -
<PAGE>

RELATED OPERATIONS

     In addition to its core alcohol-based beverage distribution operations, NWS
has conducted related beverage  operations  through a division,  Cameron Springs
Water Company,  and through NWS' U.S. Beverage  operations.  Cameron Springs,  a
bottled water supplier in Indiana,  was sold to Perrier Group for  approximately
$10.4  million  in cash,  which was in excess of net book value as of June 2000.
U.S. Beverage commenced  operations as a division of NWS in March 1997 to market
and sell imported,  specialty and microbrewed  beers and specialty malt products
nationally.  The  brand  distribution  contracts  related  to the U.S.  Beverage
operations are held by an entity, which is 50% owned by NWS-Illinois.  In select
markets,  NWS sells and distributes  premium cigars primarily as a complement to
NWS' distribution of fine wines and spirits.

     In 1998, U.S.  Beverage entered into a multiyear  agreement with Bass, PLC,
granting U.S. Beverage the exclusive U.S. distribution rights for Hooper's Hooch
flavored malt beverage. The Hooper's Hooch business and its growth have provided
U.S.  Beverage  with the  critical  mass to  support  its  nationwide  sales and
marketing force. In April 2000, U.S. Beverage entered into an agreement with the
Goose Island Brewing  Company by which U.S.  Beverage became the exclusive sales
and marketing firm for the Goose Island brand  throughout the United States.  In
May of  2001,  U.S.  Beverage  announced  a  long-term  agreement  with  Grolsch
International  BV to  provide  national  distribution,  marketing  and sales for
premium  Grolsch  beers.  In  calendar  2000,  Grolsch  sold 2.0  million  cases
nationwide, representing approximately $35 million in sales.

CUSTOMERS

     Most states,  including  Indiana,  Illinois and Michigan,  require wine and
spirits   retailers   to  purchase   alcohol-based   beverages   from   licensed
distributors.  Suppliers in these states may not legally sell directly to retail
customers.  NWS' customers fall into two broad categories depending on where the
alcohol-based beverage ultimately will be consumed:  on-premise and off-premise.
Off-premise customers include package liquor stores, grocery stores, drug stores
and mass  merchandisers.  On-premise  customers include hotels,  restaurants and
bars,  and similar  establishments.  NWS  currently  serves  over 36,000  retail
locations in Indiana, Illinois and Michigan. No single customer represented more
than 6.7% of NWS' 2001 total  revenue.  As is  customary in the  industry,  NWS'
products are generally  purchased  under standard  purchase orders and not under
long-term  supply  contracts.  As a result,  backlog  is not  meaningful  in the
wholesale distribution industry.

<TABLE>
<CAPTION>
     The following table summarizes NWS' customer base:

                                          Percentage of
Type of Customer                       Company 2001 Revenue                  Representative Customers
----------------                       --------------------                  ------------------------

<S>                                             <C>               <C>
Off-Premise
  Package Stores                                40.2%             Gold Standard and Cap'n Cork
  Grocery stores, drug stores
    and mass merchandisers                      24.5              Kroger, Dominicks, Marsh, American
                                                                  Stores (Osco), Walgreens, CVS, Sam's Club, Meijer
  Other                                          6.0              7-Eleven, White Hen, Village Pantry
                                                ----
       Percent of total                         70.7%
                                                ====

On-Premise
  Restaurants and Bars                          23.2%             Charlie Trotter's, Hard RockCafe,
                                                                  House of Blues, Mortons, Lettuce Entertain U,
                                                                  Levy, Ruth's Chris
  Hotels, Entertainment                          3.1              Four Seasons, Hyatt, Hilton, the United Center
  Other                                          3.0              Crooked Stick Golf Course, American Legion
                                                ----

       Percent of total                         29.3%
                                                ====
</TABLE>



                                     - 10 -
<PAGE>

     Management believes that the number and diversity of NWS' customers and the
nature of NWS' business  strengthens NWS' liquidity.  The prompt payment of NWS'
invoices is governed by law in all states in which NWS  operates.  Indiana has a
15-day  credit law beyond  which retail  customers  are  restricted  from buying
alcohol-based  beverages  from any  distributor  in the market.  Illinois  has a
similar 30-day credit law.  Typically,  NWS' bad debt expenses are incurred less
than 30 days after shipment  since the credit laws prohibit  extension of terms.
Average  bad debt  expense  for the past five  years has been less than 0.10% of
revenue.

MARKETING AND SALES

     Brand  Management.  NWS was one of the first  distributors to recognize the
benefits of a dedicated  approach to brand  management  and  separating  it from
sales  execution.  Our  approach  has  contributed  to  our  success.  Suppliers
appreciate  and  depend  upon  the  local  expertise  and  understanding  of the
intricacies of the market.  Our brand  managers,  through  interaction  with our
sales  teams  and  analysis  of the  competitive  landscape,  adjust  suppliers'
national brand strategies to plans that work in our respective states.

     Sales Teams.  NWS sales  organizational  design is predicated upon category
knowledge  and  expertise,  trade  channel  knowledge  and  effectiveness,   and
geographic  coverage.  Through its approximately  600-person marketing and sales
force, NWS acts as the field marketing and merchandising arm of its suppliers by
maintaining regular contact with NWS' off-premise and on-premise customers.  NWS
provides  its  customers  with a wide  variety of  services in addition to order
taking,  merchandising,  and delivery. These services include item selection and
SKU  optimization   using  space  and  financial  tools,   fact-based   business
presentations  to  capitalize  on fair share,  consumer  pull-through  marketing
programs and communicating business-building solutions.

     Sales, Marketing and Information Systems. Our investment in technology,  in
the areas of and sales and  marketing  is a critical  factor in our  success and
customer satisfaction.  NWS is generally recognized as an industry innovator and
leader in MIS in the wine and spirits  distribution  tier. Our proprietary sales
system  manages  sales data to the SKU level in all retail  accounts  we service
(approximately 36,000) and is refreshed nightly based on deliveries. This system
provides  our  brand  teams  the  necessary  information  to  develop  targeted,
effective brand plans. Moreover, our sales managers depend on the information to
monitor and control retail execution within their sales teams.  Most recently we
have moved this  information  to the  Internet  to allow for  greater  speed and
accessibility  to  management,  retail,  and  supplier  partners.  We have  also
invested to significantly improving our category management expertise.  This has
improved our service and effectiveness  particularly in the off-premise national
and regional chain accounts.

WAREHOUSING AND DISTRIBUTION

     NWS utilizes a series of four master warehouses,  three hyper-terminals and
five cross-docking facilities strategically located throughout Indiana, Illinois
and Michigan to store and ship its products pending sale to customers.  NWS uses
common carriers to transport  products from suppliers to its master  warehouses.
Master  warehouses  located in Chicago,  Indianapolis  and Detroit  serve as the
primary  storage  facilities for NWS' inventory.  A smaller master  warehouse is
located in Champaign, Illinois. Upon receipt of the product at one of the master
warehouses,  the  products  are  inspected  and  stored on  pallets or in racks.
Temperature-sensitive   products,   such   as  fine   wines,   are   stored   in
temperature-controlled  areas  of the  warehouses.  Hyper-terminals  located  in
Peoria, Illinois, South Bend, Indiana and Grand Rapids, Michigan stock only high
volume products and provide an extension of the master  warehouses.  NWS strives
to  optimize  inventory  levels,   taking  into  account  minimum   out-of-stock
percentages,  projected sales,  including  seasonal  demands,  periodic supplier
shipments to meet supplier sales requirements and working capital requirements.



                                     - 11 -
<PAGE>

     NWS' customers  ordinarily receive either next day or second-day  delivery.
In  general,  orders are  collected  during the day for batch  routing and order
"picking"  at night.  The  Chicago  and Detroit  master  warehouses  each use an
automated material handling system,  including  scanners,  automated  conveyors,
dispensers  and sorters.  Products from the master  warehouses are then shuttled
nightly to either a hyper-terminal or a cross-docking  facility where the orders
are  consolidated  and loaded onto  delivery  trucks.  Cross-docking  facilities
located in Belleville, Illinois, Evansville, Indiana, and Traverse City, Saginaw
and  Escanaba,   Michigan  further  extend  the  service  areas  of  the  master
warehouses.  Orders for delivery out of the various cross-docking facilities are
picked  in the  master  warehouses,  shipped  in  during  the  night,  and  then
transferred onto local delivery trucks for final delivery.  NWS owns or leases a
total fleet of  approximately  334 delivery  trucks,  consisting of 246 delivery
trucks,  17 tractors,  25 trailers,  42 vans and 4 pick-up  trucks.  To maximize
prompt and efficient product delivery, NWS' fleet is allocated among NWS' master
warehouses,  hyper-terminals  and cross-docking  facilities  located  throughout
Indiana, Illinois and Michigan.

     As a result of a number of factors  including  state laws and  regulations,
NWS  maintains  independent  distribution  networks  in  Indiana,  Illinois  and
Michigan. The Indiana distribution network operates with the Indianapolis master
warehouse feeding the South Bend hyper-terminal and the Evansville cross-docking
facility.  The Michigan  distribution  network  operates with the Detroit master
warehouse  feeding  the  Grand  Rapids   hyper-terminal  and  the  cross-docking
facilities  located  in  Escanaba,  Saginaw  and  Traverse  City.  The  Illinois
distribution  network is separated into the  metropolitan  Chicago area, and all
other  service  areas.  The Chicago area is serviced  out of the Chicago  master
warehouse,  while the  downstate  areas are  serviced by the  smaller  Champaign
master warehouse,  the Peoria  hyper-terminal  and the Belleville  cross-docking
facility.

MANAGEMENT INFORMATION SYSTEMS

     NWS employs customized  management  information systems to more efficiently
utilize its material handling and distribution  system. NWS' information systems
help  streamline  its  distribution  network from receipt of order through final
delivery by calculating and implementing efficient product selection, optimizing
delivery routes to meet specific delivery times, and allocating the proper types
and volume of products on specific delivery trucks.  These information  systems,
when used in connection with NWS' material handling systems, have allowed NWS to
more  efficiently  manage its inventory and minimize its handling costs per case
primarily by reducing labor costs.

     NWS'  commitment  to  technology  has also advanced its sales and marketing
initiatives. NWS' sales force is equipped with laptop computers, which expedites
order entry and provides instant feedback to customers regarding order activity.
NWS provides its customers and suppliers  with the ability to directly enter and
track orders via electronic  data  interchange.  In addition,  NWS'  proprietary
information  systems  provide its sales and marketing  personnel,  customers and
suppliers  with access to a database of  information  regarding the purchase and
sale of alcohol-based  beverages in specific geographic markets.  NWS' suppliers
have immediate access to information  regarding  product and demographic  trends
within specific geographic markets and NWS' customers have access to information
regarding  popular  products or other  trends  from  similarly  situated  retail
locations.  Management believes that its management  information systems enhance
its  operating  performance  and improve its  relationships  with  customers and
suppliers.

COMPETITION

     There are significant barriers to entry into the wholesale wine and spirits
distribution business.  These barriers include established  supplier-distributor
relationships,  specialized  distribution  equipment  such as material  handling
systems and delivery vehicles,  important industry knowledge  regarding pricing,
inventory management, and distribution logistics.  Historically, it is extremely
rare for organizations  not already engaged as wine and spirits  distributors to
enter other markets.  New distributors  typically enter existing markets through
acquisition.



                                     - 12 -
<PAGE>

     The wine and spirits wholesale distribution business is highly competitive.
NWS' primary competition in Illinois includes Romano Brothers and Judge & Dolph,
and to a  lesser  degree  Pacific  Wine.  In  Indiana,  the only  competitor  of
consequence  is  Olinger  (a  partnership  of Glazer and  Romano).  The  Olinger
operation has become a more formidable  competitor in Indiana with the corporate
strength and relationships  that Glazer and Romano lend. None of the ten largest
United States distributors  competes with NWS in Michigan.  Distributors compete
for new  suppliers  or  brands  based on  reputation,  market  share,  access to
customers and ability to satisfy  supplier  demands.  This will be  particularly
relevant in the short term as the industry continues to consolidate as evidenced
by  the  pending  sale  of  the  Seagram  brands.   Given  its  size,   supplier
relationships, effective sales and marketing organization and low cost efficient
distribution  networks,  NWS is well positioned to compete in Indiana,  Illinois
and Michigan.

ENVIRONMENTAL MATTERS

     NWS currently owns and leases a number of properties,  and  historically it
has owned and/or leased others. Under applicable  environmental laws, NWS may be
responsible for remediation of environmental conditions relating to the presence
of hazardous  substances on such properties.  The liability imposed by such laws
is often joint and several  without  regard for  whether the  property  owner or
operator  knew of,  or was  responsible  for,  the  presence  of such  hazardous
substances.  In addition,  the  presence of such  hazardous  substances,  or the
failure to properly remediate such substances, may adversely affect the property
owner's  ability to borrow using the real estate as  collateral  and to transfer
its  interest in the real  estate.  Although NWS is not aware of the presence of
hazardous  substances  requiring  remediation,  there can be no  assurance  that
releases unknown to NWS have not occurred. Except for blending and bottling of a
few of its own  brands,  NWS does  not  manufacture  any of the  wine or  spirit
products it sells and believes that it has conducted its business in substantial
compliance with applicable environmental laws and regulations.

EMPLOYEES

     As of March 31, 2001, NWS had approximately 1,521 employees.  Approximately
147 employees in Michigan and 435 employees in Illinois are represented by labor
unions. In Illinois, NWS has relationships with three unions:

     (1)  Teamsters Union Local 744, expiring March 30, 2002;

     (2)  Liquor and Allied  Workers Union Local 3, annual  agreements  expiring
          September 30, 2001 and October 31, 2001; and

     (3)  Teamsters,  Chauffeurs & Helpers Union Local 50,  expiring  August 31,
          2001.

In Michigan, NWS has relationships with four unions:

     (1)  Teamsters Union Local 337, expiring March 2, 2005;

     (2)  Teamsters Union Local 406, expiring March 1, 2002

     (3)  Teamsters Union Local 299, expiring March 2, 2004; and

     (4)  Teamsters Union Local 486, expiring March 2, 2004.

Employees of NWS in Indiana are not represented by any labor unions.

     NWS has not  experienced  any  work  stoppages  in more  than 18 years as a
result of labor disputes and considers its employee relations to be good.



                                     - 13 -
<PAGE>

REGULATORY CONSIDERATIONS

     The  manufacturing,  importation,  distribution  and sale of  alcohol-based
beverages  is  subject to  regulation  by the  federal  government  through  the
Department of the Treasury,  Bureau of Alcohol,  Tobacco and Firearms (BATF), as
well as by state and local  regulatory  agencies.  Suppliers,  distributors  and
customers must be properly licensed in order to sell alcohol-based beverages.

     In most states, the alcohol-based beverage industry operates within what is
commonly referred to as a three-tier system of distribution. The three tiers are
identified as follows:

     (1)  Tier  one  is  comprised  of  suppliers  that  produce   alcohol-based
          beverages and/or importers of alcohol-based beverages.

     (2)  Tier two is comprised of distributors, such as NWS.

     (3)  Tier three is comprised of retail licensees.

Under  this  system,  suppliers  sell  to  distributors,  distributors  sell  to
retailers, and retailers sell to consumers.  Suppliers may not sell to retailers
or consumers and  distributors  may not sell directly to consumers.  Most states
prohibit  suppliers or distributors from having an interest in retail licensees.
NWS directly and through its  affiliates  holds  federal basic permits and state
permits/licenses  as  a  distributor  and  importer.  Also,  NWS-Illinois  holds
out-of-state  shipper permits that allow it to ship products from one state to a
licensed distributor in any one of the other states.

     NWS is  required  to have each of its  officers,  directors  and  principal
stockholders  who owns 5% or more of the issued and outstanding  stock qualified
by federal  and state  governmental  agencies  to have an interest in a licensed
company. NWS' officers,  directors and principal  stockholders have been, or are
in the  process  of being,  deemed  to be  qualified  parties  by BATF and state
regulatory agencies.

     Suppliers  and retail  licensees  selling  directly to  consumers  are more
heavily  regulated than distributors by governmental  authorities.  Distributors
like NWS face  scrutiny  in a  number  of  important  areas,  including  initial
licensing or permitting and sales and marketing  activities with or on behalf of
retail customers. The distributors may not give or transfer anything of value to
their customers in exchange for business or other consideration.  The definition
of  "value"  differs  from  state to  state.  NWS  participates  in  significant
promotional   activities  for  suppliers  and  customers.   Suppliers  also  are
increasingly  asking  distributors  to be responsible for activities and related
costs formerly  undertaken by suppliers as suppliers pursue ways to reduce their
operating costs.  These increased  demands will likely  challenge  distributors,
including NWS, which desire to meet the wishes of their suppliers and customers.
As a result, NWS regularly  provides training and education  programming for its
sales and marketing personnel.

     NWS believes that it is in compliance  with  applicable  regulations in all
material respects.  Consistent with industry  practice,  the sales and marketing
activities  permitted by distributors  for the benefit of tier one suppliers are
generally  regulated by state  licensing  authorities,  many of which  regularly
advise  distributor  representatives of activities that would not be the subject
of  enforcement   action  for  failure  to  comply  with  all  regulations  they
administer.  NWS relies on such enforcement guidance, which is subject to change
at the discretion of the regulatory authorities, in determining the scope of its
permitted sales and marketing activities.



                                     - 14 -
<PAGE>

     As part of its regulatory  compliance  program,  NWS is in frequent contact
with regulatory agencies so that NWS can:

     (1)  Be kept current on regulatory developments affecting NWS.

     (2)  Obtain answers from the agencies to questions  from company  personnel
          regarding compliance issues.

     (3)  Encourage   enforcement  of  applicable  laws  and  regulations  on  a
          consistent basis throughout its markets.

NWS believes that prompt and consistent  enforcement by the regulatory  agencies
is important and benefits NWS.

REORGANIZATION OF THE COMPANY

     Historically,  NWS' operations in Indiana,  Michigan and Illinois have been
conducted  through  wholly  owned  subsidiaries  for Indiana,  NWS-Indiana,  and
Michigan,  NWS-Michigan,  and through an affiliate for  Illinois,  NWS-Illinois.
Prior to the  reorganization,  James E. LaCrosse,  or a trust for the benefit of
his family,  and Norma M.  Johnston  owned  substantially  all of the voting and
non-voting  shares of common stock of NWS-Indiana  and,  together with Martin H.
Bart,  owned  substantially  all of the voting and  non-voting  shares of common
stock of NWS-Illinois.

     In December,  1998, a reorganization took place which created a new holding
company,  NWS, into which all of the shares of capital stock in NWS-Indiana  and
NWS-Illinois owned by Mr. LaCrosse, or a trust for the benefit of his family, or
Mrs.  Johnston  were  contributed  in  exchange  for shares of NWS.  NWS-Indiana
subsequently  distributed  all of its shares in  NWS-Michigan  to NWS.  Finally,
NWS-LLC  was  created  as  a  new  limited  liability   company   subsidiary  of
NWS-Illinois  into which  substantially  all of NWS'  Illinois  operations  were
transferred.  Currently,  NWS-LLC  is owned 75% by  NWS-Illinois  and 25% by Mr.
Bart.  Allocations  of  profits  and  losses are  different,  currently  96% for
NWS-Illinois  and 4% for Mr.  Bart.  The  profit and loss  allocations  would be
subject to change in the future  depending on the relative  capital  accounts of
the  members,  which in turn  would  affect the  amount of Mr.  Bart's  minority
interest reflected in NWS' financial  statements.  Mr. LaCrosse,  or a trust for
the benefit of his family, and Mrs. Johnston substantially wholly own NWS.

     The  primary  purpose  of the  reorganization  was to  establish  a holding
company  structure  for  NWS-Indiana  and  all  of  its  significant  affiliated
companies.  The  reorganization  was accounted for as a combination  of entities
under  common  control,  similar  to a  pooling-of-interest.  As  such,  the NWS
financial statements have been presented to reflect this accounting treatment.

ITEM 2. PROPERTIES

     NWS'  distribution  facilities  consist of four  master  warehouses,  three
hyper-terminals and five cross-docking  facilities.  NWS' corporate headquarters
are located in Indianapolis, Indiana.

     The  master  warehouses,  located in  Indianapolis,  Chicago,  Detroit  and
Champaign, serve as the primary storage facilities and regional offices for NWS.
The Chicago warehouse contains  approximately 650,000 square feet of warehousing
space,    including   a    designated    temperature    controlled    area   for
temperature-sensitive    products.    The   Indianapolis    warehouse   contains
approximately  351,000 square feet of warehousing space,  including a designated
temperature  controlled  area for  temperature-sensitive  products.  The Detroit
warehouse  consists of approximately  238,000 square feet of warehousing  space,
including a material  handling  system and eight shipping  docks.  The Champaign
warehouse  contains  50,000 square feet of warehousing  space and is designed to
hold more high volume products for delivery to customers in central and southern
Illinois.



                                     - 15 -
<PAGE>

<TABLE>
<CAPTION>
     The following  chart lists NWS'  warehouses  and delivery,  production  and
office facilities:

                                                             Total
                                               Owned/        Square
                           Location            Leased         Feet               Principal Function
                           --------            ------         ----               ------------------
<S>                  <C>                       <C>          <C>           <C>
Indiana                  Indianapolis          Owned        351,000          Master Warehouse/Office
                          South Bend           Owned         76,800           Hyper-Terminal/Office
                          Evansville           Owned          5,800          Cross-Docking Facility
                          Evansville           Owned          2,400                  Office
                          Ft. Wayne            Leased         5,500                  Office
                         Crown Point           Leased         7,900                  Office
                         Indianapolis          Owned          3,500          Leased Office (Perrier)
                         Indianapolis          Owned         15,000        Leased Warehouse (Perrier)
                         Indianapolis          Owned         20,000          Leased Office Property

Connecticut                Stamford            Leased         5,700                  Office

Illinois                   Chicago             Owned        650,000          Master Warehouse/Office
                           Chicago             Leased         1,840          Leased Office Property
                          Champaign            Leased        50,000          Master Warehouse/Office
                            Peoria             Leased        56,000           Hyper-Terminal/Office
                          Belleville           Leased        14,200       Cross-Docking Facility/Office
                           Rockford            Leased         5,000                  Office
                         Springfield           Leased         1,000                  Office

Michigan             Detroit (Brownstown)      Leased       238,000          Master Warehouse/Office
                         Grand Rapids          Leased       100,000           Hyper-Terminal/Office
                           Escanaba            Leased         7,500       Cross-Docking Facility/Office
                           Saginaw             Leased         1,000          Cross-Docking Facility
                        Traverse City          Leased         5,000          Cross-Docking Facility
                       Farmington Hills        Leased         7,000                  Office
</TABLE>

     NWS' lease agreements for the Detroit master warehouse and the Grand Rapids
hyper-terminal  each have a ten-year  term,  expiring April 20, 2007 and January
31, 2007, respectively, and provide NWS with an option to purchase.

ITEM 3. LEGAL PROCEEDINGS

     The Company is a party to various lawsuits and claims arising in the normal
course of business.  While the ultimate resolution of lawsuits or claims against
the  Company  cannot be  predicted  with  certainty,  management  is  vigorously
defending all claims and does not expect that these matters will have a material
adverse  effect on the  financial  position  or  results  of  operations  of the
Company.


                                     - 16 -
<PAGE>

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

          None.


                                     - 17 -
<PAGE>

                                     Part II

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

     There is no established trading market for the common stock of NWS.

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA

     You should read the following summary historical  financial  information in
conjunction with  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations" and the consolidated  financial  statements and notes
thereto included elsewhere herein.

     The Company has  restated its  Consolidated  Financial  Statements  for the
fiscal years 1998,  1999 and 2000.  This  restatement is due to material  errors
that  occurred  in these  years  primarily  from an  overstatement  of  accounts
receivable  during the periods  being  restated.  During an  internal  review of
Company  accounts  receivable  and billing  information  during fiscal 2001, the
Company  discovered that accounts  receivable had been  overstated,  records had
been altered or destroyed, and that funds had been misappropriated by two former
employees at its Indiana location.  Through the review process,  the Company was
able  to  identify  uncollectible  accounts  receivable,   missed  invoices  and
customers who had short paid.  Total charges for fiscal 2000, 1999 and 1998 were
$1.2  million,  $0.5  million and $1.0  million,  respectively.  For  additional
discussion,  see "Restatement of Consolidated Financial Statements" in Note 2 of
the Notes to Consolidated Financial Statements.

     Distribution  fees  include  our per  case  distribution  fee for  cases of
spirits  delivered  in and on behalf of the  State of  Michigan.  We do not take
title to or finance any  inventory  in  Michigan.  Please also note that we have
elected "S" corporation status under the Internal Revenue Code and consequently,
we do not incur liability for federal and state income taxes.

     The  following  will also assist in the review of the  following  financial
information:

     o    For  purposes  of  calculating  earnings  to fixed  charges,  earnings
          consist of net income plus fixed  charges.  Fixed  charges  consist of
          interest expense, amortization of debt expense and discount or premium
          relating  to  indebtedness  and  the  portion  of  rental  expense  on
          operating  leases  which  we  estimate  to be  representative  of  the
          interest factor attributable to rental expense.



                                     - 18 -
<PAGE>
<TABLE>
<CAPTION>
                                                  YEARS ENDED MARCH 31,
                                (DOLLARS AND CASES IN THOUSANDS, EXCEPT PER CASE AMOUNT)
                            -----------------------------------------------------------------
                               1997         1998(1)       1999(1)       2000(1)        2001

<S>                         <C>           <C>           <C>            <C>          <C>
STATEMENT OF INCOME DATA:
  Net product sales.....    $ 488,071     $  505,141    $  535,521     $ 604,987    $ 639,240
  Distribution fees.....        2,729         16,270        17,832        20,770       21,573
                            ---------     ----------    ----------     ---------    ---------
  Total revenue.........      490,800        521,411       553,353       625,757      660,813

  Cost of products sold.      402,072        411,734       436,734       488,444      513,928
                            ---------     ----------    ----------     ---------    ---------
  Gross profit..........       88,728        109,677       116,619       137,313      146,885
  Selling, general and
    administrative
    expenses............       80,299        100,136       105,124       120,931      127,706
                            ---------     ----------    ----------     ---------    ---------
  Income from operations        8,429          9,541        11,495        16,382       19,179
  Interest expense......       (8,486)        (9,672)      (11,037)      (13,274)     (13,214)
  Gain on sale of assets           41          4,139           188           173        7,835
  Other income..........        1,619          2,085           341         1,394        1,112
                            ---------     ----------    ----------     ---------    ---------
  Income before
    extraordinary item..        1,603          6,093           987         4,675       14,912
  Extraordinary item....          ---            ---           318           ---          ---
                            ---------     ----------    ----------     ---------    ---------
  Net income............    $   1,603     $    6,093    $      669     $   4,675    $  14,912
                            =========     ==========    ==========     =========    =========
OTHER FINANCIAL DATA:
  EBITDA (2)............    $  14,186     $   16,656    $   19,869     $  25,287    $  28,069
  EBITDA margin.........          2.9%           3.2%          3.6%          4.0%         4.2%
  Cash provided by
    operating
    activities..........        6,939          9,783         6,013        17,103        7,853
  Cash provided (used)
    by investing
    activities..........       (9,937)        (9,908)      (20,846)       (8,170)       2,221
  Cash provided (used)
    by financing
    activities..........        4,918         (1,900)       15,371        (7,282)      (9,539)
  Depreciation and
    amortization........        5,757          7,115         8,374         8,905        8,890
  Capital expenditures
    (3).................       10,447         13,952         7,858         6,672        6,083
  Ratio of earnings to
    fixed charges.......         1.2x           1.5x          1.1x          1.3x         2.0x
  Adjusted EBITDA (2)...       15,641         17,226        20,415        26,226       29,345
OPERATING STATISTICS:
  Product Sales Operations
  Cases shipped (spirits
    and wine)...........        6,099          6,343         6,182         6,394        6,425
  Gross profit margin...         17.6%          18.5%         18.4%         19.3%        19.6%
  Fee Operations
  Cases shipped
    (spirits)...........          396          2,545         2,731         2,786        2,684
  Distribution fee per
    case................    $    6.50     $     6.50    $     6.50     $    6.50    $    7.32

                                                      AS OF MARCH 31,
                                                      (IN THOUSANDS)
                             ----------------------------------------------------------------
                               1997         1998(1)       1999(1)       2000(1)        2001
BALANCE SHEET DATA
  Cash..................    $   3,395     $    1,370    $    1,908     $   3,559    $   4,094
  Total assets..........      160,366        168,084       178,868       188,452      193,332
  Total debt............       99,545        102,434       117,222       112,471      110,571
  Stockholders'
    equity..............       10,470         13,564        16,266        18,438       25,711
</TABLE>


                                            - 19 -
<PAGE>

                  NOTES TO SELECTED CONSOLIDATED FINANCIAL DATA

(1)  As more  fully  described  in Note 2 of  Notes  to  Consolidated  Financial
     Statements, the Company has restated its results for its fiscal years ended
     March 31, 1998, 1999 and 2000.

<TABLE>
<CAPTION>
(2)  EBITDA  is  defined  as  income  from  operations  plus   depreciation  and
     amortization.  Adjusted  EBITDA is defined  as EBITDA  plus  non-cash  LIFO
     charges, as follows:

                                                      AS OF MARCH 31,
                                                      (IN THOUSANDS)
                            -----------------------------------------------------------------
                              1997           1998          1999           2000           2001
                                           RESTATED      RESTATED       RESTATED
<S>                         <C>           <C>           <C>            <C>          <C>
EBITDA..................    $  14,186     $   16,656    $   19,869     $  25,287    $  28,069
LIFO charge.............        1,455            570           546           939        1,276
                            ---------     ----------    ----------     ---------    ---------
   Adjusted EBITDA......    $  15,641     $   17,226    $   20,415     $  26,226    $  29,345
                            =========     ==========    ==========     =========    =========
</TABLE>


     EBITDA is presented  because it is a widely  accepted  financial  indicator
     used by  investors  and  analysts to analyze and compare  companies  on the
     basis of debt service  capability.  Adjusted EBITDA is presented because we
     believe  it  may  assist  in   evaluating   our   ability  to  service  our
     indebtedness,  including the senior notes.  EBITDA and Adjusted  EBITDA are
     not intended to represent  cash flows for the periods  presented,  nor have
     they been presented as an  alternative to operating  income as an indicator
     of operating  performance and should not be considered in isolation or as a
     substitute for measures of performance and cash flow prepared in accordance
     with  generally  accepted  accounting  principles.  The EBITDA and Adjusted
     EBITDA  information  reflected  above may not be  comparable  to  similarly
     titled measures used by other companies.

<TABLE>
<CAPTION>
(3)  The breakdown of our capital  expenditures  by  significant  project is set
     forth below:

                                                     Years Ended March 31
                                                        (in thousands)
                            -----------------------------------------------------------------
                              1997           1998            1999         2000           2001
<S>                         <C>           <C>           <C>            <C>          <C>
Business expansion......    $   5,855     $   10,758    $    4,856     $   3,112    $   2,374
Information systems.....        2,446          1,781         1,281           970        1,750
Maintenance.............        2,146          1,413         1,721         2,590        1,959
                            ---------     ----------    ----------     ---------    ---------
                            $  10,447     $   13,952    $    7,858     $   6,672    $   6,083
                            =========     ==========    ==========     =========    =========
</TABLE>

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

     You should read the following  discussion  in  conjunction  with  "Selected
Consolidated   Financial  Data"  and  NWS'  historical   consolidated  financial
statements  and the  accompanying  notes  included  elsewhere in this Form 10-K.
Unless  otherwise  indicated,  all  references  to years are to NWS' fiscal year
ended  March  31. As more  fully  described  in Note 2 of Notes to  Consolidated
Financial Statements,  the Company has restated its results for the fiscal years
ended March 31, 1998, 1999 and 2000.



                                     - 20 -
<PAGE>

DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

This Form 10-K, including,  but not limited to the "Management's  Discussion and
Analysis of  Financial  Condition  and  Results of  Operations"  and  "Business"
sections,  contains  "forward-looking  statements"  within  the  meaning  of the
Private Securities Litigation Reform Act of 1995, which can be identified by the
use of forward-looking  terminology,  such as "may," "intend," "will," "expect,"
"anticipate,"  "should,"  "plans to,"  "estimate"  or "continue" or the negative
thereof or other variations  thereon or comparable  terminology.  In particular,
any statement,  express or implied,  concerning  future operating results or the
ability to generate revenues,  income or cash flow to service the Company's debt
are  forward-looking   statements.   Although  the  Company  believes  that  the
expectations will prove to have been correct. All forward-looking statements are
expressly qualified by such cautionary statements, and the Company undertakes no
obligation to update such forward-looking statements.

OVERVIEW

     National  Wine &  Spirits,  Inc.  ("The  Company")  is  one of the  largest
distributors of wine and spirits in the United States.  Substantially all of the
Company's current operations are in Illinois,  Indiana,  Michigan, and Kentucky.
The Company's  reported revenues include net product sales in Indiana,  Michigan
and Illinois. Product sales of low proof and non-alcoholic products commenced in
November 2000 for the Company's Michigan operation.  Distribution fee revenue is
from  the  Michigan  operations.  References  to  U.S.  Beverage  relate  to the
operations of the Company's national import,  craft and specialty beer marketing
business performed by NWS-Illinois.

     The Company  increased  both product and  distribution  fee revenue for the
year ended March 31, 2001, over the prior fiscal year. The revenue  increase was
primarily  from a shift by  consumers  to  premium-priced  products  along  with
industry-wide  price increases on higher volume brands.  Spirits case sales were
up 1.3% over the prior fiscal year with spirits revenue rising 5.4% for the same
comparable  period.  White spirits,  such as vodkas,  tequilas and rum drove the
spirits  revenue  increase.  Revenue  from wine  sales  increased  7.8% over the
comparable fiscal year,  despite the loss of the Sutter Home line in the Indiana
market as of December  2000.  Increased  consumption of wine and a preference by
consumers for premium wines were primarily the reason for the revenue  increase.
Distribution fee revenue increased slightly due to the fee increase of $0.82 per
case.  Case  volume  decline  due to the  loss of the  Black  Velvet,  Christian
Brothers and Arrow brands.  Gross margin on product sales increased  slightly to
19.6% for the fiscal  year ended  March 31,  2001 as  compared  to 19.3% for the
prior  year.  The  increase  in revenue  and gross  margin  more than offset the
operating expense increases,  resulting in operating income of $19.2 million, an
increase of $2.8 million over the results for fiscal 2000. Net income  increased
$10.2  million  for the fiscal  year ended  March 31,  2001 over the results for
fiscal 2000  primarily  from the gain on sale of the bottled  water  division of
$7.5 million and the increased revenue and gross margin.

     As  discussed  elsewhere  in  this  report  and  in  Note  2  of  Notes  to
Consolidated Financial Statements,  the Company has restated its results for the
2000, 1999 and 1998 fiscal years.  During an internal review of Company accounts
receivable and billing  information  during fiscal 2001, the Company  discovered
that  accounts  receivable  had been  overstated,  records  had been  altered or
destroyed,  and that funds had been  misappropriated  by two former employees at
its  Indiana  location.  Through  the review  process,  the  Company was able to
identify  uncollectible  accounts receivable,  missed invoices and customers who
had short paid.  Total charges for fiscal 2000, 1999 and 1998 were $1.2 million,
$0.5 million and $1.0 million, respectively.

OUTLOOK

     The Company  anticipates  that  revenues and case volumes will  continue to
grow  modestly,  approximately  5%  and  1%,  respectively.  The  shift  towards
premium-priced  spirits and wines,  with increasing  margin  percentages  should
support current EBITDA levels.  The Company  continues to be concerned about the
effects of the pending sale of the Seagram wine and spirits brands to Diageo and
Pernod  Ricard.  Jim Beam  Brands  (Future  Brands LLC)  assumed  control of the
Absolut  distribution rights in the United States as of May 2001 and the Company
has continued to represent  the brand in our markets.  The Company is confident,
based  upon our  history of sales  performance  and  capabilities,  that we will
continue to represent  the brands which  Diageo and Pernod  Ricard  purchased as
well. The Company represents Diageo in Indiana,  Michigan and Kentucky;  Beam in
Indiana, Illinois, Michigan and Kentucky; and Pernod Ricard in Illinois, Indiana
and Kentucky.



                                     - 21 -
<PAGE>

<TABLE>
<CAPTION>
RESULTS OF OPERATIONS

     The following table includes  information  regarding total cases shipped by
NWS in 1999, 2000 and 2001:

                                              YEARS ENDED MARCH 31,
                                              (CASES IN THOUSANDS)
                            --------------------------------------------------------
                               1999       2000                     2001
                               ----       ----                     ----
                                                   PERCENT                   PERCENT
                              CASES      CASES      CHANGE        CASES       CHANGE
                              -----      -----      ------        -----       ------
<S>                           <C>        <C>         <C>          <C>         <C>
Wine (product
  sales operations).....      2,928      3,044       4.0%         3,032       (0.4)%
Spirits (product
  sales operations).....      3,254      3,350       3.0          3,393        1.3
Spirits (distribution
  fee operations).......      2,731      2,786       2.0          2,684       (3.7)
                             ------     ------      ----         ------
    Total wine
      and spirits.......      8,913      9,180       3.0          9,109       (0.8)
Other*..................      2,764      4,274      54.6          5,021       17.5
                             ------     ------      ----         ------
    Total...............     11,677     13,454      15.2%        14,130        5.0%
                             ======     ======      ====         ======

<FN>
*    U.S.  Beverage's results are included in the other category for the current
     year and prior years.
</FN>
</TABLE>

FISCAL 2001 COMPARED WITH FISCAL 2000

     Revenue.  The Company  reported  product sales for the year ended March 31,
2001 of $639.2  million,  an increase of $34.2  million,  or 5.7% over the prior
year  period.  The  increase  was  primarily  the result of consumer  demand for
premium-priced  spirits  and  wines,  along  with  growth of the  United  States
Beverage  division.  Price  increases on popular brands,  such as tequila,  also
contributed  to the revenue  increase  this year  versus the prior year  period.
Distribution fee revenue  increased 3.9% to $21.6 million,  primarily the result
of a rate  increase to $7.32 a case from $6.50 per case,  as  authorized  by the
State of Michigan.  Case volume from fee operations  declined due to the sale of
the Black  Velvet,  Christian  Brothers  (both in May  2000)  and  Arrow  brands
(February 2000) by Diageo.  The Company added the Allied Domecq line in Michigan
(July 2000);  however,  the case volume was not equal to the Diageo  brands that
were sold.

     Gross Profit.  Gross profit dollars on product sales increased $8.8 million
for the year  ended  March 31,  2001,  an  increase  of 7.5% from the prior year
period.  Gross profit  percentage  on product sales was 19.6% for the year ended
March 31, 2001 versus 19.3% for the prior year period.  The  increased  sales of
premium spirits and wines, which carry a higher gross profit  percentage,  along
with  the  growth  of  the  United  States  Beverage  division,  were  primarily
responsible for the gross margin dollar and percentage increase.

     Operating  Expenses.  Total operating expenses for the year ended March 31,
2001  increased $6.8 million,  or 5.6% over the operating  expenses for the year
ended March 31, 2000.  Expanded sales  operations in the United States  Beverage
division,  along with increased brand  promotion  costs in the product  markets,
were primarily responsible for the operating expense increase.

     Operating  expenses  for the annual  period ended March 31, 2001 in the fee
operations  increased  $1.7  million,  or  8.3%  from  the  prior  year  period.
Operational  costs  associated  with  increased  bottle  or less  than full case
orders, and expansion of the sales area were primarily  responsible for the cost
increases.



                                     - 22 -
<PAGE>

     Selling expenses increased $5.6 million to $48.1 million for the year ended
March 31,  2001 as compared to the prior year  period.  Expansion  of the United
States  Beverage  sales  area  due to the  Grolsch  brand  addition  along  with
increased   brand  support  for  the  Hooper's  Hooch  products  were  primarily
responsible for the sales expense increase. Expenses for the brokerage operation
in our fee  market  increased  $0.3  million  from the prior year  period.  This
represents a leveling off for the  brokerage  expenses,  while  revenue from the
brokerage operation increased $0.2 million for the annual period ended March 31,
2001, versus the comparable year period.

     Warehouse and delivery expenses increased 3.3% or $1.3 million for the year
ended March 31, 2001 versus the prior year period.  Operational costs associated
with the  increased  bottle  orders  in our fee  market  contributed  to  higher
warehouse costs. Total warehouse and delivery expenses, as a percentage of total
revenue, declined slightly to 6.0% during the current year period as compared to
6.1% for the prior annual period.

     Total  administrative  expense  remained  stable  at  $40.0  million.  Cost
increases  in  casualty  and  health   insurance   were  offset  by  savings  on
communication and wages. Administrative expense as a percentage of total revenue
was 6.1% for the year ended  March 31,  2001,  down  slightly  from 6.4% for the
prior annual period.  As more fully described in Note 2 to Notes to Consolidated
Financial  Statements,  the Company reported losses of $0.8 million for the year
ended March 31, 2001, as compared to $1.2 million for the prior annual period.

     Income from Operations.  Total operating income increased $2.8 million,  or
17.1% for the year ended  March 31,  2001,  over the prior  annual  period.  The
revenue  gains and an  increased  gross profit  percentage  more than offset the
increases  in  operating  expenses.  Operating  income for the  product  markets
increased  $3.7  million,  or 23.3%  from the  prior  annual  period  due to the
increased  gross profit.  The fee operations  experienced a decline in operating
income  for the year  ended  March 31,  2001 of $0.9  million  due to  increased
operational costs and the decreased case sales from the prior annual period.

     Interest Expense. Interest expense remained stable, decreasing $0.1 million
for the year ended  March 31,  2001 over the prior  annual  period.  The Company
reduced  the balance  outstanding  on the  revolving  credit  facility  with the
proceeds  of the  sale of the  bottled  water  division,  and  was  able to take
advantage of LIBOR  pricing,  which reduced the Company's rate relative to prime
based  pricing.  The Company's  revolver rate was 9.5% at March 31, 2000 and was
8.5% during March 2001.

     Other  Income.  The gain from the sale from the bottled  water  division of
$7.5  million was the primary  reason for the  increase of $7.7 million in other
income for the year ended March 31, 2001 as compared to the prior annual period.
Rental income  increased  slightly due to facilities  rented to the purchaser of
the bottled water division and office facilities to eSkye Solutions, Inc.

     Minority Investment in Kentucky Distributor.  The Company's share of income
from Commonwealth Wine & Spirits,  L.L.C. increased $0.2 million during the year
ended March 31, 2001 to $0.3  million as  compared to the prior  annual  period.
Distributions  received from  Commonwealth  were $0.8 million for the year ended
March 31, 2001 as compared to $0.5 million for the prior annual period.

     Net Income. Net income increased $10.2 million for the year ended March 31,
2001, as compared to the prior annual  period.  The increase was due to the gain
from the sale of the bottled water  division  along with  increased  revenue and
gross profit.  Net income from the product markets,  excluding the gain from the
sale of the bottled water division, increased 62.2% to $9.4 million for the year
ended March 31, 2001, as compared to $5.8 million for the prior annual period.



                                     - 23 -
<PAGE>

     For  financial  analysis  purposes  only,  the  Company's  earnings  before
interest, taxes, depreciation and amortization (EBITDA) for the year ended March
31, 2001  increased  $2.8 million,  or 11.0% to $28.1 million as compared to the
prior annual period.

FISCAL 2000 COMPARED WITH FISCAL 1999

     Revenue The  Company  reported  product  sales for the year ended March 31,
2000 of $605.0  million,  an increase of $69.5 million,  or 13.0% over the prior
year period.  This  increase  primarily  resulted  from the  continued  shift by
consumers to more premium brands, price increases during the year in the Indiana
and  Illinois  markets,  and  strong  increases  in the U.S.  Beverage  sales of
Hooper's Hooch.  U.S. Beverage had product sales of $28.8 million as compared to
$9.2 million over the prior year  period.  Distribution  fees for the year ended
March 31, 2000 increased $2.9 million, or 16.5%, to $20.8 million from the prior
year period.

     Gross  Profit.  Gross  profit on total  revenue  increased  17.7% to $137.3
million,  from $116.6 million in the prior year period.  Gross profit percentage
on product  sales for the year ended  March 31,  2000,  was 19.3% as compared to
18.4% for the prior year  period.  Increase  sales of premium  brands along with
margins  on  Hooper's  Hooch  were  primarily  responsible  for  the  percentage
increase.  Gross profit on product  sales  increased  by $17.8  million from the
prior year period.

     Operating  Expenses.  Operating  expenses for the year ended March 31, 2000
increased to $120.9 million, or 15.0% over the comparable year. The expansion of
our U.S.  Beverage  operation along with the creation of a sales  department for
our fee market  contributed  to this  increase in expenses.  Employee  costs and
outside  professional  expenses  were  increased  due  to the  expansion  of our
business units and to meet the increased public reporting requirements.  As more
fully described in Note 2 to Notes to  Consolidated  Financial  Statements,  the
Company  reported  losses of $1.2 million for the year ended March 31, 2000,  as
compared to $0.5 million for the prior annual period.  Total operating  expenses
were 19.3% of total  revenue  for March 31,  2000,  as compared to 19.0% for the
prior annual period.

     Selling expenses increased $4.6 million,  or 12.0% for the year ended March
31,  2000,over  the  prior  annual  period.  U.S.  Beverage's  selling  expenses
increased  $1.9  million as required  brand  promotion  support for the Hooper's
Hooch brand  increased.  The increased  expenses were primarily brand promotion,
point of sale material,  and greater brand advertising  costs.  U.S.  Beverage's
case sales for the year ended  March 31,  2000  increased  385.2% over the prior
annual period. The creation of a sales department for the brokerage operation in
our fee market  resulted in an increase of $1.5 million for March 31, 2000, from
the comparable annual period.  These brokerage  expenses were primarily employee
salaries with additional  expenditures in brand  advertising and promotion.  The
remaining  increase of $1.2  million of selling  expense  over the prior  annual
period  resulted  from  additional   promotional  and  advertising   costs.  The
introduction  of new brands and the increased cost of existing brand  promotion,
were primarily responsible for these larger product market selling expenses.

     Warehouse and delivery expenses  increased 7.7% or $2.7 million in the year
ended March 31, 2000 over the comparable annual period. The volume increase that
was  experienced  in our  Illinois  market  prior to the tax increase on July 1,
1999, was primarily  responsible for the product market increase of $1.8 million
over the comparable annual period.  The fee market increase of $0.9 million over
the prior  year  period  was the  result of  acquiring  product  lines  that had
increased  splits,  or less than full case  orders,  which drove up labor costs.
Total  warehouse  and  delivery  expense was 6.1% of total  revenue for the year
ended March 31, 2000, as compared to 6.4% the prior annual period.



                                     - 24 -
<PAGE>

     Total  administrative  costs  increased  $8.5 million or 26.9% for the year
ended  March 31,  2000,  over the  comparable  annual  period.  The  Company has
developed and expanded the  corporate  services area in the year ended March 31,
2000,   which  has  increased   corporate  wages  and  related  employee  costs.
Professional fees have increased due to the additional  reporting and compliance
requirements  associated  with the senior note  issuance.  These  administrative
expenses  have also  included  first time  costs  associated  with  non-employee
directors.  Expansion in our U.S.  Beverage  operation  has required  additional
administrative support,  primarily employees and their associated benefit costs.
Administrative  expense,  as a percentage of total revenue was 6.4% for the year
ended March 31, 2000, as compared to 5.7% for the comparable annual period.

     Income from Operations.  Total operating income increased $4.9 million,  or
42.5% for the year ended March 31,  2000,  over the  comparable  annual  period.
Product  markets  operating  income were up $6.3 million for the current year as
compared to the prior annual period. Revenue gains and an increased gross profit
percentage more than offset the increases in operating  expenses for the product
markets.  Operating  income for the fee market  decreased  $1.1  million for the
current  year as  compared to the prior year.  The  increased  cost of the sales
department along with increased labor costs in the operational area outpaced the
increase in fee revenue.

     Interest  Expense.  Interest  expense  increased  $2.2 million for the year
ended March 31, 2000 over the prior  annual  period.  The Company had the senior
notes  outstanding  for  approximately  two months for the year ended  March 31,
1999,  whereas  they were  outstanding  for the entire year that ended March 31,
2000.  Prior to the issuance of the senior  notes the  marginal  rate was 8.25%,
while the senior  notes carry a 10.125%  fixed  rate.  The  Company's  revolving
credit facility's rate is related to the prime lending rate. The revolver's rate
was 9.5% at March 31, 2000, and 8.25% at March 31, 1999.

     Other  Income.  Other income  increased by $1.0 million to $1.6 million for
the year ended March 31, 2000, from the prior annual period. The Company settled
a lawsuit  brought by several drivers in our Illinois market for $0.5 million in
the year ended March 31,  1999.  The Company also wrote off  intangible  assets,
non-compete and organizational  costs in the amount of $0.3 million for the year
ended March 31, 1999. These expenses in the year ended March 31, 1999, that were
one time costs,  along with an increase in rental income of $0.1 million for the
year ended March 31, 2000, were primarily  responsible for the increase in other
income.

     Minority Investment in Kentucky Distributor.  The Company's share of income
from Commonwealth Wine & Spirits,  L.L.C.  remained constant at $0.1 million for
the year ended  March 31,  2000 as cash  compared  to the prior  annual  period.
Distributions  received from Commonwealth were $0.5 million and $0.2 million for
the years ending March 31, 2000 and March 31, 1999, respectively.

     Net Income.  Net income was $4.7 million for the year ended March 31, 2000,
which was an increase of $4.0 million over the comparable annual period.

     For  financial  analysis  purposes  only,  the  Company's  earnings  before
interest, taxes, depreciation and amortization (EBITDA) for the year ended March
31, 2000  increased  $5.4 million,  or 27.3% to $25.3 million as compared to the
prior annual period.

LIQUIDITY AND CAPITAL RESOURCES

     The  Company's  primary  cash  requirements  have  been  to  fund  accounts
receivable  and  inventories  in  Indiana,   Illinois,  and  its  U.S.  Beverage
operations.  NWS has historically  satisfied its cash  requirements  principally
through cash flow from operations, trade terms and bank borrowings.

     NWS' working  capital and borrowings  under its revolving  credit  facility
fluctuate over the course of each year. In fiscal 2001, NWS' minimum and maximum
amount of borrowings under the current $60.0 million  revolving credit facility,
at any one time, was $0.0 in March 2001 and $30.3 million in December,  2000. At
March  31,  2001  NWS' did not have a balance  outstanding  under its  revolving
credit facility.



                                     - 25 -
<PAGE>

     Net cash provided by operating activities for the annual period ended March
31, 2001,  was $7.9  million,  as compared to $17.1 million for the prior annual
period. Increases in cash provided were from increased profitability and lowered
accounts receivable. The Company has emphasized collection and management of its
receivables since the incident described in Note 2 of the Consolidated Financial
Statements.  Decreases  in cash from  operating  activities  were the  result of
decreased accounts payable,  increased gain from sale of assets and increases in
inventory  levels,  as compared to the change in the prior  annual  period.  The
increased  working  capital  needs at March 31, 2001, as compared to the working
capital needs for the prior annual  period,  were funded  primarily by increased
profitability, including the funds from the sale of the bottled water division.

     Net cash provided by investing  activities  increased $10.4 million for the
year ended March 31, 2001 as compared to the prior  annual  period.  The Company
received  $10.7  million from the sale of assets during the year ended March 31,
2001,  primarily  from the sale of the bottled water  division in June 2000. The
Company  invested $2.0 million in eSkye  Solutions,  Inc.  during the year ended
March 31, 2001. The Company was able to limit  spending on capital  expenditures
related to additional capacity or real estate resulting in depreciation  expense
exceeding  expenditures  for the second  consecutive  year. The company  expects
capital expenditures in fiscal 2002 to be between $7.0 and $8.0 million.

     Net cash used by financing  activities  was $9.5 million for the year ended
March 31, 2001, as compared to $7.3 million used during the prior annual period.
The Company  was able to generate  funds to  completely  pay down the  revolving
credit  facility  at March 31, 2001 that  resulted in a net  increase of cash as
compared  to  the  prior  annual  period  of  $2.7  million.   The  Company  had
distributions to stockholders  during the year that were for tax liabilities and
used to repay  shareholder  receivables.  The $2.8 million increase in cash from
the change in notes  receivable  from  stockholders  consisted of repayments for
$3.6  million  and  net  advances  on  account  of  interest  of  $0.8  million.
Dispositions of the $10.6 million of stockholder  distributions were as follows:
$6.6 million to satisfy tax  obligations,  $3.6 million paid to shareholders and
returned  to the  Company as payment on notes  receivable,  and $0.4  million as
final payment to a former shareholder.

     Total assets  increased to $193.3 million at March 31, 2001, a $4.9 million
increase  from the  prior  year.  This  increase  was  primarily  the  result of
increased  inventories  of $8.4 million as compared to the prior annual  period.
Property  and  equipment  declined  by  $3.0  million  due  to  lowered  capital
expenditures  as compared to the prior year,  and the sale of assets  related to
the bottled water division.  Total debt decreased $1.9 million to $110.6 million
at March 31, 2001  primarily the result of increased cash flow from the proceeds
of the sale of the bottled water  division.  The net amount of notes  receivable
from  stockholders,  which is classified as an equity component declined by $2.9
million due to stockholder  distributions  that were paid back to the Company to
reduce the receivable  balance.  The amount of the  shareholder  receivables was
$4.7 million at March 31, 2001 and the notes  payable to  shareholders  was $4.5
million on the same date.

     The Company  believes that cash flow from  operations and existing  capital
resources, including cash and borrowings available under the Company's revolving
credit facility, will be sufficient to satisfy the Company's anticipated working
capital and debt service requirements and expansion plans.

OTHER

     As a matter of  policy,  the  Company  plans to  review  and  evaluate  all
professional  services firms every three to four years. This review will include
but is not limited to legal,  audit and information  systems services.  The next
scheduled review will occur during Fiscal 2002.



                                     - 26 -
<PAGE>

INFLATION

     Inflation has not had a significant impact on the Company's  operations but
there can be no assurance that inflation will not have a negative  effect on the
Company's   financial   condition,   results  of   operations  or  debt  service
capabilities in the future.

ENVIRONMENTAL MATTERS

     The  Company  currently  owns  and  leases  a  number  of  properties,  and
historically it has owned and/or leased others.  Under applicable  environmental
laws, the Company may be responsible for remediation of environmental conditions
relating to the presence of certain hazardous substances on such properties. The
liability  imposed by such laws is often  joint and several  without  regard for
whether the  property  owner or operator  knew of, or was  responsible  for, the
presence  of such  hazardous  substances.  In  addition,  the  presence  of such
hazardous substances, or the failure to properly remediate such substances,  may
adversely affect the property owner's ability to borrow using the real estate as
collateral and to transfer its interest in the real estate. Although the Company
is not aware of the  presence of  hazardous  substances  requiring  remediation,
there  can be no  assurance  that  releases  unknown  to the  Company  have  not
occurred.  Except for blending and  bottling of a few of the  Company's  private
label  brands,  the  Company  does not  manufacture  any of the  wine or  spirit
products it sells and believes that it has conducted its business in substantial
compliance with applicable environmental laws and regulations.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Not Applicable.



                                     - 27 -
<PAGE>

 Item 8.   Financial Statements and Supplementary Data


                         Report of Independent Auditors


The Board of Directors and Stockholders
National Wine & Spirits, Inc.

We have audited the accompanying  consolidated balance sheets of National Wine &
Spirits,  Inc.  as of March 31,  2001 and  2000,  and the  related  consolidated
statements of income,  stockholders' equity and cash flows for each of the three
years in the period ended March 31, 2001. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These financial statements
and  schedule  are  the   responsibility  of  the  Company's   management.   Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedule based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial position of National Wine &
Spirits,  Inc. at March 31, 2001 and 2000, and the  consolidated  results of its
operations  and its cash flows for each of the three  years in the period  ended
March 31, 2001 in conformity with accounting  principles  generally  accepted in
the United  States.  Also,  in our  opinion,  the  related  financial  statement
schedule, when considered in relation to the basic financial statements taken as
a whole,  presents  fairly in all material  respects the  information  set forth
therein.

The  consolidated  financial  statements for each of the two years in the period
ended March 31, 2000 have been restated as described in Note 2.



                                      /s/ Ernst & Young LLP

Indianapolis, Indiana
June 26, 2001


                                     - 28 -
<PAGE>

<TABLE>
<CAPTION>

                                        NATIONAL WINE & Spirits, Inc.

                                         Consolidated Balance Sheets

                                                                             MARCH 31
                                                                                       2000
                                                                        2001         RESTATED
                                                                   -----------------------------
<S>                                                                <C>             <C>
ASSETS
Current assets:
  Cash                                                             $   4,094,000   $   3,559,000
  Accounts receivable, less allowance for doubtful accounts
    of $1,737,000 ($1,412,000 in 2000)                                39,001,000      42,264,000
  Inventory                                                           79,616,000      71,167,000
  Prepaid expenses and other                                           4,231,000       3,571,000
                                                                   -----------------------------
Total current assets                                                 126,942,000     120,561,000

Property and equipment, net                                           43,734,000      46,735,000

Other assets:
  Notes receivable                                                       811,000       1,142,000
  Cash surrender value of life insurance, net of loans                 2,821,000       2,270,000
  Investment in Kentucky distributor                                   6,609,000       7,072,000
  Investment in eSkye Solutions, Inc.                                  2,513,000         500,000
  Intangible assets, net of amortization                               9,290,000       9,988,000
  Deferred pension costs                                                 487,000             ---
  Deposits and other                                                     125,000         184,000
                                                                   -----------------------------
Total other assets                                                    22,656,000      21,156,000
                                                                   -----------------------------
Total assets                                                       $ 193,332,000   $ 188,452,000
                                                                   =============================

LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES:
  Accounts payable                                                 $  35,739,000   $  37,935,000
  Accrued payroll and payroll taxes                                    6,913,000       6,757,000
  Excise taxes payable                                                 5,401,000       5,200,000
  Other accrued expenses and taxes                                     8,510,000       7,651,000
  Current maturities of long-term debt                                   571,000         900,000
                                                                   -----------------------------
Total current liabilities                                             57,134,000      58,443,000

Deferred pension liability                                               487,000             ---
Long-term debt, less current maturities                              110,000,000     111,571,000
                                                                   -----------------------------
Total liabilities                                                    167,621,000     170,014,000

Stockholders' equity:
  Voting common stock, $.01 par value                                      1,000           1,000
  Nonvoting common stock, $.01 par value                                  53,000          53,000
  Additional paid-in capital                                          25,009,000      25,009,000
  Retained earnings (deficit)                                            818,000      (3,513,000)
                                                                   -----------------------------
                                                                      25,881,000      21,550,000
  Notes receivable from stockholders, net                               (170,000)     (3,112,000)
                                                                   -----------------------------
Total stockholders' equity                                            25,711,000      18,438,000
                                                                  -----------------------------
Total liabilities and stockholders' equity                         $ 193,332,000   $ 188,452,000
                                                                   =============================

See accompanying notes.
</TABLE>


                                              - 29 -
<PAGE>

<TABLE>
<CAPTION>
                                  NATIONAL WINE & Spirits, Inc.

                                CONSOLIDATED STATEMENTS OF INCOME

                                                             YEARS ENDED MARCH 31
                                                                     2000             1999
                                                     2001           RESTATED        RESTATED
                                                 ---------------------------------------------

<S>                                              <C>             <C>             <C>
Net product sales                                $ 639,240,000   $ 604,987,000   $ 535,521,000
Distribution fees                                   21,573,000      20,770,000      17,832,000
                                                 ---------------------------------------------
Total revenue                                      660,813,000     625,757,000     553,353,000

Cost of products sold                              513,928,000     488,444,000     436,734,000
                                                 ---------------------------------------------

Gross profit                                       146,885,000     137,313,000     116,619,000

Selling, general and administrative
expenses:
  Warehouse and delivery                            39,657,000      38,401,000      35,655,000
  Selling                                           48,052,000      42,434,000      37,872,000
  Administrative                                    39,997,000      40,096,000      31,597,000
                                                 ---------------------------------------------
                                                   127,706,000     120,931,000     105,124,000
                                           -     ---------------------------------------------

Income from operations                              19,179,000      16,382,000      11,495,000

Interest expense:
  Related parties                                     (405,000)       (425,000)       (461,000)
  Third parties                                    (12,809,000)    (12,849,000)    (10,576,000)
                                                 ---------------------------------------------
                                                   (13,214,000)    (13,274,000)    (11,037,000)
Other income (expense):
  Gain on sales of assets                            7,835,000         173,000         188,000
  Interest income                                      738,000         892,000         977,000
  Rental and other income (expense)                     59,000         371,000        (756,000)
  Equity in income of Kentucky
  distributor                                          315,000         131,000         120,000
                                           -     ---------------------------------------------

Total other income                                   8,947,000       1,567,000         529,000
                                                 ---------------------------------------------

Income before extraordinary item                    14,912,000       4,675,000         987,000

Extraordinary item:
  Loss on extinguishment of debt                           ---             ---        (318,000)
                                                 ---------------------------------------------

Net income                                       $  14,912,000   $   4,675,000   $     669,000
                                                 =============================================

See accompanying notes.
</TABLE>

                                             - 30 -
<PAGE>

<TABLE>
<CAPTION>
                                            NATIONAL WINE & SPIRITS, INC.

                                   CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


                            $.01 PAR VALUE                                            NOTES
                             COMMON STOCK         ADDITIONAL        RETAINED        RECEIVABLE           TOTAL
                          ------------------       PAID-IN          EARNINGS           FROM          STOCKHOLDERS
                          VOTING   NONVOTING       CAPITAL          (DEFICIT)      STOCKHOLDERS         EQUITY
                          ----------------------------------------------------------------------------------------

<S>                       <C>       <C>          <C>              <C>              <C>               <C>
Balance at March 31,
  1998 as previously
  reported                $  1,000  $ 53,000     $ 23,202,000     $  1,929,000     $ (10,603,000)    $  14,582,000
Prior period adjustment
  (Note 2)                     ---       ---              ---       (1,018,000)              ---        (1,018,000)
                          ----------------------------------------------------------------------------------------
Balance at March 31,
  1998 (Restated)            1,000    53,000       23,202,000          911,000       (10,603,000)       13,564,000

  Net income                   ---       ---              ---          669,000               ---           669,000
  Decrease in notes
    receivable from
    stockholders               ---       ---              ---              ---         5,197,000         5,197,000
  Distributions to
    stockholders               ---       ---              ---       (4,971,000)              ---        (4,971,000)
  Conversion of
    notes payable to
    stockholders' equity       ---       ---        1,807,000              ---               ---         1,807,000
                          ----------------------------------------------------------------------------------------

Balance at March 31,
1999 (Restated)              1,000    53,000       25,009,000       (3,391,000)       (5,406,000)       16,266,000

  Net income                   ---       ---              ---        4,675,000               ---         4,675,000
  Decrease in notes
    receivable from
    stockholders               ---       ---              ---              ---         2,294,000         2,294,000
  Distributions to
    stockholders               ---       ---              ---       (4,797,000)              ---        (4,797,000)
                          ----------------------------------------------------------------------------------------

Balance at March 31,
2000 (Restated)              1,000    53,000       25,009,000       (3,513,000)       (3,112,000)       18,438,000

  Net income                   ---       ---              ---       14,912,000               ---        14,912,000
  Decrease in notes
    receivable from            ---       ---              ---              ---         2,942,000         2,942,000
    stockholders
  Distributions to
    stockholders               ---       ---              ---      (10,581,000)              ---       (10,581,000)
                          ----------------------------------------------------------------------------------------
Balance at March 31,
  2001                    $  1,000  $ 53,000     $ 25,009,000     $    818,000     $    (170,000)    $  25,711,000
                          ========================================================================================

See accompanying notes.
</TABLE>


                                                       - 31 -
<PAGE>

<TABLE>
<CAPTION>

                                      NATIONAL WINE & SPIRITS, INC.

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                      YEARS ENDED MARCH 31
                                                                                2000            1999
                                                             2001             RESTATED        RESTATED
                                                       ------------------------------------------------
<S>                                                    <C>                <C>              <C>
OPERATING ACTIVITIES
Net income                                             $   14,912,000     $  4,675,000     $    669,000
Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation of property and equipment                  7,046,000        7,270,000        6,967,000
    Gain on sale of assets                                 (7,835,000)        (174,000)        (188,000)
    Amortization of intangible assets                       1,844,000        1,635,000        1,407,000
    Equity in income of Kentucky distributor                 (315,000)        (131,000)        (120,000)
    Loss on extinguishment of debt                                ---              ---          318,000
    Changes in operating assets and liabilities:
      Accounts receivable                                   2,907,000       (6,580,000)      (5,239,000)
      Inventories                                          (9,310,000)      (3,206,000)       8,773,000
      Prepaid expenses and other receivables                 (678,000)       1,252,000          157,000
      Accounts payable                                     (2,196,000)      10,329,000       (6,154,000)
      Accrued expenses and taxes                            1,478,000        2,033,000         (577,000)
                                                       ------------------------------------------------
Net cash provided by operating activities                   7,853,000       17,103,000        6,013,000

INVESTING ACTIVITIES
Purchases of property and equipment                        (6,083,000)      (6,672,000)      (7,858,000)
Acquisition of R. M. Gilligan, Inc., net of cash
     received                                                     ---       (1,630,000)             ---
Investment in Kentucky distributor                                ---              ---       (7,500,000)
Proceeds from sale of property and equipment                  171,000        2,242,000          338,000
Proceeds from sale of assets                               10,689,000              ---              ---
Intangible assets                                          (1,156,000)      (1,996,000)      (5,869,000)
Deposits and other                                             56,000          (42,000)          28,000
Increase in cash surrender value of life insurance           (552,000)        (413,000)        (453,000)
Investment in eSkye Solutions, Inc.                        (2,013,000)        (500,000)             ---
Distributions from Kentucky distributor                       778,000          497,000          182,000
Collections on notes receivable                               331,000          344,000          286,000
                                                       ------------------------------------------------
Net cash provided (used) by investing activities            2,221,000       (8,170,000)     (20,846,000)

FINANCING ACTIVITIES
Net repayments on lines of credit                          (1,000,000)      (3,700,000)     (62,010,000)
Proceeds from senior notes issuance                               ---              ---      110,000,000
Proceeds from long-term debt                                      ---              ---        7,500,000
Principal payments on long-term debt                         (900,000)      (1,079,000)     (36,017,000)
Proceeds from borrowings from stockholder                     284,000           97,000          241,000
Repayments on borrowings from stockholder                    (191,000)        (205,000)             ---
Notes receivable from stockholders and others               2,849,000        2,402,000          628,000
Distributions to stockholders                             (10,581,000)      (4,797,000)      (4,971,000)
                                                       ------------------------------------------------
Net cash provided (used) by financing activities           (9,539,000)      (7,282,000)      15,371,000
                                                       ------------------------------------------------
Net increase in cash                                          535,000        1,651,000          538,000
Cash, beginning of year                                     3,559,000        1,908,000        1,370,000
                                                       ------------------------------------------------
Cash, end of year                                      $    4,094,000     $  3,559,000     $  1,908,000
                                                       ================================================

See accompanying notes.
</TABLE>


                                     - 32 -
<PAGE>

                          NATIONAL WINE & SPIRITS, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 2001

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NATURE OF BUSINESS AND PRINCIPLES OF CONSOLIDATION

In  December  1998,  a  reorganization  took place  which  created a new holding
company,  National Wine & Spirits, Inc. (NWS or the Company).  All of the shares
of capital  stock in National  Wine & Spirits  Corporation  (NWSC) and NWS, Inc.
(NWSI)  were  contributed  in  exchange  for shares of NWS.  In  addition,  NWSC
subsequently  distributed all of its shares in NWS Michigan, Inc. (NWSM) to NWS.
Finally,  a new limited liability  company was created into which  substantially
all of the Illinois  operations were transferred  (NWS-LLC).  The reorganization
was accounted for as a combination of entities under common control,  similar to
a pooling-of-interests. As such, the financial statements have been presented to
reflect this  accounting  treatment.  In November  2000,  NWSM  commenced  doing
business  through  its  subsidiary,   National  Wine  &  Spirits  Michigan,  LLC
(NWSM-LLC) to sell low proof alcohol and non-alcoholic  products in the state of
Michigan.

Based in  Indianapolis,  NWSC is a  wholesale  distributor  of liquor  and wines
throughout  Indiana.  Based in Chicago,  NWS-LLC is a wholesale  distributor  of
liquor and wines throughout Illinois.  NWSM is a wholesale distributor of liquor
throughout  Michigan.  NWSC also  operates a division  for the  distribution  of
cigars and accessories.

The  consolidated  financial  statements  include  the  accounts  of NWS,  NWSC,
NWS-LLC,   NWSM  and  NWSM-LLC.   All  significant   intercompany  accounts  and
transactions  have been eliminated from the consolidated  financial  statements.
Substantially  all revenues  result from the sale of liquor,  beer and wine. NWS
performs periodic credit evaluations of its customers'  financial  condition and
generally  does  not  require   collateral.   Credit  losses  have  been  within
management's expectations.

USE OF ESTIMATES

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

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's  cash,  accounts  receivable,  accounts  payable and certain other
accrued  liabilities  are all  short-term  in nature  and the  carrying  amounts
approximate fair value.  Long-term notes receivable and payable,  except for the
Company's senior notes payable,  have primarily  variable  interest rates,  thus
their carrying amounts  approximate fair value. The carrying value of the senior
notes payable approximates fair value.



                                     - 33 -
<PAGE>
INVENTORY

Substantially  all  inventory is stated at the lower of cost,  determined by the
last-in, first-out (LIFO) method, or market.

Bulk whiskey  represents the Company's  interest in certain  whiskey  inventory,
which  is  being  aged by the  supplying  distiller.  This  interest  serves  as
collateral  for related  notes  payable to the  distiller.  In  accordance  with
industry practices, storage and handling costs incurred during the aging process
are included as a component of the cost of bulk whiskey. Bulk whisky represented
approximately  $1,421,000 and $1,497,000 of the total inventory balance at March
31, 2001 and 2000, respectively.

ADVERTISING COSTS

Advertising costs are charged to operations when incurred.  Advertising  expense
was $7,128,000, $5,685,000 and $3,224,000 in 2001, 2000 and 1999, respectively.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost and are depreciated  using primarily
the straight-line method over their expected useful lives as follows:

         Land improvements                    15-40 years
         Buildings and improvements           10-40 years
         Furniture and equipment                5-7 years
         Warehouse equipment                      7 years
         Automobiles and trucks                   5 years

INTANGIBLE ASSETS

Intangible  assets,  including  goodwill,  represent the cost of certain  assets
obtained in the acquisition of various distributors, costs incurred in obtaining
financing and amounts paid to acquire supplier  distribution rights. These costs
are being amortized by the straight-line method over the terms of the agreements
or  their  estimated  useful  lives,  which  range  from  two to  twenty  years.
Accumulated  amortization  related to these assets was $5,194,000 and $3,490,000
at March 31, 2001 and 2000, respectively.



                                     - 34 -
<PAGE>

LONG-LIVED ASSETS

The  carrying  value  of the  long-lived  assets  is  periodically  reviewed  by
management.  If this review  indicates  that the carrying  value may be impaired
then the impaired amount will be written off.

INCOME TAXES

There is no  provision  for  federal  or state  income  taxes  reflected  in the
financial statements because the stockholders have consented to NWS' election to
be taxed as an S  corporation  under the  applicable  provisions of the Internal
Revenue Code. NWS' income is taxable directly to its stockholders.

REVENUE RECOGNITION

NWSC,  NWS-LLC and NWSM-LLC purchase inventory items for resale to customers and
are liable for payment to the  suppliers,  as well as  collecting  payment  from
customers.  NWSM  receives  a fixed fee per case of liquor  distributed  for the
State of Michigan  (distribution fees) which is also responsible for payments to
suppliers. All Michigan shipments are cash on delivery.

Net sales and distribution fees are recognized at the time product is shipped.

2. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

In connection with an internal review of Company accounts receivable and billing
information during fiscal 2001, the Company discovered that accounts  receivable
had been overstated,  records had been altered or destroyed,  and that funds had
been   misappropriated   by  two  former  employees  at  its  Indiana  location.
Independent   accountants  and  investigators  were  immediately  retained,  the
responsible  parties were identified and other corrective and preventive actions
were taken. This defalcation resulted in material errors that occurred in fiscal
2000,  1999 and 1998  primarily  from an  overstatement  of accounts  receivable
during these  periods.  Accordingly,  the Company has restated its  Consolidated
Financial Statements for the fiscal years 2000, 1999 and 1998. Of the total loss
of  approximately  $4.1  million,  the Company  has  received,  or has  obtained
commitments for, total recoveries of $0.6 million, and it is possible that other
sources of recoveries will be identified.  For the Company's 2001 fiscal year, a
total charge of $0.8 million was reflected in operating results. Amounts charged
to the 2000, 1999 and 1998 operating results were $1.2 million, $0.5 million and
$1.0 million, respectively.


                                     - 35 -
<PAGE>

<TABLE>
<CAPTION>
The effect of the restatement on results of operations and balance sheets are as
follows (in thousands):

For the year ended:                         March 31, 2000                 March 31, 1999                 March 31, 1998
-------------------                         --------------                 --------------                 --------------
                                      Previously                     Previously                   Previously
                                       Reported       Restated        Reported      Restated       Reported         Restated
                                     -------------------------       -----------------------      --------------------------

<S>                                  <C>            <C>              <C>           <C>              <C>            <C>
Total revenue....................    $  625,757     $ 625,757        $ 553,353     $ 553,353        $ 521,411      $ 521,411
Gross profit.....................       137,313       137,313          116,619       116,619          109,677        109,677
Selling, general and
  administrative expenses .......       119,751       120,931          104,634       105,124           99,118        100,136
Income from operations...........        17,562        16,382           11,985        11,495           10,559          9,541
Net income.......................         5,855         4,675            1,159           669            7,111          6,093

As of:
Accounts receivable..............    $   44,952      $ 42,264         $ 37,042      $ 35,534         $ 31,313      $  30,295
Total assets.....................       191,140       188,452          180,376       178,868          169,102        168,084
Stockholders' equity.............        21,126        18,438           17,774        16,266           14,582         13,564
</TABLE>

3. SALE OF BOTTLED WATER DIVISION

Effective June 5, 2000, NWSC sold certain of its licensed brands, trademarks and
trade names of its bottled water division for  approximately  $10,440,000.  NWSC
received $9,960,000 for the sale of the assets at the sale date, and the balance
of  $480,000  was  received  in  September  2000.  NWSC  recognized  a  gain  of
approximately $7,524,000 from the sales of the related assets and liabilities.

4. PURCHASE OF R. M. GILLIGAN, INC.

On April 30, 1999,  NWSM purchased all of the stock of R. M. Gilligan,  Inc. for
$1,800,000.  R. M. Gilligan, Inc. is a Michigan corporation that conducts liquor
brokerage  activities  and  receives  revenue on a per case  basis  from  NWSM's
suppliers.

The  acquisition  was accounted for using the purchase  method of accounting and
the  results of  operations  have been  included in the  consolidated  financial
statements  since the date of  acquisition.  The purchase price was allocated to
the net assets acquired of $253,000,  and the remaining $1,547,000 was allocated
to goodwill and recorded in intangible assets,  based upon the fair market value
at the date of acquisition.



                                     - 36 -
<PAGE>

5. INVESTMENT IN KENTUCKY DISTRIBUTORSHIP

In December 1998, NWSC formed a new  distributorship  in Kentucky  (Commonwealth
Wine  &  Spirits,   LLC)  in  partnership   with  two  existing   Kentucky-based
distributors,  The Vertner Smith Company ("Vertner") and Kentucky Wine & Spirits
("Kentucky  W&S").  Under the terms, NWSC invested $7.5 million ($4.5 million in
cash and a $3  million  cash  franchise  fee),  in  exchange  for 25% of the new
company.  Vertner  and  Kentucky  W&S equally own the  remaining  75%.  NWSC has
accounted  for its  investment  in  Commonwealth  Wine & Spirits,  LLC using the
equity method.

The Company  received  distributions  of  $778,000,  $497,000  and $182,000 from
Commonwealth Wine & Spirits, LLC in 2001, 2000 and 1999 respectively.

6. INVENTORY

<TABLE>
<CAPTION>
Inventory at March 31 is comprised of the following:

                                          2000             2000
                                    ------------------------------

<S>                                 <C>              <C>
    Inventory at FIFO               $  89,377,000    $  79,652,000
    Less: LIFO reserve                  9,761,000        8,485,000
                                    ------------------------------
                                    $  79,616,000    $  71,167,000
                                    ==============================
</TABLE>

If the Company had used the first-in,  first-out  (FIFO) inventory  method,  net
income would have been  $1,276,000,  $939,000 and $546,000 greater in 2001, 2000
and 1999, respectively.

7. PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
Property and equipment at March 31 is comprised of the following:

                                          2001             2000
                                    -------------------- --------------------

<S>                                 <C>              <C>
  Land and improvements             $   1,473,000    $   1,532,000
  Buildings and improvements           30,298,000       26,505,000
  Furniture and equipment              15,070,000       16,313,000
  Warehouse equipment                  27,650,000       29,250,000
  Automobiles and trucks                5,850,000        7,401,000
  Construction in progress                427,000          891,000
                                    ------------------------------
                                       80,768,000       81,892,000
  Less: Accumulated depreciation       37,034,000       35,157,000
                                    ------------------------------
                                    $  43,734,000    $  46,735,000
                                    ==============================
</TABLE>



                                     - 37 -
<PAGE>

8. DEBT

<TABLE>
<CAPTION>
Long-term debt at March 31 is comprised of the following:

                                          2001             2000
                                    ------------------------------

<S>                                 <C>              <C>
Senior notes payable (A)            $ 110,000,000    $ 110,000,000
Bank revolving line of credit (B)             ---        1,000,000
Term loan payable of $500,000
  due 2002, including interest            500,000        1,000,000
Other                                      71,000          471,000
                                    ------------------------------
                                      110,571,000      112,471,000
Less:  current maturities                 571,000          900,000
                                    ------------------------------
                                    $ 110,000,000    $ 111,571,000
                                    ==============================
</TABLE>

(A) On January 25, 1999, the Company  issued  $110,000,000  of unsecured  senior
notes with a maturity  of January  15,  2009.  Interest  on the senior  notes is
10.125% and is payable  semiannually.  These senior notes are  guaranteed by the
Company's  subsidiaries.  The  guarantors  are all wholly owned and there are no
non-guarantor subsidiaries. The guarantees are full, unconditional and joint and
several.  Audited  financial  information  of  guarantor  subsidiaries  has been
omitted  because  management has  determined  that they would not be material to
users of the financial statements.

The  Company  used  the  net   proceeds  of  the  senior  notes   (approximately
$106,900,000)  to  repay  its  outstanding  bank  and  other  debt  and  amounts
outstanding under its revolving credit facilities.  The early  extinguishment of
the bank debt and  revolving  credit  facilities  resulted  in an  extraordinary
charge of $318,000 in 1999.

The bond indenture  restricts the ability of the Company and its subsidiaries to
incur   additional   indebtedness,   pay   dividends,   engage  in   mergers  or
consolidations,  make capital  expenditures  and otherwise  restricts  corporate
activities.

On or after  January 15, 2004,  the Company may redeem some or all of the senior
notes  at any  time at  stated  redemption  prices  plus  accrued  interest  and
liquidated damages.  Notwithstanding  the foregoing,  during the first 36 months
after  January  20,  1999,  the  Company  may redeem up to 33% of the  aggregate
principal  amount of the senior  notes at a redemption  price of 110.125%,  plus
accrued  interest and liquidated  damages,  with the net cash proceeds of one or
more public offerings of common stock of the Company.

(B) On January  25,  1999,  the Company  entered  into a credit  agreement  that
provides a revolving line of credit for borrowings of up to $60,000,000  through
January 25, 2004.  Line of credit  borrowings  are limited to eligible  accounts
receivable plus eligible  inventories.  The credit agreement permits the Company
to elect an  interest  rate based upon the LIBOR rate or the higher of the prime
lending rate or the federal funds  effective  rate plus 0.5%. At March 31, 2000,
all borrowings were being charged the prime lending rate plus 0.5%.


                                     - 38 -
<PAGE>

The Company also pays a commitment fee ranging from 0.25% to 0.5% of its undrawn
portion of its line of credit.

Credit  borrowings  are secured by the accounts  receivable and inventory of the
Company  and its  subsidiaries  and are  guaranteed  by  NWS'  subsidiaries.  In
addition,   the  agreement   restricts  the  ability  of  the  Company  and  its
subsidiaries to incur additional indebtedness,  pay dividends, engage in mergers
or consolidations,  make capital  expenditures and otherwise restricts corporate
activities.

<TABLE>
<CAPTION>
Principal payments due on debt at March 31, 2001 are as follows:

<S>        <C>               <C>
           2002              $     571,000
           2003                        ---
           2004                        ---
           2005                        ---
           2006                        ---
           Thereafter          110,000,000
                             -------------
                             $ 110,571,000
                             =============
</TABLE>

The  Company  guarantees  an  obligation  of a  related  entity,  which  has  an
outstanding balance of $500,000 at March 31, 2001.

Cash paid for interest was $13,212,000, $13,116,000 and $9,780,000 in 2001, 2000
and 1999, respectively.

9. COMMON STOCK

The Company has two authorized classes of capital stock:  voting $0.01 par value
common shares and nonvoting $0.01 par value common shares. Both classes of stock
have the same relative rights, performance limitations and restrictions,  except
that  nonvoting  shares are not  entitled to vote on any matters  submitted to a
vote of the stockholders, except as provided by law.

Common stock at March 31, 2001 and 2000 is comprised of the following:

                               Number of Shares
                Authorized           Issued          Outstanding       Amount
--------------------------------------------------------------------------------
Voting             200,000           104,520             104,520     $   1,000
Nonvoting       20,000,000         5,226,001           5,226,001     $  53,000


                                     - 39 -
<PAGE>

10. COMMITMENTS

The Company  leases office and warehouse  space under  noncancellable  operating
leases ranging from two to ten years, some of which include renewal and purchase
options and  escalation  clauses,  expiring on various dates  through 2011.  The
Company also leases  certain  trucks and  equipment  pursuant to  noncancellable
operating  leases with terms ranging from three to seven years.  Future  minimum
rent payments as of March 31, 2001 are as follows:

           2002                      $   4,257,000
           2003                          3,904,000
           2004                          3,195,000
           2005                          2,735,000
           2006                          2,411,000
           Thereafter                    3,218,000
                                     -------------
                                     $  19,720,000
                                     =============

Rent expense was  $4,738,000,  $4,171,000 and $3,738,000 in 2001, 2000 and 1999,
respectively.

11. PENSION PLANS

The Company sponsors a defined benefit pension plan covering  substantially  all
of its warehousemen and drivers.  Under terms of the plan, the Company is liable
for any unsatisfied  liabilities of the other affiliated  entities.  The Company
makes contributions to the plan based on amounts permitted by law.

<TABLE>
<CAPTION>
The components of net periodic  pension cost of the defined  benefit plan are as
follows for the years ended March 31:

                                                              2001             2000           1999
                                                        --------------------------------------------

<S>                                                     <C>             <C>              <C>
Service cost-benefits earned during the year            $   231,000     $    270,000     $   262,000
Interest on projected benefit obligation                    255,000          248,000         224,000
Actual return on plan assets                                600,000         (417,000)       (464,000)
Amortization of unrecognized net transition asset            20,000           20,000          20,000
Amortization of loss                                        (40,000)             ---             ---
Amortization of prior service cost                           35,000           35,000          35,000
Difference between expected and actual return on plan
   assets                                                  (937,000)         150,000         247,000
                                                        --------------------------------------------
Net periodic pension cost                               $   164,000     $    306,000     $   324,000
                                                        ============================================
</TABLE>


                                     - 40 -
<PAGE>

<TABLE>
<CAPTION>
The change in the projected benefit obligation,  plan assets,  funded status and
amounts recognized in the accompanying  consolidated balance sheets at March 31,
2001 and 2000 for the defined benefit pension plan are as follows:

                                                                 2001                 2000
                                                         -------------------------------------
<S>                                                      <C>                   <C>
Change in projected benefit obligation:
   Benefit obligation at beginning of year               $    3,483,000        $    3,751,000
     Service cost                                               231,000               270,000
     Interest cost                                              255,000               248,000
     Actuarial changes                                           44,000              (662,000)
     Benefits paid                                             (211,000)             (124,000)
                                                         ------------------------------------

   Benefit obligation at end of year                     $    3,802,000        $    3,483,000
                                                         ====================================

                                                                   2001                  2000
                                                         ------------------------------------
Change in plan assets:
   Fair value of plan assets at beginning of year        $    3,953,000        $    3,179,000
   Actual return on plan assets                                (600,000)              417,000
   Company contributions                                        410,000               481,000
   Benefits paid                                               (211,000)             (124,000)
                                                         ------------------------------------

   Fair value of plan assets at end of year              $    3,552,000        $    3,953,000
                                                         ====================================

Funded status of the plan (underfunded)                  $     (250,000)       $      470,000
Unrecognized net actuarial gain                                (372,000)           (1,092,000)
Unrecognized prior service cost                                 752,000               496,000
Unrecognized transition obligation                              107,000               126,000
                                                         ------------------------------------

Prepaid benefit cost                                     $      237,000        $          ---
                                                         ====================================

Weighted-average assumptions:
   Discount rate                                                  7.75%                 6.75%
   Expected return on plan assets                                 8.50%                 8.00%

Balance Sheet Classification:
   Prepaid benefit cost                                  $     (237,000)       $          ---
   Noncurrent deferred additional liability                     487,000                   ---
                                                         ------------------------------------

   Minimum liability                                     $      250,000        $          ---
                                                         ====================================
   Deferred pension costs (intangible asset)             $      487,000        $          ---
                                                         ====================================
</TABLE>



                                     - 41 -
<PAGE>

The Company also sponsors a defined  contribution pension plan for substantially
all employees not covered by the defined benefit plan. Contributions to the plan
are  made  at  the  discretion  of  the  Company  and  may  not  exceed  5% of a
participant's  compensation.  The  Company's  pension  expense  for the  defined
contribution  plan was  $1,215,000,  $1,293,000 and $1,044,000 in 2001, 2000 and
1999, respectively.

NWS-LLC  contributes to  union-sponsored  multi-employer  pension  plans,  which
provide  for  contributions  based on a  specified  rate per labor  hour.  Union
employees constitute  approximately 61% of NWS-LLC's workforce (all of which are
covered under agreements that expire in fiscal 2002) and 55% of NWSM's workforce
(19% of which are covered  under union  agreements  that expire in fiscal 2002).
Contributions  charged to expense were $588,000,  $668,000 and $602,000 in 2001,
2000 and 1999, respectively.  Information as to NWS-LLC's portion of accumulated
plan benefits and plan net assets is not currently available. Under the Employee
Retirement  Income Security Act of 1974 as amended,  an employer upon withdrawal
from a  multi-employer  plan is required to continue  funding its  proportionate
share of the plan's  unfunded  vested  benefits.  NWS-LLC  has no  intention  of
withdrawing from the plans.

12. RELATED PARTY TRANSACTIONS

NWSC had notes  receivable  from its two  stockholders  totaling  $4,723,000 and
$7,571,000 at March 31, 2001 and 2000, respectively.  The notes earn interest at
the prime  lending  rate.  Interest  income  earned was  $635,000,  $809,000 and
$880,000 in 2001, 2000, and 1999, respectively.  Proceeds of the notes were used
by the  stockholders  to purchase  additional  capital stock of NWSC and to make
loans to NWS-LLC.  The notes, which are due on demand,  have been reflected as a
reduction of stockholders'  equity in the  consolidated  balance sheets as it is
the  Company's  present  intent to  satisfy  these  receivables  through  future
stockholder distributions.

Effective  July 31, 1998,  the Company and its  stockholders  executed new notes
payable to stockholders to provide for a legal right of offset against the notes
receivable from  stockholders.  Accordingly,  as of March 31, 2001 and 2000, the
notes payable to stockholders (principal plus accrued interest) have been offset
against the notes  receivable from  stockholders,  with the resulting net amount
reflected as a reduction of stockholders'  equity. The total of the subordinated
notes  payable  was  $4,553,000  and  $4,459,000  at March  31,  2001 and  2000,
respectively.  These notes bear  interest at the prime  lending  rate.  Interest
expense on these notes was $405,000,  $425,000,  and $461,000 in 2001, 2000, and
1999, respectively.

The Company  paid  $170,000 in 2001,  2000,  and 1999 for  consulting  fees to a
minority stockholder of NWS-LLC.



                                     - 42 -
<PAGE>

A Director of the Company is the Chairman and Chief  Executive  Officer of eSkye
Solutions,  Inc. (eSkye).  The Company received 6,000,000 shares of common stock
in eSkye upon inception,  representing  founders stock. The Company accounts for
its investment in eSkye using the equity  method.  In October 1999 and May 2000,
the Company invested  $500,000 and $2,013,000 in convertible  preferred stock of
eSkye, respectively.

NWS leases facilities and certain office equipment to eSkye under the terms of a
three-year  operating  lease.  NWS  received  rent from  eSkye of  $262,000  and
$151,000  during the years ended March 31,  2001 and 2000,  respectively.  eSkye
reimbursed  the Company for the $384,000 of expenses  paid on its behalf  during
the year ended March 31, 2000.

The Company  paid  $1,000,000  in April 2000 on behalf of an  affiliate to Goose
Island, a distiller of specialty beer, for the national  distribution  rights on
all Goose Island malt-based products.



                                     - 43 -
<PAGE>

13. SEGMENT REPORTING

The  Company's  reportable  segments are  business  units that engage in product
sales and all other activities.  The majority of the all other activities relate
to distribution fee operations.  The Company evaluates performance and allocates
resources  based on these  segments.  The accounting  policies of the reportable
segments  are  the  same  as  those  described  in the  summary  of  significant
accounting policies.

<TABLE>
<CAPTION>
                                                        2001                2000               1999
                                                 -----------------------------------------------------

<S>                                              <C>                <C>                 <C>
Revenues from external customers
  Product sales                                  $  639,240,000     $  604,987,000      $  535,521,000
  All other                                          21,573,000         20,770,000          17,832,000
Interest expense
  Product sales                                      11,599,000         11,698,000           9,778,000
  All other                                           1,615,000          1,576,000           1,259,000
Depreciation expense
  Product sales                                       4,941,000          5,205,000           5,020,000
  All other                                           2,105,000          2,065,000           1,947,000
Amortization expense
  Product sales                                       1,300,000          1,243,000           1,320,000
  All other                                             544,000            392,000              87,000
Equity in earnings of Kentucky distributor
  Product sales                                         315,000            131,000             120,000
Loss on extinguishment of debt
  Product sales                                             ---                ---             172,000
  All other                                                 ---                ---             146,000
Segment profit (loss)
  Product sales (Restated)                           16,898,000          5,779,000             448,000
  All other                                          (1,986,000)        (1,104,000)            221,000
Segment assets
  Product sales (Restated)                          181,425,000        174,666,000         167,073,000
  All other                                          11,907,000         13,786,000          11,795,000
Expenditures on long-lived assets
  Product sales                                       5,961,000          5,869,000           7,798,000
  All other                                             122,000            803,000              60,000
</TABLE>



                                     - 44 -
<PAGE>

14. CONCENTRATION OF RISK

Products  purchased from four suppliers  amounted to approximately  66%, 70% and
65% of all purchases in 2001, 2000 and 1999, respectively.

During 2001,  one supplier  which  accounted for 33% of 2001 total  revenues was
acquired by an unrelated  third party.  While it is possible that certain brands
owned  by  this  supplier  may  not  be   represented   in  the  market  by  NWS
prospectively,  management  does not believe this situation will have a material
adverse affect on its total revenues.

15. LITIGATION

The  Company is a party to  various  lawsuits  and claims  arising in the normal
course of business.  While the ultimate resolution of lawsuits or claims against
the  Company  cannot be  predicted  with  certainty,  management  is  vigorously
defending all claims and does not expect that these matters will have a material
adverse  effect on the  financial  position  or  results  of  operations  of the
Company.


                                     - 45 -
<PAGE>

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

     Not applicable.

                  (Remainder of page intentionally left blank.)



                                     - 46 -
<PAGE>

                                    PART III

ITEM 10.       DIRECTORS & EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

     The following  table sets forth  information  concerning  the directors and
executive officers of NWS:

Name                  Age       Position
----                  ---       --------

James E. LaCrosse     68        Chairman, President, Chief Executive Officer,
                                Chief Financial Officer and Director
Martin H. Bart        68        Vice Chairman, Senior Vice President and
                                Director
David Wilson          43        Corporate Executive Vice President,
                                Sales & Marketing
Catherine LaCrosse    34        Corporate Vice President of Sales & Marketing
                                and Director
J. Smoke Wallin       34        Executive Vice President, Secretary
                                and Director
James Beck            57        President, NWS-Indiana and Director
David Bart            36        President, NWS-Illinois
Joseph J. Fisch       52        President, U.S. Beverage
Mitchell Stoltz       47        Director
Norma M. Johnston     72        Director
Percy N. Stone        70        Director
William M. Cockrum    63        Director
Vaughn D. Bryson      62        Director

     James E.  LaCrosse  has  served as  Chairman,  President,  Chief  Executive
Officer  and  a  Director  of  NWS  since   December,   1998.   He  assumed  the
responsibilities  of Chief  Financial  Officer  in May,  2000.  Previously,  Mr.
LaCrosse  served as Chairman and  Director  NWS-Indiana  since its  formation in
1973,  and  prior to 1973 was  employed  by  various  companies  in a  financial
capacity.  Mr. LaCrosse received an MBA from Harvard Business School in 1961 and
a BA in economics from Wesleyan University in 1957.

     Martin H. Bart has served as Senior Vice  President,  Vice  Chairman  and a
Director  of NWS  since  December,  1998.  Previously  Mr.  Bart  served as Vice
Chairman  of NWSI from 1995 to 1998.  Prior to joining  NWS,  Mr. Bart served in
various  positions  with the Joseph E.  Seagram & Son Company from 1956 to 1993,
and  retired as  Executive  Vice  President  of Sales and  Marketing.  Mr.  Bart
received a BA in economics New York University in 1955.

     David  Wilson has served as Corporate  Executive  Vice  President,  Sales &
Marketing,  since March 2000.  Mr. Wilson joined the NWS in 1996 and  previously
served as Executive  Vice  President of Spirits for  NWS-Illinois.  His previous
experience  includes 17 years with the Joseph E. Seagram  Corporation in various
management  positions  including Vice President,  on-premise,  North America and
state general manager in Arizona-New  Mexico,  Indiana and Illinois.  Mr. Wilson
received  an MBA  from  Bellarmine  College  in 1983 and a BBA in  business  and
economics from the University of Kentucky in 1979.

     Catherine  LaCrosse has served as Director of NWS since  December  1998 and
Vice President, Sales & Marketing, of NWS since March, 2000. Ms. LaCrosse joined
NWS in  1991  and has  served  in  various  sales  and  marketing  positions  in
NWS-Indiana,  NWS-Illinois  and  NWS-Michigan.  Ms.  LaCrosse  received  a BA in
history from Indiana University in 1990. She is Mr. LaCrosse's daughter.

     J. Smoke Wallin has served as Executive  Vice  President,  Secretary  and a
Director of NWS since December,  1998. He served as Chief Financial Officer from
December  1998 until April  2000.  Mr.  Wallin  joined NWS in 1988 and served as
Executive Vice President, Corporate Group, from 1993 to 1998. He received an MBA
in finance,  marketing and operations from Vanderbilt  University-Owen School of
Management in 1993 and a BS in economics  from Cornell  University in 1989.  Mr.
Wallin is Mr. LaCrosse's son-in-law.



                                     - 47 -
<PAGE>

     James Beck has served as Director of NWS since  December 1998 and President
of NWS-Indiana since 1992. Mr. Beck joined NWS in 1972 and has served in various
positions,  including  Executive  Vice  President of Sales for 14 years prior to
being  named  President  of  NWS-Indiana.  He has been a  Director  of NWS since
December,  1998. Mr. Beck received a BS in education from Ball State  University
in 1968.

     David Bart became  President of NWS-Illinois in April 2001. Mr. Bart joined
the company in 1993 and most  recently  served as  Executive  Vice  President of
Spirits in Illinois.  He has also held  positions of Executive Vice President of
Wines,  district manager of Hamburg  Distributing and the On-Premise Division as
well as area  manager in the Chain Wine  Division and General  Market.  Mr. Bart
received a JD from Emory University School of Law in 1990 and a BS in managerial
economics from Carnegie-Mellon University in 1987. He is Martin Bart's son.

     Joseph J. Fisch has served as  President/CEO  of U.S.  Beverage,  a premium
import/craft  and specialty beer marketer and sales company,  based in Stamford,
Connecticut, since its inception in 1997. His previous experience with Joseph E.
Seagram  Corporation  from 1971 through 1996 includes market  research  analyst;
vice  president  and  division  manager,  General Wine & Spirits  Company;  vice
president/general    manager,   eastern   region,   House   of   Seagram;   vice
president/general manager, House of Seagram; president, Seagram Beverage Company
He received a BS in business  administration  and  marketing  from Bowling Green
University, Ohio, in 1971.

     Mitchell  Stoltz has served as Director  of NWS since  December  1998.  Mr.
Stoltz  served as President of  NWS-Illinois  from 1995 to April 2001,  at which
time he resigned from that position but continues as a Director of NWS. Prior to
becoming President, he served as Executive Vice President of Sales and Marketing
for  NWS-Illinois.  Before  joining  NWS in  1992,  Mr.  Stoltz  served  as Vice
President and General  Manager for Magnolia  Marketing  Company and as President
for  Admiral  Wine  Company.  Mr.  Stoltz  received  an M.M.  from  Northwestern
University  Kellogg  Graduate  School of Management in 1985 and a BA in Business
from Notre Dame University in 1976.

     Norma M.  Johnston  has been a Director of  NWS-Indiana  since 1976,  and a
Director of NWS since December,  1998. Mrs.  Johnston served as Secretary of NWS
from 1976 to 1998.

     Percy N. Stone has served as Director of NWS since July 1999. He retired as
General Manager of New Business  Development  from Continental Can in 1984 after
working in various  capacities from 1957. Mr. Stone received an MBA from Harvard
Business  School  in  1957  and a BA in  chemistry  and  biology  from  Wesleyan
University in 1952.

     William M.  Cockrum has served as  Director of NWS since July 1999.  He has
been an Adjunct  Professor  of Finance in the UCLA  Anderson  School of Business
since 1984,  teaching  entrepreneurial  finance,  business ethics and investment
management.  Mr. Cockrum was recognized as top entrepreneurial  professor in the
nation by Business  Week  magazine in 1998.  Prior to joining  UCLA, he spent 25
years in investment  banking,  serving as a corporate officer at Becker Paribas,
Inc. until it was acquired by Merrill Lynch in 1984. Mr. Cockrum received an MBA
in  finance  and  marketing  from  Harvard  Business  School in 1961 and a BA in
economics from DePauw University in 1959.

     Vaughn D. Bryson has served as  Director of NWS since July 1999.  He serves
on the boards of several public companies, particularly in the biotech industry.
Mr. Bryson retired as Vice Chairman in 1996 from Vector Securities International
(now Prudent  Vector).  Prior to that,  he worked for Eli Lilly and Company from
1961 to 1993  serving as  President  and CEO from 1991 to 1993,  Executive  Vice
President from 1986 to 1990, and Board Member from 1984 to 1993. Mr. Bryson is a
graduate of the Stanford Sloan Program,  Stanford Graduate School of Business in
1967 and  received a BS in pharmacy  from the  University  of North  Carolina in
1960.

                                     - 48 -
<PAGE>

ITEM 11. EXECUTIVE COMPENSATION

COMPENSATION OF DIRECTORS

         Only outside Directors of NWS receive compensation per year for serving
as directors.  Each outside director  received $60,000 for the fiscal year ended
March 31, 2001 for serving on the board.

EXECUTIVE COMPENSATION

<TABLE>
<CAPTION>
     The  following  table sets forth the  compensation  paid by NWS to James E.
LaCrosse,  Chief  Executive  Officer,  and to  each  of  the  four  most  highly
compensated executive officers of NWS for fiscal 2001 and 2000:

                                              Summary Compensation Table

                                                                              Annual Compensation
                                                   ---------------------------------------------------------------
Name and Principal Position                        Year       Salary       Bonus       Compensation   Compensation(1)
---------------------------                        ----       ------       -----       ------------   ------------

<S>                                                <C>     <C>         <C>             <C>            <C>
James E. LaCrosse                                  2001    $ 407,000   $ 249,000       $  2,168 (3)   $  233,114 (2)
   Chairman, President, Chief Financial            2000      438,711     249,000          2,210 (3)      220,585 (2)
Officer, and CEO

Mitchell Stoltz (4)                                2001      221,404     400,000          3,600 (5)        8,769
   President, NWS-Illinois                         2000      202,884      60,000          6,993 (5)        8,596

James Beck                                         2001      157,627     200,000          1,114 (3)        6,940
   President, NWS-Indiana                          2000      159,035     255,000          1,017 (3)        7,788

David Wilson                                       2001      250,000      50,000            -0-            8,920
   Corporate Executive Vice President, Sales
   & Marketing                                     2000      219,923      50,000            -0-            4,305

Joseph Fisch                                       2001      250,000      35,000            -0-            5,000
   President/CEO, U.S. Beverage

<FN>
(1)  Includes 2001 employer 401(k) Plan  contributions in the following  amounts:  Mr. LaCrosse,  $8,000; Mr. Stoltz,
     $8,769;  Mr. Beck,  $6,940;  Mr.  Wilson,  $8,920;  and Mr. Fisch,  $5,000.  Includes 2000 employer  401(k) Plan
     contributions in the following  amounts:  Mr. LaCrosse,  $9,585;  Mr. Stoltz,  $8,596; Mr. Beck, $7,788; and Mr.
     Wilson,  $4,305.  Also includes company paid portion of medical premiums in the following  amounts for 2000: Mr.
     Wallin, $2,618.

(2)  Includes $225,114, and $211,000 for fiscal 2001 and 2000,  respectively,  of life insurance premiums paid by NWS
     on behalf of Mr.  LaCrosse and for the benefit of the LaCrosse family trust for estate  planning  purposes.  NWS
     expects the premiums paid on behalf of Mr. LaCrosse in the future will remain at their current annual rate. Upon
     the death of Mr. LaCrosse or termination of the life insurance policies, NWS is entitled to repayment out of the
     proceeds of the policies of all premiums paid on behalf of Mr.  LaCrosse for the benefit of the LaCrosse  family
     trust since the inception of the policy in 1994.

(3)  Represents personal use of a company supplied automobile.

(4)  Mr. Stoltz resigned as President of NWS-Illinois on April 30, 2001.

(5)  Represents  payments of $3,600 by NWS of country  club dues for fiscal  years 2001 and 2000,  and an  additional
     $3,093 representing personal use of a company-supplied automobile for fiscal year 2000.

                                    (Remainder of page intentionally left blank.)
</FN>
</TABLE>

                                                       - 49 -
<PAGE>

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     NWS has two authorized  classes of capital  stock,  voting common stock and
non-voting common stock. The following table sets forth the beneficial ownership
of NWS' voting common stock:

     (1)  By each  person  known by NWS to  beneficially  own 5% or more of NWS'
          voting common stock, and

     (2)  By all executive officers and directors of NWS as a group.

Except for Mr. LaCrosse and Mrs.  Johnston,  who have sole voting and investment
power with respect to their voting common stock, no other  executive  officer or
director owns any shares of NWS' voting common stock.

                                                       Number of
Name and Address                                         Shares        Percent
----------------                                         ------        -------
James E. LaCrosse
     700 West Morris Street
     Indianapolis, Indiana 46225.......................  86,520           83%
Norma M. Johnston
     700 West Morris Street
     Indianapolis, Indiana 46225.......................  18,000           17%
All executive officers and directors as a group
     (11 persons)...................................... 104,520          100%

     The stockholders of NWS have entered into stockholder  agreements with each
other and NWS. Such  agreements  contain  restrictions  relating to transfers of
stock and  provide for rights to  purchase  and sell stock of each  corporation,
among other matters. In particular,  the stockholder  agreement with NWS governs
the  transferability  of Mrs.  Johnston's  stock in NWS. The LaCrosse  family is
obligated to purchase Mrs.  Johnston's stock at her death or during her lifetime
should  she  decide to sell.  NWS  becomes  obligated  to  purchase  only if the
LaCrosse  family refuses or fails to purchase.  The LaCrosse family and NWS also
have the right to purchase Mrs.  Johnston's  stock at the death of Mr. LaCrosse.
Any obligation of NWS to purchase the stock owned by Mrs. Johnston is subject to
the terms of the  indenture  and the new credit  facility.  No right to purchase
stock owned by Mr.  LaCrosse or a trust for the benefit of his family  exists in
favor of Mrs. Johnston.

     The  stockholders  have also  agreed  not to take any  action or effect any
transfer that would cause NWS or any of its  subsidiaries  to fail to qualify as
an S corporation or other  pass-through  entity for federal income tax purposes.
In addition, the stockholders have entered into a tax indemnification  agreement
whereby they have agreed to indemnify NWS and its subsidiaries for any loss that
may arise in the event NWS or any of its  subsidiaries  should  fail to maintain
its pass-through status.

     The LaCrosse  family and NWS own life insurance  policies on behalf of Mrs.
Johnston in face amount of $4.0 million and $0.5 million, respectively.


                  (Remainder of page intentionally left blank.)


                                     - 50 -
<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     J. Smoke  Wallin,  a Director of the  Company,  is the  Chairman  and Chief
Executive Officer of eSkye Solutions, Inc. The Company received 1,500,000 shares
of common stock in eSkye  Solutions Inc. upon inception,  representing  founders
stock. eSkye Solutions,  Inc. subsequently issued a 4 to 1 split, thus 6,000,000
shares are  currently  held by NWS. The Company  accounts for its  investment in
eSkye  Solutions,  Inc. using the equity method.  In October,  1999, the Company
invested  $500,000 in convertible  preferred stock of eSkye Solutions,  Inc. The
Company invested an additional  $2,012,500 in convertible preferred stock in May
2000.

     NWS leases facilities and certain office equipment to eSkye Solutions, Inc.
under the terms of a three-year  operating  lease.  NWS received rent from eSkye
Solutions,  Inc. of $262,000 and  $151,000  during the year ended March 31, 2001
and 2000,  respectively.  eSkye  Solutions,  Inc.  reimbursed  the  Company  for
$384,000 of expenses paid on its behalf during 2000.

     From  time  to  time,   NWS-Indiana  has  loaned  money  to  its  principal
shareholders,  James E. LaCrosse and Norma M. Johnston,  the primary  purpose of
which was to provide  the  necessary  funds to  finance  start-up  expenses  and
working capital needs of NWS-Illinois,  an affiliated company owned prior to the
reorganization  by Mr. LaCrosse,  Mrs.  Johnston and Martin H. Bart. As of March
31, 2001,  total  indebtedness of Mr. LaCrosse and Mrs.  Johnston to NWS-Indiana
was $4.7 million.  The indebtedness,  which is presently due upon demand,  bears
interest  at  the  prime  lending  rate  of  the  Company's   principal  lending
institution (8.5% at March 31, 2001). The proceeds of the loans were provided by
Mr.  LaCrosse  and  Mrs.  Johnston  to  NWS-Illinois  in the  form of  loans  or
additional  capital  contributions.  This  indebtedness to Mr. LaCrosse and Mrs.
Johnston of $4.5 million,  which matures in 2009, is  subordinated to the senior
notes and the credit  facility,  and bears interest at 8.0% (prime rate at March
31,  2001).  At the  closing  of the  senior  notes  and  the  credit  facility,
NWS-Indiana  distributed  approximately  $1.8  million to Mr.  LaCrosse and Mrs.
Johnston.  Additionally,  the obligations of NWS-Illinois under the subordinated
shareholder  notes are expressly  subject to timely payment by Mr.  LaCrosse and
Mrs. Johnston of their obligations under their notes to NWS-Indiana.

     On  July  27,  1998,  Mr.  LaCrosse  transferred  substantially  all of his
non-voting stock to a family trust for estate-planning purposes. As part of this
transfer  and  in  addition  to  normal  distributions  for  tax  purposes,  NWS
distributed $3.6 million to Mr. LaCrosse, the family trust, and Mrs. Johnston in
the annual period ended March 31, 2001. These distributions were made within the
terms and conditions  contained in the Company's  indenture governing its senior
notes (including the limitation on restricted payments) and the credit facility.
The  family  trust  remitted  these  funds  to  Mr.  LaCrosse  in  repayment  of
indebtedness  for the non-voting  stock that was purchased on July 27, 1998. Mr.
LaCrosse and Mrs.  Johnston then remitted $3.6 million to  NWS-Indiana to reduce
their indebtedness described above.



                                     - 51 -
<PAGE>

     NWS-Indiana  and  NWS-Illinois  have operated as S  corporations  under the
Internal Revenue Code of 1986 (Code), and their respective subsidiaries have all
operated  as  qualified  subchapter  S  subsidiaries  under  the  Code or  other
similarly  taxed  pass-through  entities  (the "S  Corp.  Businesses").  NWS has
elected to be treated as an S corporation under the Code and has elected or will
elect for each of its  subsidiaries  to be treated  as  qualified  subchapter  S
subsidiaries.  The S Corp.  Businesses  have  not been  subject  to tax on their
respective net taxable incomes,  and the shareholders of the S Corp.  Businesses
have been directly  subject to tax on their respective  proportionate  shares of
such net taxable income.  NWS-Indiana and NWS-Illinois  have  historically  made
cash distributions to Mr. LaCrosse,  Mrs. Johnston and Mr. Bart in amounts equal
to or  greater  than their  respective  tax  obligations  related to the S Corp.
Businesses.  The aggregate amount of these distributions  during 1999, 2000, and
2001 were $5.0 million, $4.8 million and $10.6 million,  respectively. The terms
of  the  senior  notes  and  the  credit   facility  does  permit  NWS  to  make
distributions to shareholders  with respect to their tax liabilities  subject to
certain  conditions and  limitations  each of the fiscal years ending 1999, 2000
and 2001.

     NWS-Illinois also paid a company owned by Mr. Bart $0.2 million during each
of fiscal years 2001, 2000 and 1999 for certain consulting  services provided by
Mr. Bart to  NWS-Illinois.  During  1998,  NWS-Indiana  entered into a five-year
non-compete  agreement with James Beck,  president of NWS-Indiana and a Director
of NWS,  under which Mr. Beck was paid $0.3 million by the Company.  NWS-Indiana
obtained  certain  inventory and other property  related to the wholesale  cigar
distribution business previously operated by Mr. Beck.

     The  Company  paid  $1,000,000  in April  2000 on behalf  of United  States
Beverage, L.L.C. to Goose Island, a distiller of specialty beer for the national
distribution  rights on all Goose  Island  malt-based  products.  Joseph  Fisch,
President and CEO of U. S. Beverage,  beneficially  owns in excess of 10% equity
interest in U.S. Beverage.

     NWS pays "split-dollar" insurance premiums on seven insurance policies with
a fair value of $14.0  million on the lives of Mr.  LaCrosse and Mrs.  Johnston.
See Item 11-Executive Compensation. NWS is entitled to receive reimbursement for
all premiums  paid out of the proceeds of these  policies  upon the death of Mr.
LaCrosse and Mrs. Johnston. Premiums paid by NWS were $328,000 in 2001, $328,000
in 2000, and $320,000 in 1999. The LaCrosse  Family Trust is the  beneficiary of
those policies.

                  (Remainder of page intentionally left blank.)

                                     - 52 -
<PAGE>

                                     PART IV

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

     (a) Documents filed as part of this Report.
         --------------------------------------

          1.   Financial Statement

                                                                     Page(s) in
                                                                     this Report
                                                                     -----------

               Report of Independent Auditors                             28

               Consolidated balance sheets - March 31, 2001 & 2000        29

               Consolidated statements of income - Years ended
               March 31, 2001, 2000 & 1999                                30

               Consolidated statements of stockholders' equity -
               Years ended March 31, 2001, 2000 & 1999                    31

               Consolidated statements of cash flows - Years
               ended March 31, 2001, 2000 & 1999                          32

               Notes to consolidated financial statements              33 to 45


          2.   Financial Statement Schedule:

               Included as outlined in Item 8 of Part II of this
               Report.

               Schedule II - Valuation & Qualifying Accounts & Reserves   54

               Schedules  other than those  listed above are omitted as
               they  are  not  required,  or  not  applicable,  or  the
               information  is shown in the  Notes to the  Consolidated
               Financial Statements.

          3.   Exhibits

               See the Index to  Exhibits  on pages 56 & 57 of this  Form  10-K,
               which is incorporated by reference herein.

     (b)  Reports on Form 8-K. None.
          -------------------

     (c)  See the Index to Exhibits on pages 56 & 57 of this Form 10-K, which is
          incorporated by reference herein.



                                     - 53 -
<PAGE>

<TABLE>
<CAPTION>

                                            NATIONAL WINE & SPIRITS, INC.
                                                     SCHEDULE II
                                    VALUATION AND QUALIFYING ACCOUNTS AND RESERVES



                                                                           Additions
                                          Balance at      Charged to      Charged to                     Balance at
                                          Beginning        Costs and         Other                           End
          Description                     of Period        Expenses         Accounts    Deductions       of Period
--------------------------------------------------------------------------------------------------------------------

<S>                                      <C>              <C>             <C>         <C>              <C>
Year ended March 31, 2001
Deducted from asset account:
  Allowance for doubtful accounts        $  1,412,000     $   599,000     $    ---    $ 274,000 (1)    $   1,737,000
  LIFO reserve                              8,485,000       1,276,000          ---          ---            9,761,000
                                         ---------------------------------------------------------------------------
                                   Total $  9,897,000     $ 1,875,000     $    ---    $ 274,000        $  11,498,000
                                         ===========================================================================

Year ended March 31, 2000
Deducted from asset account:
  Allowance for doubtful accounts        $  1,298,000     $   544,000     $    ---    $ 430,000 (1)    $   1,412,000
  LIFO reserve                              7,546,000         939,000          ---          ---            8,485,000
                                         ---------------------------------------------------------------------------
                                   Total $  8,844,000    $  1,483,000     $    ---    $ 430,000        $   9,897,000
                                         ===========================================================================

Year ended March 31, 1999
Deducted from assets account:
  Allowance for doubtful accounts        $    900,000     $   504,000     $    ---    $ 106,000 (1)    $   1,298,000
  LIFO reserve                              7,000,000         546,000          ---          ---            7,546,000
                                         ---------------------------------------------------------------------------
                                   Total $  7,900,000     $ 1,050,000     $    ---    $ 106,000        $   8,844,000
                                         ===========================================================================

<FN>
(1)  Uncollectible accounts written off, net of recoveries.
</FN>

                                    (Remainder of page intentionally left blank.)

                                                        - 54 -
</TABLE>
<PAGE>


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on June 29, 2001.

                                   NATIONAL WINE & SPIRITS, INC.


                                   By: /s/ James E. LaCrosse
                                       -----------------------------------------
                                       James E. LaCrosse,
                                       Chairman, President, Chief Executive
                                       Officer, and Chief Financial Officer


     Pursuant to the  requirements  of the  Securities  Act,  this  Registration
Statement has been signed on the 29th day of June, 2001 by the following persons
in the capacities indicated:

      SIGNATURE                                      TITLE

/s/ James E.LaCrosse          Chairman,  President, Chief Executive Officer
--------------------------    (Principal Executive Officer), and Chief Financial
James E. LaCrosse             Officer


--------------------------    Director, Executive Vice President, and Secretary
J. Smoke Wallin


/s/ Martin H. Bart            Director
--------------------------
Martin H. Bart


s/ James Beck                 Director
--------------------------
James Beck


--------------------------    Director
Mitchell Stoltz


--------------------------    Director
William Cockrum


--------------------------    Director
Percy N. Stone


/s/ Norma M. Johnston         Director
--------------------------
Norma M. Johnston


/s/ Vaughn D. Bryson          Director
--------------------------
Vaughn D. Bryson


/s/ Catherine M. LaCrosse     Director
--------------------------
Catherine LaCrosse


                                     - 55 -
<PAGE>


                                INDEX TO EXHIBITS


   Exhibit
      No.                        Description
   -------                       -----------

     3.1  Amended and  Restated  Articles of  Incorporation  of National  Wine &
          Spirits,  Inc.  (Incorporated  by  reference  to  Exhibit  3.1  to the
          Company's  annual  report  on Form 10K for the year  ended  March  31,
          2000.)

     3.2  Amended  and  Restated  Bylaws  of  National  Wine  &  Spirits,   Inc.
          (Incorporated  by  reference  to Exhibit 3.2 to the  Company's  annual
          report on Form 10K for the year ended March 31, 2000.)

     3.3  Articles  of  Incorporation  of  National  Wine & Spirits  Corporation
          (incorporated by reference  Exhibit 3.3 to the Company's  Registration
          Statement no. 333-74589 on Form S-4, filed May 13, 1999).

     3.4  Bylaws  of  National  Wine  &  Spirits  Corporation  (incorporated  by
          reference  Exhibit 3.4 to the  Company's  Registration  Statement  no.
          333-74589 on Form S-4, filed May 13, 1999).

     3.5  Articles of  Incorporation  of NWS,  Inc.  (incorporated  by reference
          Exhibit 3.5 to the Company's  Registration  Statement no. 333-74589 on
          Form S-4, filed May 13, 1999).

     3.6  Bylaws of NWS,  Inc.  (incorporated  by  reference  Exhibit 3.6 to the
          Company's  Registration Statement no. 333-74589 on Form S-4, filed May
          13, 1999).

     3.7  Articles of  Incorporation  of NWS  Michigan,  Inc.  (incorporated  by
          reference  Exhibit 3.7 to the  Company's  Registration  Statement  no.
          333-74589 on Form S-4, filed May 13, 1999).

     3.8  Bylaws of NWS Michigan, Inc. (incorporated by reference Exhibit 3.8 to
          the Company's  Registration Statement no. 333-74589 on Form S-4, filed
          May 13, 1999).

     3.9  Articles  of  Organization  of  NWS-Illinois,   LLC  (incorporated  by
          reference  Exhibit 3.9 to the  Company's  Registration  Statement  no.
          333-74589 on Form S-4, filed May 13, 1999).

     3.10 Operating  Agreement of NWS-Illinois,  LLC  (incorporated by reference
          Exhibit 3.10 to the Company's  Registration Statement no. 333-74589 on
          Form S-4, filed May 13, 1999).

     4.1  Indenture relating to the Exchange Notes, dated as of January 25, 1999
          among National Wine & Spirits,  Inc.,  the  Subsidiary  Guarantors and
          Norwest Bank Minnesota,  N.A., as trustee  (including  cross-reference
          sheet  regarding  sections 310 through  318(a) of the Trust  Indenture
          Act)   (incorporated  by  reference  Exhibit  (4b)  to  the  Company's
          Registration  Statement  no.  333-74589  on Form S-4,  filed March 17,
          1999).

     4.2  A/B Exchange  Registration  Rights Agreement,  dated as of January 25,
          1999, among National Wine & Spirits,  Inc., the Subsidiary  Guarantors
          and the Initial Purchasers  (incorporated by reference Exhibit 4(b) to
          the Company's  Registration Statement no. 333-74589 on Form S-4, filed
          March 17, 1999).

     4.3  Form of  Exchange  Notes  (including  related  Subsidiary  Guarantors)
          (incorporated by reference Exhibit 4(c) to the Company's  Registration
          Statement no. 333-74589 on Form S-4, filed March 17, 1999).

     4.4  Guaranty  entered  into  as of  January  25,  1999  by all  Subsidiary
          Guarantors  (incorporated  by reference  Exhibit 4(d) to the Company's
          Registration  Statement  no.  333-74589  on Form S-4,  filed March 17,
          1999).


                                     - 56 -
<PAGE>

    10.1  Purchase  Agreement,  dated  January 20, 1999,  among  National Wine &
          Spirits,  Inc., the Subsidiary  Guarantors and the Initial  Purchasers
          (incorporated by reference Exhibit 10(a) to the Company's Registration
          Statement no. 333-74589 on Form S-4, filed March 17, 1999).

    10.2  Credit  Agreement,  dated  January 25,  1999,  among  National  Wine &
          Spirits,   Inc.,  the   Subsidiary   Guarantors  and  NBD,  as  agent.
          (incorporated by reference Exhibit 10(b) to the Company's Registration
          Statement no. 333-74589 on Form S-4, filed March 17, 1999).

     12   Statement regarding computation of ratios

     21   List of  subsidiaries  (incorporated  by  reference  Exhibit 21 to the
          Company's  Registration  Statement  no.  333-74589 on Form S-4,  filed
          March 17, 1999).




                                     - 57 -
<PAGE>

<TABLE>
<CAPTION>
STATEMENT REGARDING COMPUTATION OF RATIOS
EXHIBIT (12)


                                                            Years Ended March 31,
                                                                (in thousands)
                                      -------------------------------------------------------------------
                                                        1998         1999          2000
                                           1997       Restated     Restated      Restated          2001
<S>                                   <C>            <C>          <C>            <C>           <C>
Consolidated pretax income
 from continuing
 operations...........................$    1,603     $  6,093     $    987       $  4,675      $ 14,912

Interest..............................
                                           8,486        9,672       11,037         13,274        13,214

Net amortization of debt discount
  and premium and issuance expense....       261          325          385            628           629

Interest portion of rental
 expense..............................       634        1,120        1,122          1,251         1,422
                                      -----------------------------------------------------------------

Earnings..............................$   10,984     $ 17,210     $ 13,531       $ 19,828      $ 30,177
                                      =================================================================

Interest..............................$    8,486     $  9,672     $ 11,037       $ 13,274      $ 13,214

Net amortization of debt discount
  and premium and issuance expense....       261          325          385            628           629

Interest portion of rental
  expense.............................       634        1,120        1,122          1,251         1,422
                                      -----------------------------------------------------------------

Fixed Charges.........................$    9,381     $ 11,117     $ 12,544       $ 15,153      $ 15,265
                                      =================================================================

Ratio of earnings to fixed
   charges............................       1.2          1.5          1.1            1.3           2.0
</TABLE>


                                                 - 58 -
<PAGE>