##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)



|x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------------------

For the fiscal year ended June 29, 2011

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from
                     to

Commission File Number 1-3657

WINN-DIXIE STORES, INC.

(Exact name of registrant as specified in its
charter)



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Florida                                                        |  | 59-0514290                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|5050 Edgewood Court, Jacksonville, Florida                     |  | 32254-3699                          
|(Address of principal executive offices)                       |  | (Zip Code)                          

(904) 783-5000

(Registrants telephone number, including area code)

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



|                                         |  |                                          
|---------------------------------------- |  | -----------------------------------------
|Title of each class                      |  | Name of each exchange on which
registered
|Common Stock, par value $0.001 per share |  | The NASDAQ Stock Market LLC              

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

Title of each class

None

Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act.    Yes   ̈    No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act.    Yes   ̈    No  þ

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  þ    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) 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.   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of accelerated filer large accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                           |  |                      |  |                          |  |                             
|-------------------------- |  | -------------------- |  | ------------------------ |  | ----------------------------
|Large accelerated filer   ̈ |  | Accelerated filer  þ |  | Non-accelerated filer   ̈ |  | Smaller reporting company   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act).    Yes   ̈    No  þ

The aggregate market value of the common stock held by non-affiliates of the registrant on January 12, 2011, was approximately
$356.1 million.

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.    Yes  þ    No   ̈

As of August 11, 2011, 55,822,649 shares of Winn-Dixie Stores, Inc. common stock were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrants Proxy Statement for the 2011 Annual Meeting of Shareholders are
incorporated by reference in Part III hereof.









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WINN DIXIE STORES, INC.

ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED JUNE 29, 2011

TABLE OF CONTENTS



|           |  |                                                                                                              |    |            |    | 
|---------- |  | ------------------------------------------------------------------------------------------------------------ | -- | ---------- | -- | 
|           |  |                                                                                                              |    | PageNumber |   
|PART I     |  |                                                                                                              |    |           
|Item 1.    |  | Business                                                                                                     |    |            | 1  | 
|           |  |                                                                                                             
|Item 1A.   |  | Risk Factors                                                                                                 |    |            | 5  | 
|           |  |                                                                                                             
|Item 1B.   |  | Unresolved Staff Comments                                                                                    |    |            | 9  | 
|           |  |                                                                                                             
|Item 2.    |  | Properties                                                                                                   |    |            | 9  | 
|           |  |                                                                                                             
|Item 3.    |  | Legal Proceedings                                                                                            |    |            | 9  | 
|           |  |                                                                                                             
|Item 4.    |  | Reserved                                                                                                     |    |            | 9  | 
|           | 
|PART II    |  |                                                                                                              |    |           
|Item 5.    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |    |            | 10 | 
|           |  |                                                                                                             
|Item 6.    |  | Selected Financial Data                                                                                      |    |            | 12 | 
|           |  |                                                                                                             
|Item 7.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                        |    |            | 13 | 
|           |  |                                                                                                             
|Item 7A.   |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |    |            | 26 | 
|           |  |                                                                                                             
|Item 8.    |  | Financial Statements and Supplementary Data                                                                  |    |            | 27 | 
|           |  |                                                                                                             
|Item 9.    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |    |            | 57 | 
|           |  |                                                                                                             
|Item 9A.   |  | Controls and Procedures                                                                                      |    |            | 57 | 
|           |  |                                                                                                             
|Item 9B.   |  | Other Information                                                                                            |    |            | 62 | 
|           | 
|PART III   |  |                                                                                                              |    |           
|Item 10.   |  | Directors, Executive Officers and Corporate Governance                                                       |    |            | 62 | 
|           |  |                                                                                                             
|Item 11.   |  | Executive Compensation                                                                                       |    |            | 64 | 
|           |  |                                                                                                             
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters               |    |            | 64 | 
|           |  |                                                                                                             
|Item 13.   |  | Certain Relationships and Related Transactions and Director Independence                                     |    |            | 64 | 
|           |  |                                                                                                             
|Item 14.   |  | Principal Accounting Fees and Services                                                                       |    |            | 64 | 
|           | 
|PART IV    |  |                                                                                                              |    |           
|Item 15.   |  | Exhibits and Financial Statement Schedules                                                                   |    |            | 65 | 
|           | 
|Signatures |  |                                                                                                              | 68 |           



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PART I

The following should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8 of this Annual Report on Form 10-K. Unless specified to the contrary, all
information herein is reported as of June 29, 2011, which was the end of our most recently completed fiscal year. References such as the Company, we, our and us refer to Winn-Dixie Stores, Inc.
and its consolidated subsidiaries.

Forward-Looking Statements

Certain statements made in this report, and other written or oral statements made by us or on our behalf, may constitute forward-looking statements within the meaning of the federal
securities laws. Statements regarding future events and developments and our future performance, as well as managements expectations, beliefs, plans, estimates or projections related to the future, are forward-looking statements within the
meaning of these laws. These forward-looking statements include and may be indicated by words or phrases such as anticipate, estimate, plans, expects, projects, should,
will, believes or intends and similar words and phrases.

All forward-looking statements, as well
as our business and strategic initiatives, are subject to certain risks and uncertainties that could cause actual results to differ materially from expected results. Management believes that these forward-looking statements are reasonable. However,
you should not place undue reliance on such statements. These statements are based on current expectations and speak only as of the date of such statements. We undertake no obligation to publicly update or revise any forward-looking statement,
whether as a result of future events, new information or otherwise. Information concerning the risks and uncertainties that you may wish to consider is included in Item 1A: Risk Factors of this Annual Report on Form 10-K and elsewhere in
our filings with the Securities and Exchange Commission (the SEC). A number of factors, many of which are described in Item 1A: Risk Factors, could cause our actual results to differ materially from the expected results
described in our forward-looking statements.



|ITEM 1: | BUSINESS
|------- | --------

General

Founded in 1925, Winn-Dixie Stores, Inc. is a major food retailer operating primarily under the Winn-Dixie banner. As of June 29, 2011,
we operated 484 stores in five states in the southeastern United States.

On February 21, 2005 (the Petition Date),
Winn-Dixie Stores, Inc. and 23 then-existing direct and indirect wholly-owned subsidiaries (collectively, the Debtors) filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code (Chapter
11 or the Bankruptcy Code) in the United States Bankruptcy Court (the Court). Two of the then-existing wholly-owned subsidiaries of Winn-Dixie Stores, Inc. (collectively with the Debtors, the Company or
Winn-Dixie) did not file petitions under Chapter 11. On November 9, 2006, the Court entered its order confirming the Debtors modified plan of reorganization (the Plan or the Plan of Reorganization). The
Plan became effective and the Debtors emerged from bankruptcy protection on November 21, 2006 (the Effective Date).



1



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Under the Plan, 400 million shares of new common stock were authorized under the amended and restated
articles of incorporation of Winn-Dixie Stores, Inc. Pursuant to the terms of the Plan, 54 million shares of new common stock were issued to the Companys disbursing agent for distribution to unsecured creditors. All such shares were
issued without registration under the Securities Act of 1933, as amended, or state securities laws, in reliance on Section 1145 of the Bankruptcy Code. Subsequent to the Effective Date, the Companys common stock trades on The NASDAQ Stock
Market (NASDAQ) under the symbol WINN.

We generate revenues and cash as we sell products to guests in our stores. We
earn a profit by selling these products at price levels in excess of our costs, which include procurement, distribution, occupancy and overhead expenses. Our operations are within one reportable segment. The Consolidated Financial Statements set
forth in Item 8 below present our results of operations, financial position and cash flows.

Stores

The following chart identifies each of our markets by state and retail market area, the number of stores in each market area and the banners under which
they operate as of June 29, 2011. We operate our grocery warehouse stores under the SaveRite banner.



|                                 |  |       |     |  |            |  |     |          |  |  |   | 
|-------------------------------- |  | ----- | --- |  | ---------- |  | --- | -------- |  |  | - | 
|                                 |  | Total |     |  | Winn-Dixie |  |     | SaveRite | 
|Florida                          |  |       | 328 |  |            |  | 323 |          |  |  | 5 | 
|                                 |  |       |     |  |            |  |     |          |  |  |   | 
|Orlando / Daytona                |  |       | 67  |  |            |  | 66  |          |  |  | 1 | 
|Miami / Fort Lauderdale          |  |       | 72  |  |            |  | 72  |          |  |  |  | 
|Tampa /St. Petersburg            |  |       | 60  |  |            |  | 59  |          |  |  | 1 | 
|Jacksonville                     |  |       | 48  |  |            |  | 45  |          |  |  | 3 | 
|West Palm Beach / Fort Pierce    |  |       | 26  |  |            |  | 26  |          |  |  |  | 
|Fort Myers / Naples              |  |       | 14  |  |            |  | 14  |          |  |  |  | 
|Mobile / Pensacola / Panama City |  |       | 26  |  |            |  | 26  |          |  |  |  | 
|Tallahassee / Gainesville        |  |       | 15  |  |            |  | 15  |          |  |  |  | 
|                                 |  |       |     |  |            |  |     |          |  |  |   | 
|Alabama                          |  |       | 70  |  |            |  | 70  |          |  |  |  | 
|                                 |  |       |     |  |            |  |     |          |  |  |   | 
|Birmingham                       |  |       | 25  |  |            |  | 25  |          |  |  |  | 
|Mobile / Pensacola               |  |       | 19  |  |            |  | 19  |          |  |  |  | 
|Montgomery                       |  |       | 16  |  |            |  | 16  |          |  |  |  | 
|Columbus / Dothan                |  |       | 10  |  |            |  | 10  |          |  |  |  | 
|                                 |  |       |     |  |            |  |     |          |  |  |   | 
|Georgia                          |  |       | 21  |  |            |  | 21  |          |  |  |  | 
|                                 |  |       |     |  |            |  |     |          |  |  |   | 
|Louisiana                        |  |       | 51  |  |            |  | 51  |          |  |  |  | 
|                                 |  |       |     |  |            |  |     |          |  |  |   | 
|New Orleans                      |  |       | 32  |  |            |  | 32  |          |  |  |  | 
|Baton Rouge / Lafayette          |  |       | 19  |  |            |  | 19  |          |  |  |  | 
|                                 |  |       |     |  |            |  |     |          |  |  |   | 
|Mississippi                      |  |       | 14  |  |            |  | 12  |          |  |  | 2 | 
|                                 |  |       |     |  |            |  |     |          |  |  |   | 
|Total stores as of June 29, 2011 |  |       | 484 |  |            |  | 477 |          |  |  | 7 | 
|                                 |  |       |     |  |            |  |     |          |  |  |   | 

The following chart provides selected information related to our stores for the last five fiscal years:



|                                                           |  |      |      |  |      |  |      |      |  |  |      |  |  |      |      |  |  |  |      | 
|---------------------------------------------------------- |  | ---- | ---- |  | ---- |  | ---- | ---- |  |  | ---- |  |  | ---- | ---- |  |  |  | ---- | 
|                                                           |  | 2011 |      |  | 2010 |  |      | 2009 |  |  | 2008 |  |  | 2007 |     
|Opened during fiscal year                                  |  |      |     |  |      |  | 2    |      |  |  |     |  |  |      | 2    |  |  |  | 2    | 
|Closed or sold during fiscal year                          |  |      | 30   |  |      |  | 3    |      |  |  | 6    |  |  |      | 1    |  |  |  | 21   | 
|In operation at fiscal year-end                            |  |      | 484  |  |      |  | 514  |      |  |  | 515  |  |  |      | 521  |  |  |  | 520  | 
|Year-end average supermarket square footage (in thousands) |  |      | 46.8 |  |      |  | 46.9 |      |  |  | 46.8 |  |  |      | 46.7 |  |  |  | 46.8 | 



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Strategic Initiatives

Over the last several years, we have focused on creating a fresh and local experience in our stores. Building upon that foundation, we are now working to provide our guests a more meaningful
shopping experience that will further evolve and improve our brand image. Our multi-year strategic initiatives include building guest loyalty, growing profitable sales and improving our brand image. We recently introduced a strategic framework to
our team members that focuses on a refined company vision, a new set of values and a promise to our guests to make their lives easier and fun.

We believe capital investment in our stores is important to improving our brand image, and in fiscal 2011, we introduced enhancements to our store
remodel program. The enhancements include many expanded and upscale attributes that create a more inviting shopping experience in a new format that we refer to as a transformational store. Some of the enhancements are a wood-burning
rotisserie, an expanded deli department, a whole bean coffee station, a candy shop, and locally grown produce and other products local to the area. As we continue to refine our store remodel program, we will continue to select strategically stores
to transform our brand image for our guests.

Merchandising

Substantially all of our stores offer grocery, dairy, frozen food, meat, seafood, produce, deli, bakery, floral, health and beauty, and other general merchandise items. Certain stores offer pharmacies,
distilled spirits and fuel.

We offer national brands as well as many of our own private-label products. These products are delivered from our
distribution centers or directly to stores from manufacturers and wholesalers.

Competition

We face competition from both traditional grocery stores and non-traditional grocery retailers such as mass merchandisers, super-centers, warehouse club
stores, dollar-discount stores, drug stores, convenience stores, and restaurants. We compete based on price, product quality, variety, location, service, convenience, and store condition. The number and type of competitors varies by location, as
does our competitive position across our markets.

Suppliers and Raw Materials Sources

We receive the products sold in our stores from a number of sources. We are not dependent on a single or relatively few suppliers. We believe that the
products we sell are available in sufficient quantities to meet guest demand adequately. As with any supermarket, many brands have high consumer recognition. Though we may be able to find alternate suppliers for a particular type of product, we
would likely experience negative guest response if we were unable to supply a particular brand of product.



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Trademarks

We actively enforce and defend our rights related to our intellectual property portfolio. In addition to the Winn-Dixie trademark, we own approximately 80 other trademarks that are registered or pending
as applications in the United States Patent and Trademark Office.

Seasonality

Due to the influx of winter residents to the Southeast, particularly Florida, and increased purchases of food items for the holidays that occur from November through April, our sales are typically higher
during these months as compared to the rest of the year.

Working Capital

As of June 29, 2011, working capital was comprised of $887.9 million of current assets and $665.3 million of current liabilities. Normal operating fluctuations in these substantial balances can
result in changes to cash flows from operating activities as presented in the Consolidated Statements of Cash Flows that are not necessarily indicative of long-term operating trends. There are no unusual industry practices or requirements related to
working capital items.

Environmental Matters

We are subject to federal, state and local environmental laws that apply to store operations, property ownership and property development. We may be subject to certain environmental regulations regardless
of whether we lease or own stores or land, or whether environmental conditions were created by the owner, a prior tenant or us. We believe that compliance with such laws and regulations has not had a material effect on our capital expenditures,
operating results or competitive position.

Employees

As of June 29, 2011, we employed approximately 47,000 team members, of whom approximately 56% were employed on a part-time basis. None of our team members are covered by a collective bargaining
agreement.

Additional Information

We are a Florida corporation, headquartered at 5050 Edgewood Court, Jacksonville, Florida 32254-3699. Our telephone number is 904-783-5000.

Our web site, www.winn-dixie.com, provides additional information about our Company. There you can obtain, free of charge, Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current
Reports on Form 8-K, proxy statements and all of our other filings with the SEC, including amendments thereto. You can also obtain copies of all of our recent press releases. Our web site also contains important information about our corporate
governance practices, including our Code of Conduct, information on the members of our Board of Directors, our Governance Principles and our Board Committee Charters. The information on our web site is not part of and is not incorporated by
reference into this Annual Report on Form 10-K.



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|ITEM 1A: | RISK FACTORS
|-------- | ------------

Our business and strategic
initiatives are subject to certain risks and uncertainties that could cause actual results to differ materially from expected results. Additional information concerning the risks and uncertainties listed below, and other factors that you may wish to
consider, are contained elsewhere in our filings with the SEC.

We operate in a highly competitive industry with low profit margins and
actions taken by our competitors can negatively impact our results of operations.

We face competition from both traditional grocery stores
and non-traditional grocery retailers such as mass merchandisers, super-centers, warehouse club stores, dollar-discount stores, drug stores, convenience stores, and restaurants. Actions of our competitors can negatively impact our business,
particularly competitor investments in their store base and increased competitor promotional activity. Over the past several years, we have experienced a significant number of competitor store openings in our operating regions.

Our industry is highly competitive with low profit margins. Pricing is a significant driver of consumer choice in our industry and we regularly engage in
price competition, particularly through our promotional programs. To the extent that our competitors lower prices, through increased promotional activity or otherwise, our ability to maintain gross profit margins and sales levels may be negatively
impacted. Several of our primary competitors are larger than we are, have greater financial resources available to them and, therefore, may be able to devote greater resources to invest in pricing and promotional programs.

Actions taken by our competitors may negatively impact our business and we may not have sufficient resources to respond to significant competitor
investments in pricing and promotional programs or store base.

Failure to execute successfully our core strategic initiatives could
adversely affect our financial condition and results of operations.

Over the last several years, we have focused on creating a fresh
and local experience in our stores. Building upon that foundation, we are now working to provide our guests an improved shopping experience that will further evolve and improve our brand image. Our multi-year strategic initiatives include
building guest loyalty, growing profitable sales and improving our brand image. We recently introduced an updated strategic framework to our team members that focuses on a refined company vision, a new set of values and a promise to our guests to
make their lives easier and fun.

Our financial strategy is intended to achieve a balance between sales and earnings growth. Because many of
our operating costs  such as rent, utilities and minimum labor staffing levels  are largely fixed, low levels of sales productivity negatively impact profitability. Our sales per square foot are significantly less than those of our
leading competitors. To achieve levels of profitability consistent with most of our industry peers, we must increase our average sales per square foot, while maintaining or improving gross margin rates.

Our financial condition and results of operations could be adversely affected if we fail to successfully execute these core strategic initiatives or if
our initiatives do not meet the expectations of our guests.



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Failure to achieve expected results from our store-remodel program could adversely affect our financial
condition and results of operations.

We believe capital investment in our stores is important to improving our brand image. Stores in need
of remodeling are at risk of sales erosion, particularly when they compete with newer or better-maintained competitor facilities. We continually refine our remodel strategy using a market-by-market analysis, which considers such factors as the
appropriate remodel scope and expected returns. In fiscal 2011, we introduced enhancements to our remodel program to include many expanded and upscale attributes that create a more inviting shopping experience in a new format that we refer to as a
transformational store. As we continue to refine our store remodel program, we will continue to select strategically stores to transform our brand image for our guests.

If the remodel program does not meet the expectations of our guests, stay within the time and financial budgets we have forecasted or achieve expected results, our future financial condition and results
of operations could be materially adversely affected.

We expect that cash flows from operations and borrowing availability under our credit
facility will be sufficient to fund our existing operations and remodel program. However, in the event that our overall liquidity decreases, it may be necessary to reevaluate our liquidity needs, and, to the extent we deem appropriate, review our
business operations and capital structure to ensure appropriate overall liquidity. Actions we might take could include, but may not be limited to, capital expenditure reductions that impact the store remodel program, asset sales, or seeking
additional capital through issuances of debt or equity securities. Any issuance of debt securities could result in increased interest expense and additional restrictive covenants; any issuance of equity securities could result in dilution of
existing shareholders or in new equity securities having rights, preferences or privileges senior to those of existing holders of common stock.

Adverse economic conditions could negatively affect our results of operations and financial condition.

The retail food industry is sensitive to changes in overall economic conditions that impact consumer spending and purchasing habits. General economic
conditions in our market areas such as higher levels of unemployment, weakness in the housing market, inflation in food and energy, and lagging consumer confidence could reduce consumer spending and cause consumers to switch to a less expensive mix
of products or trade down to discounters for grocery items. Adverse economic conditions in our markets have affected and could continue to affect our results of operations.

In addition, the current operating environment remains uncertain, and factors such as inflation in food, energy and commodity prices and other operating costs, as well as extended duration or
deterioration in current economic conditions could negatively impact our results of operations and financial condition.

Failure to
attract, train and retain qualified associates could adversely affect our ability to carry out strategic initiatives and ultimately impact our financial performance.



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The retail food industry is labor intensive. Our ability to meet our labor needs, while controlling wage and
labor-related costs, is subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force in the markets in which we are located, unemployment levels within those markets, unionization of
the available work force, prevailing wage rates, changing demographics, health and other insurance costs and changes in employment legislation.

We must identify, develop, and retain talent to ensure that we can execute our strategic initiatives. Failure to do so could adversely affect our results
of operations.

Increased operating costs due to changes in laws and other regulations affecting our industry could adversely affect our
results of operations.

We are subject to numerous federal, state and local laws and regulations such as those affecting food
manufacturing, food and drug distribution and retailing, labor and environmental practices, accounting standards and taxation requirements.

Ongoing efforts related to the implementation of recently enacted food safety and health care reform legislation create uncertainty about the probability
and impact of future regulatory changes. In addition, new mandates, fees and taxes and stricter regulatory oversight can significantly impact operations and compliance costs.

Any changes in these laws or regulations could significantly increase our operating costs and adversely affect our results of operations.

We face risks inherent in providing pharmacy services at our stores, and continued reimbursement rate pressures and increased regulatory requirements in the pharmacy industry may adversely affect our
business and results of operations.

Pharmacies are exposed to risks such as filling and labeling of prescriptions, adequacy of warnings,
unintentional distribution of counterfeit drugs and expiration of drugs. Although we maintain professional liability and errors and omissions liability insurance, from time to time, claims result in the payment of significant amounts, some portions
of which may not be covered by insurance.

Sales of prescription drugs reimbursed by third party payers, including Medicare Part D and state
sponsored Medicaid agencies, represent a significant portion of our pharmacy sales. Continued reimbursement rate pressures, and increased regulatory requirements related to such third party payers, may adversely affect our business and results of
operations.

Food safety issues could negatively impact our brand image and results of operations.

We could be adversely affected if consumers lose confidence in the safety and quality of certain food or drug products, even if the basis for the concern
is out of our control. Adverse publicity about these types of concerns, whether or not valid, may discourage consumers from buying our products or cause production and delivery disruptions. The real or perceived sale of contaminated food or drug
products by us could result in product liability claims and a loss of the confidence of our guests, which could adversely affect our results of operations.

Disruptions or compromises in our information technology systems could adversely affect our business operations, our reputation with our customers and our results of operations.

We are dependent on large, complex information technology systems for many of our core business processes. Any disruptions in these systems due to
security breaches, internal failures of technology, severe damage to the data center or large scale external interruptions in technology infrastructure could adversely affect our results of operations.



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As with most retailers, we receive certain personal information about our customers. A compromise of our
security systems that results in customer personal information being obtained by unauthorized persons could require that we expend significant additional resources related to our information security systems. Such a security breach could also
adversely affect our reputation with our customers could result in litigation against us or the imposition of penalties and could adversely affect our results of operations.

The concentration of our locations in the southeast increases our vulnerability to severe storm damage, which could adversely affect our results of operations.

Our operations are concentrated in Florida and in other states along the Gulf of Mexico and the Atlantic Ocean, which increases the likelihood of being
negatively affected by hurricanes and windstorm activity. Specific risks that we face include the following:



| |  |  | while we have placed generators in stores we believe are most likely to be at risk from hurricanes and windstorm activity, we have not implemented a
comprehensive program to place generators in every store;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to re-open stores that may close as a result of damage to the store and/or the operating area;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | our ability to continue to distribute products to stores;
| | - |  | ---------------------------------------------------------



| |  |  | our ability to fund losses of inventory and other costs in advance of receipt of insurance payments; and
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | our ability to collect on insurance coverage, which is subject to the solvency of our insurance carriers, their approval of our claims and the timing
of claims processing and payment.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Variability in self-insurance liability estimates could significantly impact our
results of operations.

We self-insure for workers compensation, general liability, business interruptions, automobile liability,
property losses and employee medical coverage up to a set retention level, beyond which we maintain excess insurance coverage. Liabilities are determined using actuarial estimates of the aggregate liability for claims incurred and an estimate of
incurred but not reported claims, on an undiscounted basis. Our accruals for insurance reserves reflect certain actuarial assumptions and management judgments, which are subject to a high degree of variability. The variability is caused by factors
external to us such as:



| |  |  | historical claims experience;
| | - |  | -----------------------------



| |  |  | medical inflation;
| | - |  | ------------------



| |  |  | legislative changes to benefit levels;
| | - |  | --------------------------------------



| |  |  | trends relating to jury verdicts; and
| | - |  | -------------------------------------



| |  |  | claim settlement patterns
| | - |  | -------------------------

Any significant variation in these factors could cause a material change to our reserves for self-insurance liabilities as well as earnings.

Litigation or legal proceedings could expose us to significant liabilities and thus negatively affect our financial results.



8



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##### Table of Contents

We are party to various litigation claims and legal proceedings, including personnel and employment issues,
personal injury, and other claims and proceedings arising in the ordinary course of business. We evaluate these litigation claims and legal proceedings to assess the likelihood of unfavorable outcomes and to estimate, if possible, the amount of
potential losses. Based on these assessments and estimates, if any, we establish reserves and/or disclose the relevant litigation claims or legal proceedings as appropriate. These assessments and estimates are based on the information available to
management at the time and involve a significant amount of management judgment. Actual outcomes or losses may differ materially from those envisioned by our current assessments and estimates, which could adversely affect our results of operations
and financial condition.



|ITEM 1B: | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

None.



|ITEM 2: | PROPERTIES
|------- | ----------

Our corporate headquarters
are located in Jacksonville, Florida. Our stores are located in the southeastern United States, as further detailed in Item 1. We believe that all of our properties are in adequate condition for their intended use. We lease substantially all of
our facilities. Each lease provides for a minimum annual rent, while certain store leases also require contingent rental payments if sales volumes exceed specified amounts.

The following table details the properties utilized in our one reportable segment as of June 29, 2011:



|                       |  |       |   |  |        |  |     |       |  |  |     | 
|---------------------- |  | ----- | - |  | ------ |  | --- | ----- |  |  | --- | 
|                       |  | Owned |   |  | Leased |  |     | Total | 
|Retail Stores          |  |       | 8 |  |        |  | 476 |       |  |  | 484 | 
|Distribution Centers   |  |       | 1 |  |        |  | 5   |       |  |  | 6   | 
|Corporate Headquarters |  |       |  |  |        |  | 1   |       |  |  | 1   | 
|                       |  |       |   |  |        |  |     |       |  |  |     | 
|Total                  |  |       | 9 |  |        |  | 482 |       |  |  | 491 | 
|                       |  |       |   |  |        |  |     |       |  |  |     | 

A more detailed description of our leasing arrangements appears in Item 8, Note 12.



|ITEM 3: | LEGAL PROCEEDINGS
|------- | -----------------

See Note 16 to the
Consolidated Financial Statements included in Item 8 of this Report for a discussion of legal proceedings.



|ITEM 4: | RESERVED
|------- | --------



9



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##### Table of Contents

PART II



|ITEM 5: | MARKET FOR THE REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ----------------------------------------------------------------------------------------------------------------

Winn-Dixies common stock is traded on NASDAQ under the symbol WINN. The number of holders of record of our common stock as of August 11, 2011,
was 3,994. Approximately 75% of our outstanding common stock is held in street name by depositories or nominees on behalf of beneficial holders.

We did not pay dividends during fiscal 2011 or fiscal 2010. Under the terms of our Credit Agreement, we are restricted from paying dividends.

We did not repurchase any of our equity securities during the fourth quarter of fiscal 2011.

The
following table shows the quarterly high and low sales prices of the Companys common stock for fiscal 2011 and fiscal 2010:



|               |  |      |       |  |      |  |      |      |  |  |       |  |  |  |       | 
|-------------- |  | ---- | ----- |  | ---- |  | ---- | ---- |  |  | ----- |  |  |  | ----- | 
|               |  | 2011 |       |  | 2010 | 
|               |  | High |       |  | Low  |  |      | High |  |  | Low   | 
|First Quarter  |  | $    | 10.44 |  |      |  | 6.25 |      |  |  | 16.00 |  |  |  | 12.36 | 
|Second Quarter |  | $    | 7.46  |  |      |  | 5.95 |      |  |  | 15.08 |  |  |  | 9.80  | 
|Third Quarter  |  | $    | 7.20  |  |      |  | 6.05 |      |  |  | 13.17 |  |  |  | 8.90  | 
|Fourth Quarter |  | $    | 9.56  |  |      |  | 6.53 |      |  |  | 13.90 |  |  |  | 9.60  | 

The following table presents information about our common stock that may be issued under equity-based compensation plans
as of June 29, 2011:



|                                                       |  |                                                                                                           |       |  |                                                                                    |  |       |                                                                                                                                                 |  |  |       | 
|------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------- | ----- |  | ---------------------------------------------------------------------------------- |  | ----- | ----------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ----- | 
|Plan Category                                          |  | (a)Number of securities 
to beissued upon exercise ofoutstanding optionswarrants and rights (inthousands) |       |  | (b)Weighted-averageexercise price
ofoutstanding options,warrants and rights (1)($) |  |       | (c)Number of 
securitiesremaining available forfuture issuance underequity compensation plans(excluding securities incolumn (a)) (in thousands) | 
|Equity compensation plans approved by shareholders     |  |                                                                                                           | 6,302 |  |                                                                                    |  | 14.18 |                                                                                                                                                 |  |  | 1,728 | 
|Equity compensation plans not approved by shareholders |  |                                                                                                           |      |  |                                                                                    |  |      |                                                                                                                                                 |  |  |      | 
|                                                       |  |                                                                                                           |       |  |                                                                                    |  |       |                                                                                                                                                 |  |  |       | 
|Total                                                  |  |                                                                                                           | 6,302 |  |                                                                                    |  | 14.18 |                                                                                                                                                 |  |  | 1,728 | 
|                                                       |  |                                                                                                           |       |  |                                                                                    |  |       |                                                                                                                                                 |  |  |       | 



|(1) | The weighted
average exercise price does not take into account 2.3 million shares issuable related to restricted stock units, which have no exercise price.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

The following graph shows the cumulative total shareholder return for the Companys common stock during
the period from November 22, 2006, to June 29, 2011. Five-year historical data is not presented because the Companys stock began trading on NASDAQ on November 22, 2006, following the Companys emergence from bankruptcy.

The graph also shows the cumulative returns of the Standard & Poors 500 Index and the Standard & Poors 500 Food
Retail Index. The Standard & Poors 500 Food Retail Index replaced a peer group of food retailers used in the prior fiscal years, which included Supervalu Inc., The Kroger Co., Safeway Inc., and The Great Atlantic and Pacific Tea
Company Inc. The established industry index is designed to represent and measure the retail food sub-industry.

LOGO

Data and graph provided by Zacks Investment Research, Inc. Copyright© 2011, Standard & Poors, a division of The McGraw-Hill Companies, Inc. All rights reserved. Used with
permission.



11



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##### Table of Contents

|ITEM 6: | SELECTED FINANCIAL DATA
|------- | -----------------------

Upon emergence
from bankruptcy protection, we adopted the fresh-start reporting provisions of the American Institute of Certified Public Accountants Statement of Position 90-7, Financial Reporting for Entities Under the Bankruptcy Code
effective November 15, 2006, which was the end of our immediately preceding accounting period. Under fresh-start reporting, a new reporting entity was deemed to have been created, and all assets and liabilities were revalued to their fair
values, which resulted in material adjustments to the historical carrying amount of reorganized assets and liabilities. Accordingly, our Consolidated Financial Statements for periods prior to November 15, 2006, are not comparable to our
Consolidated Financial Statements for periods on or after November 15, 2006.

References to the Successor refer to Winn-Dixie
on or after November 15, 2006, after application of fresh-start reporting. References to the Predecessor refer to Winn-Dixie prior to November 15, 2006. References such as the Company, we,
our and us refer to Winn-Dixie Stores, Inc. and its consolidated subsidiaries, whether Predecessor and/or Successor, as appropriate.

We derived the financial data below from our Consolidated Financial Statements included in Item 8 of this report and from our previously issued consolidated financial statements. We reclassified all
necessary data to reflect discontinued operations, as described in Note 13 of the Consolidated Financial Statements. The following table should be read in conjunction with Managements Discussion and Analysis of Financial Condition and
Results of Operations and our Consolidated Financial Statements, included in Item 7 and Item 8, respectively, of this report.



|                                                           |        |           |       |                             |             |  |                            |      |  |  |       |  |  |  |       |  |  |  |       |  |  |  |       |  
|---------------------------------------------------------- | ------ | --------- | ----- | --------------------------- | ----------- |  | -------------------------- | ---- |  |  | ----- |  |  |  | ----- |  |  |  | ----- |  |  |  | ----- | -
|                                                           |        | Successor |       |                             | Predecessor | 
|                                                           | Fiscal |           |       | 32 weeksended 
June 27,2007 |             |  | 20
weeksended Nov. 15,2006 |     
|In millions, except per share data                         |        | 2011      |       |                             | 2010(1)     |  |                            | 2009 |  |  | 2008  |  |  | 
|Results of continuing operations:                          |        |           |       |                             |             |  |                            |      |  |  |       |  |  |  |       |  |  |  |       |  |  |  |       |  
|Net sales                                                  |        | $         | 6,881 |                             |             |  | 6,980                      |      |  |  | 7,079 |  |  |  | 6,975 |  |  |  | 4,322 |  |  |  | 2,554 |  
|Gross profit                                               |        | $         | 1,918 |                             |             |  | 1,992                      |      |  |  | 2,017 |  |  |  | 1,905 |  |  |  | 1,180 |  |  |  | 678   |  
|Operating and administrative expenses                      |        | $         | 1,939 |                             |             |  | 1,950                      |      |  |  | 1,953 |  |  |  | 1,878 |  |  |  | 1,138 |  |  |  | 743   |  
|(Loss) income before reorganization items and income taxes |        | $         | (33   | )                           |             |  | 32                         |      |  |  | 76    |  |  |  | 29    |  |  |  | 46    |  |  |  | (88   | )
|Reorganization items, net gain                             |        | $         |      |                             |             |  |                           |      |  |  |      |  |  |  |      |  |  |  |      |  |  |  | (334  | )
|(Loss) income from continuing operations                   |        | $         | (30   | )                           |             |  | 37                         |      |  |  | 40    |  |  |  | 15    |  |  |  | 29    |  |  |  | 260   |  
|Net (loss) income per share from continuing operations:    |        |           |       |                             |             |  |                            |      |  |  |       |  |  |  |       |  |  |  |       |  |  |  |       |  
|Basic and Diluted                                          |        | $         | (0.54 | )                           |             |  | 0.67                       |      |  |  | 0.74  |  |  |  | 0.28  |  |  |  | 0.54  |  |  |  | 1.84  |  
|Financial data as of fiscal period end:                    |        |           |       |                             |             |  |                            |      |  |  |       |  |  |  |       |  |  |  |       |  |  |  |       |  
|Capital expenditures                                       |        | $         | 93    |                             |             |  | 189                        |      |  |  | 223   |  |  |  | 229   |  |  |  | 69    |  |  |  | 24    |  
|Working capital                                            |        | $         | 223   |                             |             |  | 241                        |      |  |  | 295   |  |  |  | 314   |  |  |  | 441   |  |  |  | 433   |  
|Total assets                                               |        | $         | 1,800 |                             |             |  | 1,838                      |      |  |  | 1,815 |  |  |  | 1,776 |  |  |  | 1,699 |  |  |  | 1,719 |  
|Capital lease obligations - long term                      |        | $         | 32    |                             |             |  | 20                         |      |  |  | 24    |  |  |  | 18    |  |  |  | 19    |  |  |  | 9     |  
|Shareholders equity                                       |        | $         | 864   |                             |             |  | 924                        |      |  |  | 879   |  |  |  | 826   |  |  |  | 797   |  |  |  | 759   |  



|(1) | Fiscal 2010 was comprised of 53 weeks.
|--- | --------------------------------------



12



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##### Table of Contents

|ITEM 7: | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

Managements Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements and statements of our business strategies, all of which are
subject to certain risks. Item 7 should be read in conjunction with the information contained in Forward-Looking Statements at the beginning of this report and with the Consolidated Financial Statements and Notes thereto included in
Item 8. When multiple factors are provided as the explanation for business results, we quantify the approximate effect of each factor to the extent that it is practical for us to do so. References such as the Company,
we, our and us refer to Winn-Dixie Stores, Inc., and its consolidated subsidiaries.

OVERVIEW

Summary

Fiscal 2011 was a challenging economic environment. We focused on balancing sales and margin in our pricing and promotional programs and implementing sustainable merchandising and marketing initiatives
tailored to the needs of our guests. As a result, our identical store sales were positive for the fourth quarter and essentially flat for fiscal year 2011, as compared to the corresponding prior year period. Our identical stores sales were impacted
positively by inflation and several key company initiatives (such as our fuelperks!® Rewards program, the
rollout of our computer generated ordering system and our remodel program), offset by competitive activity, other general market factors and the continued mix shift from brand name pharmaceutical products to generics. Identical store sales for
fiscal 2011 decreased 0.1% as compared to fiscal 2010. Gross profit as a percentage of net sales for fiscal 2011 decreased 0.6% compared to fiscal 2010 due to a higher LIFO charge in fiscal 2011 and the effect of our pricing and promotional
programs. Operating and administrative expenses decreased due to an extra week in fiscal 2010 offset by increases in payroll and payroll related expenses, depreciation and in general liability claims losses.

As we announced in July 2010, in order to lower our cost structure, improve efficiency, and build the right foundation for our business, we reviewed both
our retail operations and support structure. As a result, we decided to exit 30 non-remodeled, underperforming stores. In addition, we eliminated approximately 120 positions in our corporate and field support staff. The store closures and position
eliminations were substantially complete by the end of the first quarter of fiscal 2011.



13



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##### Table of Contents

RESULTS OF OPERATIONS

Continuing Operations

Fiscal year ended June 29, 2011 (fiscal 2011),
comprised of 52 weeks, as compared to fiscal year ended June 30, 2010 (fiscal 2010), comprised of 53 weeks



|                                                                     |  |            |       |   |            |  |       |                    |   |  |      |   |  |  |      |  
|-------------------------------------------------------------------- |  | ---------- | ----- | - | ---------- |  | ----- | ------------------ | - |  | ---- | - |  |  | ---- | -
|Dollar amounts in millions                                           |  | Fiscal2011 |       |   | Fiscal2010 |  |       | Increase(Decrease) |   |  | %    |  
|Net sales                                                            |  | $          | 6,881 |   |            |  | 6,980 |                    |   |  | (99  | ) |  |  | -1.4 | %
|Impact of extra week in fiscal 2010                                  |  |            |      |   |            |  | (113  | )                  |   |  | 113  |   |  |  |      |  
|Other revenue                                                        |  |            | (50   | ) |            |  | (44   | )                  |   |  | (6   | ) |  |  |      |  
|Sales in 2 new and 3 closed stores                                   |  |            | (48   | ) |            |  | (31   | )                  |   |  | (17  | ) |  |  |      |  
|                                                                     |  |            |       |   |            |  |       |                    |   |  |      |   |  |  |      |  
|Identical store sales                                                |  | $          | 6,783 |   |            |  | 6,792 |                    |   |  | (9   | ) |  |  | -0.1 | %
|                                                                     |  |            |       |   |            |  |       |                    |   |  |      |   |  |  |      |  
|Basket size (average sales per guest visit on identical store sales) |  |            |       |   |            |  |       | 1.3                | %
|Transaction count (number of guest visits on identical store sales)  |  |            |       |   |            |  |       | -1.5               | %
|Gross profit on net sales                                            |  | $          | 1,918 |   |            |  | 1,992 |                    |   |  | (74  | ) |  |  | -3.7 | %
|% of net sales                                                       |  |            | 27.9  | % |            |  | 28.5  | %                  |   |  | -0.6 | % |  |  |      |  
|Operating and administrative expenses                                |  | $          | 1,939 |   |            |  | 1,950 |                    |   |  | (11  | ) |  |  | -0.6 | %
|% of net sales                                                       |  |            | 28.2  | % |            |  | 27.9  | %                  |   |  | 0.3  | % |  |  |      |  

Net Sales. Net sales for the 52 weeks ended June 29, 2011, decreased as compared to the prior year due
primarily to an extra week of sales in fiscal 2010. Identical store sales were essentially flat in fiscal 2011 as compared to fiscal 2010.

We
define identical store sales as sales from continuing operations stores, including stores that we remodeled or enlarged during the year and excluding stores that opened or closed during the year. Identical store sales comparisons were measured on a
52-week basis while the net sales comparison was based on 52 weeks in fiscal 2011 and 53 weeks in fiscal 2010.

Identical
store sales were impacted positively by inflation and key company initiatives (such as our fuelperks!® Rewards
program, computer generated ordering system and our remodel program), offset by competitive activity, other general market factors and the continued mix shift from brand name pharmaceutical products to generics.

During fiscal 2011, food inflation was the largest factor that impacted identical store sales. We experienced sizable cost increases in several
commodities that, in most cases, we were able to pass through. In fiscal 2010, inflation had an insignificant impact on the full year identical store sales.

Gross Profit on Net Sales. Gross profit as a percentage of net sales for the 52 weeks ended June 29, 2011, decreased due primarily to a higher LIFO charge recognized in fiscal 2011 compared to
fiscal 2010 (30 basis points) and the effect of pricing and promotional activity (20 basis points) and other items (10 basis points).



14



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##### Table of Contents

Operating and Administrative Expenses. The table below details the changes in operating and
administrative expenses for fiscal 2011 as compared to fiscal 2010. Fiscal 2011 operating and administrative expenses include 52 weeks compared to 53 weeks in fiscal 2010 (dollar amounts in millions).



|                                     |  |             |       |   |                             |  |      |               |  |  |      |  
|------------------------------------ |  | ----------- | ----- | - | --------------------------- |  | ---- | ------------- |  |  | ---- | -
|Increase (decrease)                  |  | As Reported |       |   | EstimatedFiscal 2010week 53 |  |      | 52 week basis | 
|Depreciation                         |  | $           | 12.2  |   |                             |  |     |               |  |  | 12.2 |  
|Insurance(1)                         |  |             | 7.1   |   |                             |  | 1.5  |               |  |  | 8.6  |  
|Payroll and payroll-related expenses |  |             | (3.6  | ) |                             |  | 19.8 |               |  |  | 16.2 |  
|Share-based compensation             |  |             | (6.8  | ) |                             |  | 0.3  |               |  |  | (6.5 | )
|Occupancy cost                       |  |             | (8.8  | ) |                             |  | 4.1  |               |  |  | (4.7 | )
|Other, net                           |  |             | (11.4 | ) |                             |  | 9.0  |               |  |  | (2.4 | )
|                                     |  |             |       |   |                             |  |      |               |  |  |      |  
|                                     |  | $           | (11.3 | ) |                             |  | 34.7 |               |  |  | 23.4 |  
|                                     |  |             |       |   |                             |  |      |               |  |  |      |  



|(1) | Includes cost of
claims, premiums, administrative and other costs related to general liability, workers compensation and auto liability coverage, as well as premiums on property loss and other lines of coverage. Insurance costs related to employee medical are
included in payroll and payroll-related expenses.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operating and administrative expenses decreased in fiscal 2011 as
compared to fiscal 2010 due primarily to an extra week of expense in fiscal 2010 offset by increases in payroll and payroll related expenses, depreciation and self-insurance. During fiscal 2011 and fiscal 2010, we recorded adjustments to our prior
year self-insurance reserves as a result of the actuarial studies performed in the second and fourth quarters of each fiscal year. The reserve increase in fiscal 2011 negatively impacted operating and administrative expense by $6.6 million, while
the reserve decrease in fiscal 2010 positively impacted operating and administrative expense by $10.9 million. The $17.5 million increase in reserve adjustments in fiscal 2011 as compared to fiscal 2010 was partially offset by a decrease in the cost
of insurance premiums and a reduction in the amount of workers compensation and general liability claims occurring in fiscal 2011.

Impairment Charges.Impairment charges of $5.2 million and $4.6 million were recorded in fiscal 2011 and fiscal 2010, respectively. See
Item 8, Note 6 for further discussion of impairment charges.

Interest Expense, net. Interest expense is primarily interest
related to our credit facility and capital leases, offset by interest income. Interest expense, net was $7.2 million and $4.7 million for fiscal 2011 and fiscal 2010, respectively.

The increase in interest expense, net was primarily related to the acceleration of debt issue costs totaling $0.8 million associated with the amended and restated $600.0 million credit facility, an
increase in capital lease interest for new leases in fiscal 2011 and a decrease in capitalized interest as compared to fiscal 2010. See Item 8, Note 9 for further description of interest expense, net.



15



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##### Table of Contents

Income Taxes. Income tax benefit for fiscal 2011 was $3.2 million, which resulted in an effective tax
rate benefit of 9.8% on continuing operations. The rate reflected our ability to carry back certain net operating losses while maintaining a full valuation allowance and certain refundable credits. Income tax benefit for fiscal 2010 was $4.3
million, which resulted in an effective tax rate benefit of 13.3% on continuing operations. The rate reflected our ability to carry back certain net operating losses while maintaining a full valuation allowance, certain refundable credits and the
benefit of a reduction of uncertain tax positions.

We maintain a full valuation allowance against substantially all of our net deferred tax
assets. The valuation allowance will be maintained until there is sufficient positive evidence to conclude that it is more likely than not that the net deferred tax assets will be realized.

As of June 29, 2011, we had $776.5 million of net operating loss (NOL) carryforwards for federal income tax purposes that will begin to expire in fiscal 2025 and NOL carryforwards for state income
tax purposes of $996.3 million that will begin to expire in fiscal 2019. In addition, we had tax credit carryforwards of $37.9 million for federal income tax purposes, which will begin to expire in fiscal 2023.

As of June 29, 2011, we had $551 thousand of unrecognized tax benefits; if recognized, none of this amount would change our effective income tax
rate. We do not anticipate that we will record any significant change in the unrecognized tax benefit during fiscal 2012.

Generally, the
statute of limitations remains open for our federal and state income tax returns for our fiscal 2009 through 2011 tax years.



16



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##### Table of Contents

Fiscal year ended June 30, 2010 (fiscal 2010), comprised of 53 weeks, as compared to
fiscal year ended June 24, 2009 (fiscal 2009), comprised of 52 weeks



|                                                                     |  |            |       |   |            |  |       |                    |  |  |      |      |   |  |      |  
|-------------------------------------------------------------------- |  | ---------- | ----- | - | ---------- |  | ----- | ------------------ |  |  | ---- | ---- | - |  | ---- | -
|Dollar amounts in millions                                           |  | Fiscal2010 |       |   | Fiscal2009 |  |       | Increase(Decrease) |  |  | %    |     
|Net sales                                                            |  | $          | 6,980 |   |            |  | 7,079 |                    |  |  | (99  | )    |   |  | -1.4 | %
|Impact of extra week in fiscal 2010                                  |  |            | (113  | ) |            |  |      |                    |  |  | (113 | )    |   |  |      |  
|Other revenue                                                        |  |            | (44   | ) |            |  | (35   | )                  |  |  | (9   | )    |   |  |      |  
|Sales in new and closed stores                                       |  |            | (31   | ) |            |  | (64   | )                  |  |  | 33   |      |   |  |      |  
|                                                                     |  |            |       |   |            |  |       |                    |  |  |      |      |   |  |      |  
|Identical store sales                                                |  | $          | 6,792 |   |            |  | 6,980 |                    |  |  | (188 | )    |   |  | -2.7 | %
|                                                                     |  |            |       |   |            |  |       |                    |  |  |      |      |   |  |      |  
|Basket size (average sales per guest visit on identical store sales) |  |            |       |   |            |  |       |                    |  |  |      | -0.7 | %
|Transaction count (number of guest visits on identical store sales)  |  |            |       |   |            |  |       |                    |  |  |      | -2.1 | %
|Gross profit on net sales                                            |  | $          | 1,992 |   |            |  | 2,017 |                    |  |  | (25  | )    |   |  | -1.3 | %
|% of net sales                                                       |  |            | 28.5  | % |            |  | 28.5  | %                  |  |  |     | %    |   |  |      |  
|Operating and administrative expenses                                |  | $          | 1,950 |   |            |  | 1,953 |                    |  |  | (3   | )    |   |  | -0.1 | %
|% of net sales                                                       |  |            | 27.9  | % |            |  | 27.6  | %                  |  |  | 0.3  | %    |   |  |      |  

Net Sales. Net sales for the 53 weeks ended June 30, 2010, decreased as compared to the prior year due to a
decrease in our identical store sales and the loss of sales from six stores we closed during fiscal 2009, offset by an extra week of sales in fiscal 2010 and sales from two new stores.

We define identical store sales as sales from continuing operations stores, including stores that we remodeled or enlarged during the year and excluding stores that opened or closed during the year.
Identical store sales comparisons were measured on a 52-week basis while the net sales comparison was based on 53 weeks in fiscal 2010 and 52 weeks in fiscal 2009.

Identical store sales were impacted negatively by competitive activity and other general market factors, non-recurring storm-related sales occurring in fiscal 2009 (40 basis points), and the continued mix
shift from brand name pharmaceutical products to generics (50 basis points), partially offset by sales increases related to remodeled stores.

During fiscal 2010, inflation had an insignificant impact on the decrease in identical store sales as compared to fiscal 2009, whereas inflation was the
largest contributor to the increase in fiscal 2009 identical store sales as compared to fiscal 2008. This change in trend resulted from deflation in certain categories and low inflation in others experienced in fiscal 2010 as compared to fiscal
2009.

Gross Profit on Net Sales. Gross profit as a percentage of net sales for the 53 weeks ended June 30, 2010 was unchanged as
compared to fiscal 2009. While gross margin was impacted negatively from pricing and promotional programs (30 basis points), it was impacted positively by the small LIFO benefit recognized in fiscal 2010 compared to a charge in the prior year (20
basis points) and other items (10 basis points).



17



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##### Table of Contents

Operating and Administrative Expenses. The table below details the changes in operating and
administrative expenses for fiscal 2010 as compared to fiscal 2009. Fiscal 2010 operating and administrative expenses include 53 weeks compared to 52 weeks in fiscal 2009 (dollar amounts in millions).



|                                     |  |             |      |   |                             |  |      |               |  |  |       |  
|------------------------------------ |  | ----------- | ---- | - | --------------------------- |  | ---- | ------------- |  |  | ----- | -
|Increase (decrease)                  |  | As Reported |      |   | EstimatedFiscal 2010week 53 |  |      | 52 week basis | 
|Payroll and payroll-related expenses |  | $           | 8.1  |   |                             |  | 19.8 |               |  |  | (11.7 | )
|Insurance(1)                         |  |             | 4.7  |   |                             |  | 1.5  |               |  |  | 3.2   |  
|Occupancy Cost                       |  |             | 1.5  |   |                             |  | 4.1  |               |  |  | (2.6  | )
|Hurricane expenses                   |  |             | (2.6 | ) |                             |  |     |               |  |  | (2.6  | )
|Utilities                            |  |             | (5.5 | ) |                             |  | 2.6  |               |  |  | (8.1  | )
|Other, net                           |  |             | (9.0 | ) |                             |  | 6.7  |               |  |  | (15.7 | )
|                                     |  |             |      |   |                             |  |      |               |  |  |       |  
|                                     |  | $           | (2.8 | ) |                             |  | 34.7 |               |  |  | (37.5 | )
|                                     |  |             |      |   |                             |  |      |               |  |  |       |  



|(1) | Includes cost of
claims, premiums, administrative and other costs related to general liability, workers compensation and auto liability coverage, as well as premiums on property loss and other lines of coverage. Insurance costs related to employee medical are
included in payroll and payroll-related expenses.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Operating and administrative expenses decreased in fiscal 2010 as
compared to fiscal 2009 due primarily to lower employee medical and payroll related expenses and lower fuel rates for utilities, offset by an extra week of expenses in fiscal 2010.

Gain on Insurance Settlement. We incurred losses and damage due to hurricanes in fiscal 2006, particularly in the New Orleans and coastal Mississippi areas due to Hurricane Katrina. During fiscal
2009, we reached a final settlement with our insurers related to our claim resulting from these hurricanes. Final payments on this claim totaling approximately $25.0 million received during fiscal 2009 exceeded the insurance receivable. Accordingly,
we recorded a gain of $22.4 million in the consolidated statements of operations during fiscal 2009. There were no material gains on insurance settlements in fiscal 2010.

Impairment Charges.Impairment charges of $4.6 million and $5.2 million were recorded in fiscal 2010 and fiscal 2009, respectively. See Item 8, Note 6 for further discussion of impairment
charges.

Interest Expense, net. Interest expense is primarily interest related to our credit facility and capital leases, offset by
interest income. Interest expense, net was $4.7 million and $5.0 million for fiscal 2010 and fiscal 2009, respectively.

The decrease in
interest expense, net was primarily related to lower interest expense offset by lower interest income during fiscal 2010, as compared to fiscal 2009. Interest income was $0.3 million and $2.1 million for fiscal 2010 and fiscal 2009, respectively.
See Item 8, Note 9 for further description of interest expense, net.



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Income Taxes. Income tax benefit for fiscal 2010 was $4.3 million, which resulted in an effective tax
rate benefit of 13.3% on continuing operations. The rate reflected our ability to carry back certain net operating losses while maintaining a full valuation allowance and recording certain refundable credits and the benefit of a reduction of
uncertain tax positions. Income tax expense for fiscal 2009 was $36.2 million. The income tax expense will not result in significant cash payments due to the availability of net operating loss (NOL) carryforwards, as further described below. The
effective tax rate for fiscal 2009 was an expense of 47.4% on continuing operations, which differs from statutory rates due primarily to permanent items and the impact of an adjustment due to the finalization of the prior year tax return.

We maintain a full valuation allowance against substantially all of our net deferred tax assets. The valuation allowance will be maintained
until there is sufficient positive evidence to conclude that it is more likely than not that the net deferred tax assets will be realized.

As
of June 25, 2009, we adopted Accounting Standards Codification Topic 805, Business Combinations, whereby increases or decreases in the valuation allowance for deferred tax assets increase or decrease tax expense. Prior to the
adoption, decreases in the valuation allowance for deferred tax assets that existed at the time of emergence from bankruptcy did not decrease income tax expense but instead reduced intangible assets.

Discontinued Operations

In evaluating
whether store closures qualify for discontinued operations classification, we consider each store to be a component of a business, as this is the lowest level at which the operations and cash flows can be clearly distinguished, operationally and for
financial reporting purposes. If the cash flows of a store to be exited will not be significant to our ongoing operations and cash inflows of our nearby stores are not expected to increase significantly because of the exit, the results of operations
of the store are reported in discontinued operations. Costs incurred to dispose of a location are included in loss on disposal of discontinued operations only if the location qualifies for discontinued operations classification; otherwise, such
costs are reported as continuing operations.

During fiscal 2011, we closed 30 non-remodeled, underperforming stores. Results of operations
for the 30 stores were classified as discontinued operations. Net sales from discontinued operations for fiscal 2011, fiscal 2010 and fiscal 2009 were $49.1 million, $267.6 million and $287.8 million, respectively. For fiscal 2011, the loss on
disposal of discontinued operations consisted of $7.6 million net gain on sale or retirement of assets, including pharmacy prescription files, $31.4 million of lease termination costs and $3.6 million of other costs.

The following table presents the detail of liability activity for costs related to closed stores.



|                         |  |       |         |   |                       |  |         |                   |  |  |        |  
|------------------------ |  | ----- | ------- | - | --------------------- |  | ------- | ----------------- |  |  | ------ | -
|                         |  | Total |         |   | LeaseTerminationCosts |  |         | OtherClosingCosts | 
|Balance at June 30, 2010 |  | $     | (12,490 | ) |                       |  | (12,490 | )                 |  |  |       |  
|Expense                  |  |       | (37,995 | ) |                       |  | (34,321 | )                 |  |  | (3,674 | )
|Cash payments            |  |       | 16,522  |   |                       |  | 12,848  |                   |  |  | 3,674  |  
|                         |  |       |         |   |                       |  |         |                   |  |  |        |  
|Balance at June 29, 2011 |  | $     | (33,963 | ) |                       |  | (33,963 | )                 |  |  |       |  
|                         |  |       |         |   |                       |  |         |                   |  |  |        |  



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The balance at June 30, 2010, includes $4.8 million of closed store lease liability related to stores
closed prior to the 30 closures and $7.7 million of accrued expenses related to the leases of the 30 closures that were reclassified to the closed store lease liability in fiscal 2011. The expense amount includes leases added to the accrual and the
effect on operations from the accretion of the present value of the expected future rental payments, and adjustments due to the settlement of certain leases. The cash payments include payments made for rent and related costs.

LIQUIDITY AND CAPITAL RESOURCES

Summary

As of June 29, 2011, we had
$553.7 million of liquidity, comprised of $345.9 million of borrowing availability under the Credit Agreement and $207.8 million of cash and cash equivalents. We believe that we have sufficient liquidity through borrowing availability, available
cash and cash flows from operating activities to fund our cash requirements for existing operations and capital expenditures through fiscal 2012. Based on anticipated cash flow from operations and borrowing availability, we believe that we will have
sufficient resources beyond fiscal 2012 to operate our business and fund our capital expenditures.

Credit Agreement

On November 21, 2006, Winn-Dixie Stores, Inc., and certain of its subsidiaries entered into an Amended and Restated Credit Agreement. This credit
agreement provided for a $725.0 million senior secured revolving credit facility, of which a maximum of $300.0 million could be utilized for letters of credit. Obligations under the credit agreement were guaranteed by substantially all of our
subsidiaries and were secured by senior liens on substantially all of our assets.

On March 18, 2011, Winn-Dixie Stores, Inc. and certain
of its subsidiaries entered into a Second Amended and Restated Credit Agreement (Credit Agreement). The Credit Agreement, to be used for working capital and general corporate purposes, provides for a $600.0 million (Maximum
Credit) senior secured revolving credit facility, of which a maximum of $300.0 million may be utilized for letters of credit. The Credit Agreement matures March 18, 2016, at which time all principal amounts outstanding under the agreement
will be due and payable. At our request, under certain conditions the facility may be increased by up to $100.0 million. Obligations under the Credit Agreement are guaranteed by certain of our subsidiaries and are secured by senior liens on
substantially all our assets. Debt issuance costs of $9.0 million are being amortized over the term of the Credit Agreement. This Form 10-K contains only a general description of the terms of the Credit Agreement and is qualified in its entirety by
reference to the full Credit Agreement (filed as Exhibit 10.1 to the Form 8-K filed on March 21, 2011). The following capitalized terms have specific meanings as defined in the Credit Agreement: Agent, Borrowing Base, Minimum Excess
Availability, Maximum Credit and Reserves.

We had no borrowings on the Credit Agreement, other than fees charged by the lender, during fiscal
2011 and fiscal 2010. Costs associated with the Amended and Restated Credit Agreement were also included in the borrowings for fiscal 2011. As of June 29, 2011, no amount was outstanding.



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Borrowing availability was $345.9 million as of June 29, 2011, as summarized below (in thousands):



|                              |  |               |          |  
|----------------------------- |  | ------------- | -------- | -
|                              |  | June 29, 2011 |         
|Borrowing Base1               |  | $             | 544,897  |  
|Outstanding letters of credit |  |               | (144,460 | )
|Minimum Excess Availability   |  |               | (54,490  | )
|Outstanding borrowings        |  |               |         |  
|                              |  |               |          |  
|Borrowing availability        |  | $             | 345,947  |  
|                              |  |               |          |  



|1 | The lesser of the
value of collateral or the Maximum Credit net of Reserves.
|- | ----------------------------------------------------------------------------

As shown in the table above, the Borrowing Base under the Credit
Agreement is determined net of Reserves, which are subject to revision by the Agent to reflect events or circumstances that adversely affect the value of the Borrowing Base assets. Accordingly, a determination by the Agent to increase Reserves would
reduce availability.

As of June 29, 2011, letters of credit totaling $144.5 million were issued under the Credit Agreement. Outstanding
letters of credit relate primarily to insurance programs including workers compensation programs. Minimum Excess Availability is the greater of 10% of the Borrowing Base or $40.0 million.

Historical Cash Flow Data

The table
below presents certain Consolidated Statements of Cash Flows data for fiscal 2011, fiscal 2010 and fiscal 2009 (in thousands):



|                            |  |             |         |   |             |  |          |             |  |  |          |  
|--------------------------- |  | ----------- | ------- | - | ----------- |  | -------- | ----------- |  |  | -------- | -
|                            |  | Fiscal 2011 |         |   | Fiscal 2010 |  |          | Fiscal 2009 | 
|Cash provided by (used in): |  |             |         |   |             |  |          |             |  |  |          |  
|Operating activities        |  | $           | 144,399 |   |             |  | 172,019  |             |  |  | 199,556  |  
|Investing activities        |  |             | (79,174 | ) |             |  | (187,744 | )           |  |  | (196,269 | )
|Financing activities        |  |             | (9,788  | ) |             |  | (14,771  | )           |  |  | (21,739  | )

Operating Activities.Net cash provided by operating activities for fiscal 2011 was due primarily to operating
cash flows and working capital changes primarily from working capital initiatives focused on improving vendor payment terms and inventory reduction. Net cash provided by operating activities for fiscal 2010 and fiscal 2009 was due primarily to
operating cash flows and working capital changes primarily from working capital initiatives focused on improving vendor payment terms, inventory reduction and account receivable collections. In fiscal 2011, we paid $15.4 million related to the
settlement of bankruptcy tax claims offset by collections of $3.7 million related to income tax refunds. In fiscal 2009, we collected $28.9 million of proceeds from insurance claims of which $11.3 million related to operating activities and $17.6
million related to property and equipment, which is classified as an investing activity. We did not have any proceeds from insurance claims in fiscal 2011 and fiscal 2010. Cash flows from operating activities related to discontinued operations for
fiscal 2011, fiscal 2010 and fiscal 2009 primarily relate to the loss from discontinued operations included on the Consolidated Financial Statements.



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Investing Activities.For fiscal 2011, net cash used in investing activities related primarily to our
store-remodeling program and investments in technology. For fiscal 2010 and fiscal 2009, net cash used in investing activities related primarily to expenditures for our store-remodeling program. In fiscal 2011, we received proceeds from asset sales
related to the closure of 30 stores including pharmacy prescription files of $10.1 million. In fiscal 2009 we collected $17.6 million of proceeds from insurance claims related to investing activities. We did not have any proceeds from insurance
claims in fiscal 2011 and fiscal 2010.

Financing Activities. For fiscal 2011, net cash used in financing activities related primarily
to payments on capital leases of $12.1 million and $8.5 million in debt issue costs associated with the amended and restated $600.0 million credit facility offset by an increase in book overdrafts of $10.8 million. For fiscal 2010 and fiscal 2009,
net cash used in financing activities related primarily to payments on capital leases of $11.4 million and $9.1 million, respectively. Also in fiscal 2010 and fiscal 2009, net cash used in financing activities was impacted by decreases in our book
overdraft position.

Capital Expenditures.In fiscal 2012, we expect capital expenditures to total approximately $200.0 million, of
which approximately $125.0 million is for our store-remodeling program and new stores. We anticipate spending approximately $75.0 million on other capital expenditures, including retail store maintenance, information technology, and other projects.



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OUTLOOK AND TRENDS

We recognize the need to adjust our business model to meet the changing needs and expectations of our guests. We regularly assess the trends present in the markets in which we compete. Generally, it is
difficult to predict if a trend will continue and it is possible that new trends will develop which will affect an existing trend. We believe the following economic and/or industry trends are likely to continue for at least the next fiscal year:



| |  |  | New competitive store openings will continue in our markets including traditional grocery stores, supercenters, drug stores, dollar-discount stores and
restaurants.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Consumer spending behavior will continue to be impacted by the general economic environment.
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | Pricing will continue to be a significant driver of consumer choice in the industry.
| | - |  | ------------------------------------------------------------------------------------



| |  |  | The percentage of generic pharmaceuticals sales to branded pharmaceuticals is expected to continue to increase.
| | - |  | ---------------------------------------------------------------------------------------------------------------

We expect to continue to focus on building guest loyalty, growing profitable sales and improving our brand image over the long term. In addition, we
believe the following plans and business specific trends will have an impact on our business during fiscal 2012.



| |  |  | We will continue to focus on our guest shopping experience and innovative merchandising and marketing initiatives to make our guests lives easier
and fun.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We will continue our store-remodeling program with plans to enhance our capital investment in strategically selected stores to improve our brand image.
We expect to spend approximately $125.0 million in fiscal 2012 on our store- remodeling program and new stores.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | We will continue to focus on cost management.
| | - |  | ---------------------------------------------



| |  |  | We will continue to focus on balancing our pricing and margin decisions to drive profitable sales.
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | We will continue our business focus on our corporate brand products.
| | - |  | --------------------------------------------------------------------



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CONTRACTUAL OBLIGATIONS AND COMMERCIAL COMMITMENTS

We assume various financial obligations and commitments in the normal course of our operating and financing activities. Contractual obligations represent
known future cash payments that we will be required to make under existing arrangements, such as debt and lease agreements. The table below presents the scheduled payments due under our contractual obligations as of June 29, 2011:

Contractual Obligations



|                      |  |                       |         |  |                 |  |       |          |  |  |          |  |  |                  |       |  |  |  |       | 
|--------------------- |  | --------------------- | ------- |  | --------------- |  | ----- | -------- |  |  | -------- |  |  | ---------------- | ----- |  |  |  | ----- | 
|                      |  | Payment due by period |        
|(in millions)         |  | Total                 |         |  | Less than1 year |  |       | 1-3years |  |  | 3-5years |  |  | More than5 years |      
|Long-term debt1       |  | $                     |        |  |                 |  |      |          |  |  |         |  |  |                  |      |  |  |  |      | 
|Capital leases        |  |                       | 50.8    |  |                 |  | 13.3  |          |  |  | 24.5     |  |  |                  | 11.7  |  |  |  | 1.3   | 
|Operating leases      |  |                       | 1,274.9 |  |                 |  | 205.8 |          |  |  | 365.1    |  |  |                  | 289.0 |  |  |  | 415.0 | 
|Purchase obligations2 |  |                       | 161.3   |  |                 |  | 150.8 |          |  |  | 10.5     |  |  |                  |      |  |  |  |      | 
|Retirement plans3     |  |                       | 12.6    |  |                 |  | 1.3   |          |  |  | 2.4      |  |  |                  | 2.4   |  |  |  | 6.5   | 
|Other                 |  |                       | 39.4    |  |                 |  | 25.1  |          |  |  | 9.0      |  |  |                  | 2.1   |  |  |  | 3.2   | 
|                      |  |                       |         |  |                 |  |       |          |  |  |          |  |  |                  |       |  |  |  |       | 
|Total                 |  | $                     | 1,539.0 |  |                 |  | 396.3 |          |  |  | 411.5    |  |  |                  | 305.2 |  |  |  | 426.0 | 
|                      |  |                       |         |  |                 |  |       |          |  |  |          |  |  |                  |       |  |  |  |       | 



|1 | Excludes: $144.5 million of letters of credit outstanding under the Credit Agreement; and Borrowing Availability of $345.9 million.
|- | -----------------------------------------------------------------------------------------------------------------------------------



|2 | We enter into supply contracts to purchase products for resale in the ordinary course of business. These contracts may include specific merchandising
obligations related to the products and, if so, typically include either a volume commitment or a fixed expiration date; pricing terms based on the vendors published list price; termination provisions; and other standard contractual
considerations. Contracts that are cancelable within 60 days are excluded. Contracts that are either non-cancelable or are less specific as to our obligations upon cancellation are included above. When applicable, we used anticipated purchase
volumes to allocate the purchase obligation to the indicated periods. The amounts above include open purchase orders of $137.2 million.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3 | Payments for retiree plans are based on actuarial projections related to our post-retirement benefits.
|- | ------------------------------------------------------------------------------------------------------

IMPACT OF INFLATION

Inflation impacts
our operating costs including, but not limited to, cost of goods, supplies, utilities, occupancy costs, and labor expenses. We typically seek to mitigate these effects by passing along inflationary increases in costs through increases in the selling
prices of our products. To the extent we pass through cost increases in the form of higher selling prices, our sales are positively impacted. If we are unable to pass through cost increases, we may experience pressure on our gross margins. We also
seek to mitigate cost inflation through strategically managing pricing and promotions, lowering overhead costs, and/or by increasing productivity.

CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with
U.S. generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenues, and expenses, as well as disclosure of contingent assets and
liabilities. We believe that the policies below are our critical accounting policies, as they are most important to the portrayal of our financial condition and results, and require managements most difficult, subjective or complex judgments,
often because of the need to make estimates about the effect of inherently uncertain matters.



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Merchandise Inventories.Merchandise inventories are stated at the lower of cost or market.
Approximately 85% of the Companys merchandise inventories are valued using the dollar-value, link-chain last-in, first-out (LIFO) method. This method requires management to estimate cumulative price indices driven by the change in
current year costs as well as the change in the dollar value inventory on hand. Unanticipated changes in the current year costs may materially affect our LIFO reserve. The remaining merchandise inventories, which consist of pharmacy, produce, deli
and bakery are valued at first in, first out (FIFO) method.

The retail inventory method is used for non-perishable inventory at the stores to
estimate inventory cost. This method requires management to estimate a cost to retail ratio, based on a selected product mix of non-perishable inventory, to mark retail inventory down to cost. The retail inventory method includes certain judgments
and estimates that could impact the ending inventory valuation at cost.

Allowances for inventory shortages are estimated based on physical
inventory counts and historical information. Any changes in these estimates could have a significant impact on merchandise inventory reserves.

Long-lived Assets. We review our long-lived assets, such as property, plant and equipment and intangible assets subject to amortization, for
impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. When such events occur, we compare the carrying amount of the asset to our best estimate of the net undiscounted cash flows
expected to result from the use and eventual disposition of the asset. If this comparison indicates that there is impairment, we record an impairment loss for the excess of net book value over the fair value of the impaired asset. We estimate the
fair value based on the best information available, including prices for similar assets and the results of other valuation techniques.

Factors such as changes in economic conditions and changes in operating performance significantly affect our judgments and estimates related to the
expected useful lives and cash flows of long-lived assets. Adverse changes in these factors could cause us to recognize a material impairment charge.

Intangible Assets.We report intangible assets in accordance with ASC Topic 350, Intangibles  Goodwill and Other, which requires that an intangible asset with indefinite useful
economic life not be amortized, but instead be separately tested for impairment at least annually using a fair-value approach. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate the
carrying value of an asset may not be recoverable. The evaluation of possible impairment of intangible assets is affected by factors such as changes in economic conditions and changes in operating performance. These factors could cause us to
recognize a material impairment charge as we assess the ongoing expected cash flows and carrying amounts of intangible assets.



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Self-insurance.We self-insure for certain insurable risks, primarily workers compensation,
business interruptions, general liability, automobile liability and property losses, as well as employee medical benefits. We obtain insurance coverage for catastrophic property and casualty exposures, as well as risks that require insurance by law
or contract. We estimate the liabilities related to self-insured programs with the assistance of an independent actuary. The accounting estimates for self-insurance liabilities include both known and incurred but not reported insurance claims and
reflect certain actuarial assumptions and management judgments regarding claim reporting and settlement patterns, judicial decisions, legislation, economic conditions and the effect of our Chapter 11 filings. Unanticipated changes in these factors
may materially affect our results of operations and financial position.

Closed Facility Lease Liability. For closed store and
warehouse facilities that are no longer used in our current operation but are under non-cancelable long-term leases, we record a liability based upon the present value of expected payments over the remaining lease term, net of estimated sublease
income, using a discount rate based on a credit-adjusted risk-free rate. Expected payments generally include lease payments, real estate taxes, common area maintenance charges, insurance and utility costs. Our estimate of future expected payments is
based on experience and knowledge of the real estate market for each closed facility and existing economic conditions. Adjustments are made for changes in estimates in the period in which the changes become known.

While individual closed facility liabilities are deemed to be adequate, it is possible that real estate market and economic conditions could cause
changes in our assumptions and may require adjustments to the liability.

Income Taxes.We recognize deferred tax assets and
liabilities for estimated future tax consequences that are attributable to differences between the financial statement bases of assets and liabilities and their respective tax bases. We measure deferred tax assets and liabilities using the enacted
tax rates for the year in which we expect those temporary differences to be recovered or settled. We adjust the valuation allowance against our net deferred tax assets based on our assessment of the likelihood of realization of such assets in the
future; such adjustments may be material. Although we believe that the estimates and judgments used to prepare our various tax returns are reasonable and appropriate, such returns are subject to audit by the respective tax authorities.



|ITEM 7A: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

At June 29, 2011, we had no derivative instruments that increased our exposure to market risks for interest rates, foreign currency rates, commodity prices or other market price risks. We do not use
derivatives for speculative purposes. Our exposure to market risks results primarily from changes in interest rates, principally with respect to our Credit Agreement, which is a variable rate financing agreement. However, as of June 29, 2011,
we had no amount outstanding under the Credit Agreement. We currently do not use swaps or other interest rate protection agreements to hedge this risk.



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|ITEM 8: | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

WINN-DIXIE STORES, INC. AND SUBSIDIARIES

INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS,

SUPPORTING SCHEDULES AND SUPPLEMENTARY DATA



|                                                             |  |  |    | 
|------------------------------------------------------------ |  |  | -- | 
|Consolidated Financial Statements and Supplementary Data:    |  |  |    | 
|                                                             | 
|Report of Independent Registered Public Accounting Firm      |  |  | 28 | 
|                                                             | 
|Consolidated Statements of Operations                        |  |  | 30 | 
|                                                             | 
|Consolidated Balance Sheets                                  |  |  | 31 | 
|                                                             | 
|Consolidated Statements of Cash Flows                        |  |  | 32 | 
|                                                             | 
|Consolidated Statements of Shareholders Equity              |  |  | 33 | 
|                                                             | 
|Notes to Consolidated Financial Statements                   |  |  | 34 | 
|                                                             | 
|Financial Statement Schedule:                                |  |  |    | 
|                                                             | 
|Schedule II - Consolidated Valuation and Qualifying Accounts |  |  | 56 | 

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



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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Winn-Dixie Stores, Inc.:

We have audited the accompanying consolidated balance sheets of
Winn-Dixie Stores, Inc. and subsidiaries as of June 29, 2011 and June 30, 2010, and the related consolidated statements of operations, shareholders equity, and cash flows for each of the years in the three-year period ended
June 29, 2011. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule II. These consolidated financial statements and financial statement schedule are the responsibility of
the Companys management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Winn-Dixie
Stores, Inc. and subsidiaries as of June 29, 2011 and June 30, 2010, and the results of their operations and their cash flows for each of the years in the three-year period ended June 29, 2011, in conformity with U.S. generally
accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respect, the information set
forth therein.

As discussed in notes 7 and 17 to the consolidated financial statements, the Company adopted the provisions of
ASC Topic 805 Business Combinations as of June 25, 2009.

We also have audited, in accordance with the standards of the
Public Company Accounting Oversight Board (United States), Winn-Dixie Stores, Inc.s internal control over financial reporting as of June 29, 2011, based on criteria established in Internal Control  Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated August 29, 2011 expressed an unqualified opinion on the effectiveness of the Companys internal control over financial reporting.

/s/ KPMG LLP

KPMG LLP

August 29, 2011

Jacksonville, Florida

Certified Public Accountants



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years ended June 29, 2011, June 30, 2010, and June 24, 2009



|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|---------------------------------------------------------- |  | ---- | --------- | - | ----- |  | --------- | ---- |  |  | --------- | -
|Amounts in thousands except per share data                 |  | 2011 |           |   | 2010* |  |           | 2009 | 
|Net sales                                                  |  | $    | 6,880,776 |   |       |  | 6,980,118 |      |  |  | 7,079,127 |  
|Cost of sales, including warehouse and delivery expenses   |  |      | 4,962,508 |   |       |  | 4,988,193 |      |  |  | 5,061,960 |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Gross profit on net sales                                  |  |      | 1,918,268 |   |       |  | 1,991,925 |      |  |  | 2,017,167 |  
|Operating and administrative expenses                      |  |      | 1,938,902 |   |       |  | 1,950,205 |      |  |  | 1,952,984 |  
|Gain on insurance settlement                               |  |      |          |   |       |  |          |      |  |  | (22,430   | )
|Impairment charges                                         |  |      | 5,174     |   |       |  | 4,592     |      |  |  | 5,174     |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Operating (loss) income                                    |  |      | (25,808   | ) |       |  | 37,128    |      |  |  | 81,439    |  
|Interest expense, net                                      |  |      | 7,217     |   |       |  | 4,650     |      |  |  | 4,978     |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|(Loss) income from continuing operations before income tax |  |      | (33,025   | ) |       |  | 32,478    |      |  |  | 76,461    |  
|Income tax (benefit) expense                               |  |      | (3,233    | ) |       |  | (4,306    | )    |  |  | 36,209    |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Net (loss) income from continuing operations               |  |      | (29,792   | ) |       |  | 36,784    |      |  |  | 40,252    |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Discontinued operations:                                   |  |      |           |   |       |  |           |      |  |  |           |  
|Loss from discontinued operations                          |  |      | (12,958   | ) |       |  | (7,887    | )    |  |  | (752      | )
|Loss on disposal of discontinued operations                |  |      | (27,380   | ) |       |  |          |      |  |  |          |  
|Income tax benefit                                         |  |      |          |   |       |  |          |      |  |  | (289      | )
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Net loss from discontinued operations                      |  |      | (40,338   | ) |       |  | (7,887    | )    |  |  | (463      | )
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Net (loss) income                                          |  | $    | (70,130   | ) |       |  | 28,897    |      |  |  | 39,789    |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Basic (loss) earnings per share:                           |  |      |           |   |       |  |           |      |  |  |           |  
|(Loss) earnings from continuing operations                 |  | $    | (0.54     | ) |       |  | 0.67      |      |  |  | 0.74      |  
|Loss from discontinued operations                          |  |      | (0.72     | ) |       |  | (0.14     | )    |  |  | (0.01     | )
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Basic (loss) earnings per share                            |  | $    | (1.26     | ) |       |  | 0.53      |      |  |  | 0.73      |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Diluted (loss) earnings per share:                         |  |      |           |   |       |  |           |      |  |  |           |  
|(Loss) earnings from continuing operations                 |  | $    | (0.54     | ) |       |  | 0.67      |      |  |  | 0.74      |  
|Loss from discontinued operations                          |  |      | (0.72     | ) |       |  | (0.15     | )    |  |  | (0.01     | )
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Diluted (loss) earnings per share                          |  | $    | (1.26     | ) |       |  | 0.52      |      |  |  | 0.73      |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Weighted-average common shares outstanding-Basic           |  |      | 55,654    |   |       |  | 54,911    |      |  |  | 54,347    |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  
|Weighted-average common shares outstanding-Diluted         |  |      | 55,654    |   |       |  | 55,196    |      |  |  | 54,583    |  
|                                                           |  |      |           |   |       |  |           |      |  |  |           |  



|* | Fiscal year 2010 contains 53 weeks
|- | ----------------------------------

See accompanying notes to consolidated financial statements.

|
|



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS



|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- |  | ------------ |  | --------- | 
|Dollar amounts in thousands except share data                                                                                                                                                                  |  | June 29,2011 |           |  | June 30,2010 | 
|ASSETS                                                                                                                                                                                                         |  |              |           |  |              |  |           | 
|Current assets:                                                                                                                                                                                                |  |              |           |  |              |  |           | 
|Cash and cash equivalents                                                                                                                                                                                      |  | $            | 207,764   |  |              |  | 152,327   | 
|Trade and other receivables, less allowance for doubtful receivables of $3,230 ($3,730 at June 30, 2010)                                                                                                       |  |              | 71,082    |  |              |  | 63,356    | 
|Merchandise inventories, less LIFO reserve of $55,627 ($38,268 at June 30, 2010)                                                                                                                               |  |              | 580,089   |  |              |  | 658,040   | 
|Prepaid expenses and other current assets                                                                                                                                                                      |  |              | 28,994    |  |              |  | 28,096    | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|Total current assets                                                                                                                                                                                           |  |              | 887,929   |  |              |  | 901,819   | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|Property, plant and equipment, net                                                                                                                                                                             |  |              | 658,891   |  |              |  | 680,936   | 
|Intangible assets, net                                                                                                                                                                                         |  |              | 207,216   |  |              |  | 211,281   | 
|Deferred tax assets, non-current                                                                                                                                                                               |  |              | 36,646    |  |              |  | 40,697    | 
|Other assets, net                                                                                                                                                                                              |  |              | 9,108     |  |              |  | 3,334     | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|Total assets                                                                                                                                                                                                   |  | $            | 1,799,790 |  |              |  | 1,838,067 | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                                                                                                                           |  |              |           |  |              |  |           | 
|Current liabilities:                                                                                                                                                                                           |  |              |           |  |              |  |           | 
|Current obligations under capital leases                                                                                                                                                                       |  | $            | 10,888    |  |              |  | 9,397     | 
|Accounts payable                                                                                                                                                                                               |  |              | 344,345   |  |              |  | 345,955   | 
|Reserve for self-insurance liabilities                                                                                                                                                                         |  |              | 74,837    |  |              |  | 73,661    | 
|Accrued wages and salaries                                                                                                                                                                                     |  |              | 73,929    |  |              |  | 65,417    | 
|Deferred tax liabilities                                                                                                                                                                                       |  |              | 44,740    |  |              |  | 48,667    | 
|Accrued expenses                                                                                                                                                                                               |  |              | 116,606   |  |              |  | 118,094   | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|Total current liabilities                                                                                                                                                                                      |  |              | 665,345   |  |              |  | 661,191   | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|Reserve for self-insurance liabilities                                                                                                                                                                         |  |              | 111,622   |  |              |  | 109,240   | 
|Unfavorable leases                                                                                                                                                                                             |  |              | 82,390    |  |              |  | 99,049    | 
|Obligations under capital leases                                                                                                                                                                               |  |              | 31,875    |  |              |  | 20,075    | 
|Other liabilities                                                                                                                                                                                              |  |              | 45,050    |  |              |  | 24,775    | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|Total liabilities                                                                                                                                                                                              |  |              | 936,282   |  |              |  | 914,330   | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|Commitments and contingent liabilities (Notes 8, 12 and 16)                                                                                                                                                    |  |              |           |  |              |  |           | 
|Shareholders equity:                                                                                                                                                                                          |  |              |           |  |              |  |           | 
|Common stock, $0.001 par value. Authorized 400,000,000 shares; 55,932,767 shares issued and 55,820,160 outstanding at
June 29, 2011, and 55,187,440 shares issued and 55,074,833 outstanding at June 30, 2010. |  |              | 56        |  |              |  | 55        | 
|Additional paid-in-capital                                                                                                                                                                                     |  |              | 819,009   |  |              |  | 808,694   | 
|Retained earnings                                                                                                                                                                                              |  |              | 39,833    |  |              |  | 109,963   | 
|Accumulated other comprehensive income                                                                                                                                                                         |  |              | 4,610     |  |              |  | 5,025     | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|Total shareholders equity                                                                                                                                                                                     |  |              | 863,508   |  |              |  | 923,737   | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 
|Total liabilities and shareholders equity                                                                                                                                                                     |  | $            | 1,799,790 |  |              |  | 1,838,067 | 
|                                                                                                                                                                                                               |  |              |           |  |              |  |           | 

See accompanying notes to consolidated financial statements.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years ended June 29, 2011, June 30, 2010, and June 24, 2009



|                                                                                         |  |      |         |   |       |  |          |      |  |  |          |  
|---------------------------------------------------------------------------------------- |  | ---- | ------- | - | ----- |  | -------- | ---- |  |  | -------- | -
|Amounts in thousands                                                                     |  | 2011 |         |   | 2010* |  |          | 2009 | 
|Cash flows from operating activities:                                                    |  |      |         |   |       |  |          |      |  |  |          |  
|Net (loss) income                                                                        |  | $    | (70,130 | ) |       |  | 28,897   |      |  |  | 39,789   |  
|Adjustments to reconcile net (loss) income to net cash provided by operating activities: |  |      |         |   |       |  |          |      |  |  |          |  
|Depreciation and amortization                                                            |  |      | 116,595 |   |       |  | 103,554  |      |  |  | 99,566   |  
|Deferred income taxes                                                                    |  |      | 124     |   |       |  | 165      |      |  |  | 35,920   |  
|Share-based compensation                                                                 |  |      | 10,197  |   |       |  | 16,984   |      |  |  | 15,469   |  
|Other, net                                                                               |  |      | 620     |   |       |  | 8,043    |      |  |  | 10,324   |  
|Gain on insurance settlement                                                             |  |      |        |   |       |  |         |      |  |  | (22,430  | )
|Changes in operating assets and liabilities:                                             |  |      |         |   |       |  |          |      |  |  |          |  
|Trade, insurance and other receivables                                                   |  |      | (7,536  | ) |       |  | 10,068   |      |  |  | 26,379   |  
|Merchandise inventories                                                                  |  |      | 77,951  |   |       |  | 7,441    |      |  |  | (16,459  | )
|Prepaid expenses and other current assets                                                |  |      | (898    | ) |       |  | 4,474    |      |  |  | 9,528    |  
|Accounts payable and accrued expenses                                                    |  |      | 13,918  |   |       |  | (1,368   | )    |  |  | 6,695    |  
|Reserve for self-insurance liabilities                                                   |  |      | 3,558   |   |       |  | (6,239   | )    |  |  | (5,225   | )
|                                                                                         |  |      |         |   |       |  |          |      |  |  |          |  
|Net cash provided by operating activities                                                |  |      | 144,399 |   |       |  | 172,019  |      |  |  | 199,556  |  
|                                                                                         |  |      |         |   |       |  |          |      |  |  |          |  
|Cash flows from investing activities:                                                    |  |      |         |   |       |  |          |      |  |  |          |  
|Purchases of long-lived assets                                                           |  |      | (92,632 | ) |       |  | (189,062 | )    |  |  | (223,271 | )
|(Increase) decrease in other assets, net                                                 |  |      | (1      | ) |       |  | 115      |      |  |  | 8,085    |  
|Sales of assets                                                                          |  |      | 13,459  |   |       |  | 1,203    |      |  |  | 1,316    |  
|Proceeds from insurance                                                                  |  |      |        |   |       |  |         |      |  |  | 17,601   |  
|                                                                                         |  |      |         |   |       |  |          |      |  |  |          |  
|Net cash used in investing activities                                                    |  |      | (79,174 | ) |       |  | (187,744 | )    |  |  | (196,269 | )
|                                                                                         |  |      |         |   |       |  |          |      |  |  |          |  
|Cash flows from financing activities:                                                    |  |      |         |   |       |  |          |      |  |  |          |  
|Gross borrowings on credit facilities                                                    |  |      | 22,028  |   |       |  | 9,090    |      |  |  | 12,777   |  
|Gross payments on credit facilities                                                      |  |      | (22,028 | ) |       |  | (9,090   | )    |  |  | (12,835  | )
|Increase (decrease) in book overdrafts                                                   |  |      | 10,756  |   |       |  | (3,522   | )    |  |  | (12,623  | )
|Principal payments on capital leases                                                     |  |      | (12,133 | ) |       |  | (11,393  | )    |  |  | (9,097   | )
|Debt issuance costs                                                                      |  |      | (8,530  | ) |       |  |         |      |  |  |         |  
|Other, net                                                                               |  |      | 119     |   |       |  | 144      |      |  |  | 39       |  
|                                                                                         |  |      |         |   |       |  |          |      |  |  |          |  
|Net cash used in financing activities                                                    |  |      | (9,788  | ) |       |  | (14,771  | )    |  |  | (21,739  | )
|                                                                                         |  |      |         |   |       |  |          |      |  |  |          |  
|Increase (decrease) in cash and cash equivalents                                         |  |      | 55,437  |   |       |  | (30,496  | )    |  |  | (18,452  | )
|Cash and cash equivalents at beginning of year                                           |  |      | 152,327 |   |       |  | 182,823  |      |  |  | 201,275  |  
|                                                                                         |  |      |         |   |       |  |          |      |  |  |          |  
|Cash and cash equivalents at end of year                                                 |  | $    | 207,764 |   |       |  | 152,327  |      |  |  | 182,823  |  
|                                                                                         |  |      |         |   |       |  |          |      |  |  |          |  



|* | Fiscal year 2010 contains 53 weeks
|- | ----------------------------------

See accompanying notes to consolidated financial statements.

|
|



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY



|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|--------------------------------------------- |  | -------------------- | ------ | - | ---------------------- | - | -- | ------------------------- |  |  | ---------------- |  |  | ----------------------------------- | ------- | - | ------------------------ |  | ------ | - |  | - | ------- | -
|Amounts in thousands                          |  | NumberofCommonShares |        |   | ParValue ofCommonStock |   |    | AdditionalPaid-In-Capital |  |  | RetainedEarnings |  |  | AccumulatedOtherComprehensiveIncome |         |   | TotalShareholdersEquity | 
|Balances as of June 25, 2008                  |  |                      | 54,081 |   |                        | $ | 54 |                           |  |  | 776,059          |  |  |                                     | 41,277  |   |                          |  | 8,237  |   |  | $ | 825,627 |  
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Comprehensive income:                         |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Net income                                    |  |                      |       |   |                        |   |   |                           |  |  |                 |  |  |                                     | 39,789  |   |                          |  |       |   |  |   | 39,789  |  
|Change in post-retirement benefit obligation* |  |                      |       |   |                        |   |   |                           |  |  |                 |  |  |                                     |        |   |                          |  | (1,826 | ) |  |   | (1,826  | )
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Total comprehensive income                    |  |                      |       |   |                        |   |   |                           |  |  |                 |  |  |                                     | 39,789  |   |                          |  | (1,826 | ) |  |   | 37,963  |  
|Restricted stock units vested                 |  |                      | 399    |   |                        |   |   |                           |  |  |                 |  |  |                                     |        |   |                          |  |       |   |  |   |        |  
|Share-based compensation expense              |  |                      |       |   |                        |   |   |                           |  |  | 15,469           |  |  |                                     |        |   |                          |  |       |   |  |   | 15,469  |  
|Stock issued under Employee Stock             |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Purchase Plan                                 |  |                      | 4      |   |                        |   |   |                           |  |  | 39               |  |  |                                     |        |   |                          |  |       |   |  |   | 39      |  
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Balances as of June 24, 2009                  |  |                      | 54,484 |   |                        | $ | 54 |                           |  |  | 791,567          |  |  |                                     | 81,066  |   |                          |  | 6,411  |   |  | $ | 879,098 |  
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Comprehensive income:                         |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Net income                                    |  |                      |       |   |                        |   |   |                           |  |  |                 |  |  |                                     | 28,897  |   |                          |  |       |   |  |   | 28,897  |  
|Change in post-retirement benefit obligation* |  |                      |       |   |                        |   |   |                           |  |  |                 |  |  |                                     |        |   |                          |  | (1,386 | ) |  |   | (1,386  | )
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Total comprehensive income                    |  |                      |       |   |                        |   |   |                           |  |  |                 |  |  |                                     | 28,897  |   |                          |  | (1,386 | ) |  |   | 27,511  |  
|Restricted stock units vested                 |  |                      | 592    |   |                        |   |   |                           |  |  |                 |  |  |                                     |        |   |                          |  |       |   |  |   |        |  
|Share-based compensation expense              |  |                      |       |   |                        |   |   |                           |  |  | 16,984           |  |  |                                     |        |   |                          |  |       |   |  |   | 16,984  |  
|Treasury activity                             |  |                      | (14    | ) |                        |   |   |                           |  |  |                 |  |  |                                     |        |   |                          |  |       |   |  |   |        |  
|Stock issued under Employee Stock             |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Purchase Plan                                 |  |                      | 13     |   |                        |   | 1  |                           |  |  | 143              |  |  |                                     |        |   |                          |  |       |   |  |   | 144     |  
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Balances as of June 30, 2010                  |  |                      | 55,075 |   |                        | $ | 55 |                           |  |  | 808,694          |  |  |                                     | 109,963 |   |                          |  | 5,025  |   |  | $ | 923,737 |  
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Comprehensive loss:                           |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Net loss                                      |  |                      |       |   |                        |   |   |                           |  |  |                 |  |  |                                     | (70,130 | ) |                          |  |       |   |  |   | (70,130 | )
|Change in post-retirement benefit obligation* |  |                      |       |   |                        |   |   |                           |  |  |                 |  |  |                                     |        |   |                          |  | (415   | ) |  |   | (415    | )
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Total comprehensive loss                      |  |                      |       |   |                        |   |   |                           |  |  |                 |  |  |                                     | (70,130 | ) |                          |  | (415   | ) |  |   | (70,545 | )
|Restricted stock units vested                 |  |                      | 728    |   |                        |   |   |                           |  |  |                 |  |  |                                     |        |   |                          |  |       |   |  |   |        |  
|Share-based compensation expense              |  |                      |       |   |                        |   |   |                           |  |  | 10,197           |  |  |                                     |        |   |                          |  |       |   |  |   | 10,197  |  
|Stock issued under Employee Stock             |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Purchase Plan                                 |  |                      | 17     |   |                        |   | 1  |                           |  |  | 118              |  |  |                                     |        |   |                          |  |       |   |  |   | 119     |  
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  
|Balances as of June 29, 2011                  |  |                      | 55,820 |   |                        | $ | 56 |                           |  |  | 819,009          |  |  |                                     | 39,833  |   |                          |  | 4,610  |   |  | $ | 863,508 |  
|                                              |  |                      |        |   |                        |   |    |                           |  |  |                  |  |  |                                     |         |   |                          |  |        |   |  |   |         |  



|* | Net of tax of $0.
|- | -----------------

See
accompanying notes to consolidated financial statements.



33



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



|1. | Summary of Significant Accounting Policies and Other Matters
|-- | ------------------------------------------------------------

The Company: As of June 29, 2011, Winn-Dixie Stores, Inc. (the Company or Winn-Dixie) operated as a major food retailer in five states in the southeastern United
States. The Company operated 484 retail stores, with 4 fuel centers and 75 liquor stores. In support of its stores, the Company operated six distribution centers.

Fiscal Year: The fiscal year ends on the last Wednesday in June. Fiscal 2010 was comprised of 53 weeks ended June 30, 2010, and fiscal 2011 and fiscal 2009 were each comprised of 52 weeks
ended June 29, 2011, and June 24, 2009, respectively.

Basis of Consolidation: The Consolidated Financial
Statements include the accounts of Winn-Dixie Stores, Inc. and its subsidiaries, all of which are wholly owned and fully consolidated. Intercompany accounts and transactions are eliminated in consolidation.

Business Reporting Segments:The Companys retail stores account for substantially all of its net sales. These stores are
located in a limited geographic area, the southeast region of the United States. Each retail store contains substantially the same selling departments and sells substantially the same products within those departments. Accordingly, the Company has
determined that it has one operating segment that is one reportable segment. No aggregation of operating segments has occurred.

The following table provides detail on the percentage of net sales for each group of similar products sold:



|                  |  |      |       |   |      |  |       |      |  |  |       |  
|----------------- |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                  |  | 2011 |       |   | 2010 |  |       | 2009 | 
|Non-perishable(1) |  |      | 60.9  | % |      |  | 61.5  | %    |  |  | 62.2  | %
|Perishable(2)     |  |      | 29.7  | % |      |  | 28.9  | %    |  |  | 28.4  | %
|Pharmacy          |  |      | 8.7   | % |      |  | 9.0   | %    |  |  | 8.9   | %
|Other(3)          |  |      | 0.7   | % |      |  | 0.6   | %    |  |  | 0.5   | %
|                  |  |      |       |   |      |  |       |      |  |  |       |  
|Net sales         |  |      | 100.0 | % |      |  | 100.0 | %    |  |  | 100.0 | %
|                  |  |      |       |   |      |  |       |      |  |  |       |  



| | (1) | Consists primarily of grocery, dairy, frozen food, general merchandise, alcoholic beverages, tobacco and fuel.
| | --- | --------------------------------------------------------------------------------------------------------------



| | (2) | Consists primarily of fresh and packaged meat, seafood, deli, bakery, produce and floral.
| | --- | -----------------------------------------------------------------------------------------



| | (3) | Consists primarily of revenue from sales of items such as money orders, lottery tickets and incidental warehouse sales.
| | --- | -----------------------------------------------------------------------------------------------------------------------

The principal characteristic in determining each group of products that make up net sales is based on similar economic factors, including
similar gross margin percentage, shelf life or inventory shrink losses.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



Estimates: The preparation of financial statements in conformity with U.S.
generally accepted accounting principles requires management to make estimates and assumptions about future events that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent assets and liabilities.
The Company cannot determine future events and their effects with certainty. Therefore, the determination of estimates requires the exercise of judgment based on various assumptions and other factors such as historical experience, current and
expected economic conditions, and in some cases, actuarial calculations. The Company periodically reviews these significant factors and makes adjustments when appropriate. Actual results could differ from those estimates.

Cash and Cash Equivalents:Cash equivalents consist of highly liquid investments with an original maturity of 90 days or less when
purchased. Cash and cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash includes in-transit amounts from debit, credit and electronic benefit transactions. Cash and cash equivalents consisted of United
States government obligations money market funds of $200.5 million and cash in stores of $7.3 million as of June 29, 2011, and United States government obligations money market funds of $142.5 million and cash in stores of $9.8 million as of
June 30, 2010. Book overdrafts of $20.1 million and $9.3 million were classified as accounts payable in the Consolidated Balance Sheets as of June 29, 2011, and June 30, 2010, respectively.

Trade and Other Receivables, Less Allowance for Doubtful Receivables:Trade and other receivables, less allowance for doubtful
receivables consist primarily of amounts due from vendors related to vendor allowances and from third-party insurance companies for pharmacy billings less an allowance for doubtful receivables. Receivables are recorded at an amount based on
agreements with vendors. The allowance for doubtful receivables is the Companys best estimate of the amount of probable credit losses in the Companys existing accounts receivable. On a quarterly basis, the Company evaluates its trade and
other receivables and establishes an allowance for doubtful receivables, based on its history of past write-offs and collections, and current credit conditions. No interest is accrued on past due receivables.

Merchandise Inventories: Merchandise inventories are stated at the lower of cost or market. As of both June 29, 2011, and
June 30, 2010, the dollar-value, link-chain last-in, first-out (LIFO) method was used to determine the cost of approximately 85% of inventories, primarily non-perishable merchandise in stores and distribution centers. The LIFO
reserve represents the amount of the excess of the replacement or current cost over the stated LIFO amount.

Pharmacy, produce,
deli and bakery inventories are valued at the lower of first-in, first-out (FIFO) cost or market.

The Company
evaluates inventory shortages throughout the year based on actual physical counts in its facilities. Allowances for inventory shortages are recorded based on the results of these counts to provide for estimated shortages as of the balance sheet
date.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



Property, Plant and Equipment:Property, plant and equipment is stated at
historical cost less accumulated depreciation and amortization. Interest costs on construction projects are capitalized as part of the costs of the newly constructed facilities. Depreciation and amortization is computed using the straight-line
method over the estimated useful life of the related asset. Building depreciation is based on a life of forty years. Furniture, fixture and equipment depreciation is based on lives varying from five to ten years. Amortization of improvements to
leased facilities is based on the term of the lease or the estimated useful life of the improvement, whichever is less.

Long-lived Assets:The Company periodically evaluates the period of depreciation or amortization for long-lived assets, which
include property, plant and equipment and intangible assets with finite lives, to determine whether current circumstances warrant revised estimates of useful lives. The Company reviews its long-lived assets for impairment whenever events or changes
in circumstances indicate the carrying value of an asset may not be recoverable. When such events occur, the Company compares the carrying amount of the asset to the Companys best estimate of the net undiscounted cash flows expected to result
from the use and eventual disposition of the asset. If this comparison indicates that there is impairment, an impairment loss is recorded for the excess of net book value over the fair value of the impaired asset. Fair value is estimated based on
the best information available, including prices for similar assets and the results of other valuation techniques.

Intangible Assets:Intangible assets consist primarily of favorable leases, pharmacy prescription files, software, liquor licenses,
and the Companys trade name and trademark. Intangible assets related to favorable leases are amortized over the lesser of the remaining lease term, including renewal options, or seventeen years. Amortization of favorable leases is recognized
as an increase in rent expense within operating and administrative expenses. Other intangible assets with finite lives are amortized on a straight-line basis over the estimated useful lives of the assets, which range from five to seven years.

Intangible assets with indefinite lives are not amortized, but are instead reviewed for impairment annually in the fourth
fiscal quarter or more frequently if events or circumstances indicate that the asset may be impaired.

Deferred Rent:The Company recognizes rent holidays, including the period that it has access to a property for construction of buildings or improvements, as well as construction allowances and escalating rent provisions, on a straight-line basis over the term
of the lease.

Unfavorable Leases:Unfavorable leases are lease agreements with contract rates in excess of market value
rates. Amortization is recognized on a straight-line basis over the lesser of the remaining lease term, including renewal options, or seventeen years. Amortization is recognized as a reduction in rent expense within operating and administrative
expenses.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



Income Taxes: The Company recognizes deferred tax assets and liabilities for
estimated future tax consequences that are attributable to differences between the financial statement bases of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates for
the year in which those temporary differences are expected to be recovered or settled. The Company adjusts the valuation allowance against its net deferred tax assets based upon its assessment of the likelihood of realization of such assets in the
future; such adjustments may be material. Although the Company believes that the estimates and judgments used to prepare its various tax returns are reasonable and appropriate, such returns are subject to audit by the respective tax authorities.

The Company classifies interest expense related to income tax uncertainties as a component of interest expense. Any related
penalties are included in operating and administrative expenses.

Self-Insurance: The Company self-insures for certain
insurable risks, primarily workers compensation, business interruptions, general liability, automobile liability, and property losses, as well as employee medical benefits. Insurance coverage is obtained for catastrophic property and casualty
exposures, as well as risks that require insurance by law or contract. Liabilities are determined by management using information such as independent actuarial estimates, and include both a liability for claims incurred and an estimate of incurred
but not reported claims, on an undiscounted basis. When applicable, anticipated recoveries are recorded in the Consolidated Statements of Operations in the same lines in which the losses are recorded, and are based on managements best estimate
of amounts due from insurance providers.

The Companys accruals for insurance reserves reflect certain actuarial
assumptions and management judgments regarding claim reporting and settlement patterns, judicial decisions, legislation, economic conditions and the effect of our 2005 Chapter 11 filing. Unanticipated changes in these factors may materially affect
the Consolidated Financial Statements.

Facility Opening and Closing Costs:The costs of both opening new facilities and
closing existing facilities are charged to operations as incurred. The Company accrues for obligations related to closed facilities, at the cease-use date, based upon the present value of expected payments over the remaining lease terms, net of
estimated sublease income, using a discount rate based on a credit-adjusted risk-free rate. Expected payments include lease payments, real estate taxes, common area maintenance charges and utility costs. Adjustments to closed facility liabilities
relate primarily to changes in sublease income and changes in costs. All adjustments are recorded in the period in which the changes become known.

Revenue Recognition: The Company recognizes revenue at the time of sale for retail sales. In the Consolidated Statements of Operations, net sales are reported net of sales taxes and
similar taxes.

Sales discounts may be offered to customers at the time of sale as part of the Companys Customer Reward
Card program, as well as other promotional events. All sales discounts are recorded as a reduction of sales at the time of sale.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



In addition, the Company periodically offers awards to customers in the form of sales
discounts to be used on a future purchase, based on an accumulation of points as part of its Customer Reward Card program. The obligation related to the award of a future sales discount is recognized as a reduction of sales, based on a systematic
and rational allocation of the cost of the award earned and claimed to each of the underlying revenue transactions that result in progress by the customer toward earning the award.

Cost of Sales: Cost of sales includes the cost of inventory sold during the period, net of discounts and vendor allowances;
purchasing costs; transportation costs, including inbound freight and internal transfer costs; warehousing costs, including receiving and inspection costs; depreciation and amortization related to transportation and warehouses; and other costs of
the Companys distribution network.

Vendor Allowances: The Company receives allowances or rebates from certain
vendors in the form of promotional allowances, quantity discounts, payments under merchandising agreements and other allowances that relate to new item introductions, slotting fees, placement of the vendors products in premier locations within
the stores, and temporary price reductions offered to customers. The allowances reduce cost of sales if the product has been sold, and reduce ending inventory if the product has not yet been sold.

Promotional allowances are recognized based on the terms of the underlying agreements, which require either specific performance or
time-based merchandising of vendor products. Thus, the Company recognizes allowances when it meets the performance criteria or on the expiration of the agreement. Promotional allowances received in advance that are contractually refundable, in whole
or in part, are deferred and reported in accounts payable and other liabilities until earned. Quantity discounts and payments under merchandising agreements are recognized when specified purchase or sales volume levels are achieved and are typically
not received in advance. The amounts due the Company under such agreements are reported in trade and other receivables.

Advertising: The Company expenses the costs of advertising and promotions as incurred and reports these costs in operating and
administrative expenses. Advertising and promotional expense totaled $84.3 million, $91.2 million and $95.5 million, for 2011, 2010 and 2009, respectively.

Comprehensive (Loss) Income:Comprehensive (loss) income differs from net (loss) income as shown on the Consolidated Statements of Operations due to changes in the post-retirement benefit
obligation. These items are excluded from operations and are instead recorded to accumulated other comprehensive (loss) income, a component of shareholders equity.

Share-Based Payments: The Company accounts for share-based compensation plans using the fair value method established by ASC Topic 718, Compensation  Stock Compensation
(Topic 718).



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



Reclassifications and Revisions: Certain prior year amounts have been
reclassified to conform to the current years presentation.



|2. | (Loss) Earnings per Share
|-- | -------------------------

Basic (loss) earnings per common share is based on the weighted-average number of common shares outstanding for the periods presented.
Diluted (loss) earnings per share is based on the weighted-average number of common shares outstanding, plus the incremental shares that would have been outstanding on the assumed vesting and exercise of all common stock equivalents which include
options and restricted stock units (collectively CSEs), subject to anti-dilution limitations.

For 2011, there were
no dilutive CSEs. For 2010 and 2009, the weighted-average number of common shares outstanding used in the calculation of diluted (loss) earnings per share included approximately 0.3 million and 0.2 million CSEs, respectively. The 2011
calculation excluded approximately 4.8 million CSEs due to a net loss for 2011. The 2010 and 2009 calculations excluded approximately 3.4 million and 4.4 million options, respectively. Such options are considered anti-dilutive because
the exercise prices of these options were greater than the average market price of the common shares during the reporting periods.



|3. | Merchandise Inventories
|-- | -----------------------

The Company recognized LIFO charges (benefits) of $17.4 million, $(1.0) million and $14.5 million, for 2011, 2010 and 2009, respectively.
The LIFO charge (benefit) for 2011, 2010 and 2009 was net of a benefit of $5.0 million, $1.0 million and $3.5 million, respectively, related to liquidation of LIFO layers.



|4. | Property, Plant and Equipment
|-- | -----------------------------

Property, plant and equipment consisted of:



|                                                                                          |  |               |          |   |               |  |          |  
|----------------------------------------------------------------------------------------- |  | ------------- | -------- | - | ------------- |  | -------- | -
|                                                                                          |  | June 29, 2011 |          |   | June 30, 2010 | 
|Land                                                                                      |  | $             | 11,480   |   |               |  | 11,480   |  
|Buildings                                                                                 |  |               | 44,459   |   |               |  | 44,365   |  
|Furniture, fixtures and equipment                                                         |  |               | 567,944  |   |               |  | 526,604  |  
|Improvements to leased facilities                                                         |  |               | 286,039  |   |               |  | 258,816  |  
|Construction in progress                                                                  |  |               | 28,062   |   |               |  | 39,523   |  
|                                                                                          |  |               |          |   |               |  |          |  
|                                                                                          |  |               | 937,984  |   |               |  | 880,788  |  
|Accumulated depreciation and amortization                                                 |  |               | (310,525 | ) |               |  | (228,134 | )
|                                                                                          |  |               |          |   |               |  |          |  
|                                                                                          |  |               | 627,459  |   |               |  | 652,654  |  
|Assets under capital leases, net of accumulated amortization of $25,757 ($21,645 in 2010) |  |               | 31,432   |   |               |  | 28,282   |  
|                                                                                          |  |               |          |   |               |  |          |  
|Property, plant and equipment, net                                                        |  | $             | 658,891  |   |               |  | 680,936  |  
|                                                                                          |  |               |          |   |               |  |          |  

Assets under capital leases are primarily transportation equipment.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



|5. | Intangible Assets
|-- | -----------------



|                               |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|------------------------------ |  | --------------------------------------------------- | ------------------- |  | ------------- | ----------------------- | ------- | ------------- | ------------------- |  | -------- | ----------------------- |  |  | ------- |  |  |  | ------- | -
|                               |  | Weightedaverageremaining
amortizationperiod (years) |                     |  | June 29, 2011 |                         |         | June 30, 2010 |                    
|                               |  |                                                     | GrossCarryingAmount |  |               | AccumulatedAmortization |         |               | GrossCarryingAmount |  |          | AccumulatedAmortization | 
|Amortized Intangible Assets    |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Favorable leases               |  |                                                     | 12                  |  |               | $                       | 194,362 |               |                     |  | (54,819  | )                       |  |  | 196,785 |  |  |  | (43,467 | )
|Pharmacy prescription files    |  |                                                     | 2                   |  |               |                         | 19,364  |               |                     |  | (12,639  | )                       |  |  | 19,942  |  |  |  | (10,295 | )
|Software                       |  |                                                     | 3                   |  |               |                         | 75,035  |               |                     |  | (39,475  | )                       |  |  | 55,559  |  |  |  | (32,819 | )
|                               |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Total                          |  |                                                     |                     |  |               | $                       | 288,761 |               |                     |  | (106,933 | )                       |  |  | 272,286 |  |  |  | (86,581 | )
|                               |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Unamortized Intangible Assets  |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Trade name and trademark       |  |                                                     |                     |  |               | $                       | 18,049  |               |                     |  |          |                         |  |  | 18,049  |  |  |  |         |  
|Liquor licenses                |  |                                                     |                     |  |               |                         | 7,339   |               |                     |  |          |                         |  |  | 7,527   |  |  |  |         |  
|                               |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|                               |  |                                                     |                     |  |               | $                       | 25,388  |               |                     |  |          |                         |  |  | 25,576  |  |  |  |         |  
|                               |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Estimated Amortization Expense |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Fiscal 2011                    |  |                                                     |                     |  |               | $                       | 25,237  |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Fiscal 2012                    |  |                                                     |                     |  |               |                         | 22,599  |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Fiscal 2013                    |  |                                                     |                     |  |               |                         | 19,252  |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Fiscal 2014                    |  |                                                     |                     |  |               |                         | 16,808  |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Fiscal 2015                    |  |                                                     |                     |  |               |                         | 15,087  |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|Thereafter                     |  |                                                     |                     |  |               |                         | 82,845  |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|                               |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|                               |  |                                                     |                     |  |               | $                       | 181,828 |               |                     |  |          |                         |  |  |         |  |  |  |         |  
|                               |  |                                                     |                     |  |               |                         |         |               |                     |  |          |                         |  |  |         |  |  |  |         |  

Amortization of intangible assets was $23.2 million and $23.4 million for 2011 and 2010, respectively.
Amortization for favorable leases was $11.7 million and $12.8 million for 2011 and 2010, respectively.



|6. | Impairment Charges
|-- | ------------------

The
Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The Company uses store performance reviews for indications that changes in market
factors, traffic patterns, competition and other factors have negatively impacted the operating results of store locations. Such changes resulted in the identification of underperforming stores that experienced a current period cash flow loss
combined with a history of cash flow losses. The Company compared the net book value of those underperforming store assets to the Companys best estimate of the net undiscounted cash flows expected to result from the use and eventual
disposition of the assets and, in some cases, the Company concluded that the net undiscounted cash flows were less than the net book value of the related assets. For those stores, the excess of the net book value of the assets over their fair value
was recorded as an impairment charge as detailed below.

Intangible assets with indefinite lives are reviewed for impairment on
an annual basis or more frequently if events or circumstances indicate that the asset may be impaired. In 2011 and 2009, the Company recorded liquor license impairment charges of $215 and $605, respectively, related to the decline in market values.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



Fair value estimates are based on assumptions the Company believes to be reasonable but
are inherently uncertain, thus fall within level 3 of the fair value hierarchy. Fair value is determined using a discounted cash flow methodology, which incorporates the terminal value of equipment based on broker quotes and the market value of
favorable leases based on broker quotes. Pharmacy scripts and liquor licenses also incorporate the market value based on broker quotes.

Impairment charges from continuing operations were comprised of the following:



|                                   |  |      |       |  |      |  |       |      |  |  |       | 
|---------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                                   |  | 2011 |       |  | 2010 |  |       | 2009 | 
|Store facilities                   |  | $    | 4,959 |  |      |  | 4,592 |      |  |  | 4,569 | 
|Indefinite-lived intangible assets |  |      | 215   |  |      |  |      |      |  |  | 605   | 
|                                   |  |      |       |  |      |  |       |      |  |  |       | 
|Total impairment charges           |  | $    | 5,174 |  |      |  | 4,592 |      |  |  | 5,174 | 
|                                   |  |      |       |  |      |  |       |      |  |  |       | 

Impairment charges in store facilities included leasehold improvements, store fixtures and favorable
leases.

Discontinued operations for 2011, 2010 and 2009 included impairment charges of $0.9 million, $1.1 million, and $0.4
million, respectively.



|7. | Income Taxes
|-- | ------------

Income tax
(benefit) expense for continuing operations consisted of:



|         |  |      |        |   |      |  |        |      |  |  |        | 
|-------- |  | ---- | ------ | - | ---- |  | ------ | ---- |  |  | ------ | 
|         |  | 2011 |        |   | 2010 |  |        | 2009 | 
|Current  |  |      |        |   |      |  |        |      |  |  |        | 
|Federal  |  | $    | (3,260 | ) |      |  | (4,505 | )    |  |  |       | 
|State    |  |      | (97    | ) |      |  | 34     |      |  |  |       | 
|         |  |      |        |   |      |  |        |      |  |  |        | 
|         |  |      | (3,357 | ) |      |  | (4,471 | )    |  |  |       | 
|         |  |      |        |   |      |  |        |      |  |  |        | 
|Deferred |  |      |        |   |      |  |        |      |  |  |        | 
|Federal  |  |      | 124    |   |      |  | 165    |      |  |  | 31,333 | 
|State    |  |      |       |   |      |  |       |      |  |  | 4,876  | 
|         |  |      |        |   |      |  |        |      |  |  |        | 
|         |  |      | 124    |   |      |  | 165    |      |  |  | 36,209 | 
|         |  |      |        |   |      |  |        |      |  |  |        | 
|Total    |  | $    | (3,233 | ) |      |  | (4,306 | )    |  |  | 36,209 | 
|         |  |      |        |   |      |  |        |      |  |  |        | 



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



The following table reconciles the federal statutory income tax rate to the effective
income tax rate for continuing operations:



|                                                                 |  |      |        |   |      |  |        |      |  |  |       |  
|---------------------------------------------------------------- |  | ---- | ------ | - | ---- |  | ------ | ---- |  |  | ----- | -
|                                                                 |  | 2011 |        |   | 2010 |  |        | 2009 | 
|Federal statutory income tax rate                                |  |      | 35.00  | % |      |  | 35.00  | %    |  |  | 35.00 | %
|State and local income taxes, net of federal income tax benefits |  |      | 3.49   |   |      |  | 5.28   |      |  |  | 3.93  |  
|Tax credits                                                      |  |      | 0.67   |   |      |  | (0.65  | )    |  |  | (0.29 | )
|Effect of permanent differences related to bankruptcy            |  |      | (0.45  | ) |      |  | 9.75   |      |  |  | 0.66  |  
|Valuation allowance                                              |  |      | (26.98 | ) |      |  | (66.55 | )    |  |  |      |  
|Prior year tax return to provision adjustment                    |  |      |       |   |      |  |       |      |  |  | 2.25  |  
|Other, net                                                       |  |      | (1.94  | ) |      |  | 3.91   |      |  |  | 5.81  |  
|                                                                 |  |      |        |   |      |  |        |      |  |  |       |  
|Effective tax rate on continuing operations                      |  |      | 9.79   | % |      |  | (13.26 | )%   |  |  | 47.36 | %
|                                                                 |  |      |        |   |      |  |        |      |  |  |       |  

The Company maintains a full valuation allowance against substantially all of its net deferred tax assets.
The valuation allowance will be maintained until there is sufficient positive evidence to conclude that it is more likely than not that the net deferred tax assets will be realized.

As of June 29, 2011, the Company had net operating losses (NOL) carryforwards for federal income tax purposes of $776.5 million that
will begin to expire in 2025 and NOL carryforwards for state income tax purposes of $996.3 million that will begin to expire in 2019. In addition, the Company had tax credit carryforwards of $37.9 million for federal income tax purposes, which will
begin to expire in 2023.

As of June 25, 2009, the Company adopted Accounting Standards Codification Topic 805,
Business Combinations, whereby increases or decreases in the valuation allowance for deferred tax assets increase or decrease tax expense. Prior to the adoption, decreases in the valuation allowance for deferred tax assets that existed
at the time of emergence from bankruptcy did not decrease income tax expense and instead reduced intangible assets.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



A reconciliation of the unrecognized tax benefits is as follows:



|                                                    |  |   |        |  
|--------------------------------------------------- |  | - | ------ | -
|Balance as of June 25, 2008                         |  | $ | 7,575  |  
|Additions for tax positions of prior years          |  |   | 10,406 |  
|Reductions due to statute of limitations expiration |  |   | (1,297 | )
|Reductions for tax positions of prior years         |  |   | (4,312 | )
|                                                    |  |   |        |  
|Balance as of June 24, 2009                         |  | $ | 12,372 |  
|                                                    |  |   |        |  
|Reductions due to statute of limitations expiration |  |   | (1,269 | )
|Reductions for tax positions of prior years         |  |   | (3,506 | )
|                                                    |  |   |        |  
|Balance as of June 30, 2010                         |  | $ | 7,597  |  
|                                                    |  |   |        |  
|Reductions due to statute of limitations expiration |  |   | (341   | )
|Additions for tax positions of the current year     |  |   | 550    |  
|Settlements                                         |  |   | (7,255 | )
|                                                    |  |   |        |  
|Balance as of June 29, 2011                         |  | $ | 551    |  
|                                                    |  |   |        |  

The Company does not anticipate that it will record any significant change in the unrecognized tax benefit
during 2012.

Generally, the statute of limitations remains open for the Companys federal and state income tax returns
for its 2009 through 2011 tax years.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



Deferred tax assets and liabilities consisted of the following:



|                                     |  |               |          |   |               |  |          |  
|------------------------------------ |  | ------------- | -------- | - | ------------- |  | -------- | -
|                                     |  | June 29, 2011 |          |   | June 30, 2010 | 
|Deferred tax assets:                 |  |               |          |   |               |  |          |  
|Insurance claims and self-insurance  |  | $             | 69,406   |   |               |  | 68,114   |  
|Lease liability on closed facilities |  |               | 13,076   |   |               |  | 1,844    |  
|Compensation                         |  |               | 25,882   |   |               |  | 30,178   |  
|Property, plant and equipment        |  |               |         |   |               |  | 15,414   |  
|Unfavorable leases                   |  |               | 31,720   |   |               |  | 38,134   |  
|Accrued rent                         |  |               | 3,842    |   |               |  | 2,321    |  
|Retirement and benefits              |  |               | 7,754    |   |               |  | 7,838    |  
|State NOL carryforwards              |  |               | 34,872   |   |               |  | 29,757   |  
|Federal NOL carryforwards            |  |               | 271,790  |   |               |  | 225,242  |  
|Federal tax credits                  |  |               | 37,917   |   |               |  | 37,967   |  
|Other, net                           |  |               | 9,435    |   |               |  | 15,714   |  
|                                     |  |               |          |   |               |  |          |  
|Total deferred tax assets            |  |               | 505,694  |   |               |  | 472,523  |  
|Valuation allowance                  |  |               | (362,890 | ) |               |  | (345,770 | )
|                                     |  |               |          |   |               |  |          |  
|Net deferred tax assets              |  |               | 142,804  |   |               |  | 126,753  |  
|                                     |  |               |          |   |               |  |          |  
|Deferred tax liabilities:            |  |               |          |   |               |  |          |  
|Property, plant and equipment        |  |               | (25,842  | ) |               |  |         |  
|Merchandise inventories              |  |               | (62,504  | ) |               |  | (67,034  | )
|Favorable leases                     |  |               | (54,458  | ) |               |  | (59,719  | )
|Intangible assets                    |  |               | (8,094   | ) |               |  | (7,970   | )
|                                     |  |               |          |   |               |  |          |  
|Total deferred tax liabilities       |  |               | (150,898 | ) |               |  | (134,723 | )
|                                     |  |               |          |   |               |  |          |  
|Net deferred tax liabilities         |  | $             | (8,094   | ) |               |  | (7,970   | )
|                                     |  |               |          |   |               |  |          |  



|8. | Credit Agreement
|-- | ----------------

On
November 21, 2006, Winn-Dixie Stores, Inc., and certain of its subsidiaries entered into an Amended and Restated Credit Agreement. This credit agreement provided for a $725.0 million senior secured revolving credit facility, of which a maximum
of $300.0 million could be utilized for letters of credit. Obligations under the credit agreement were guaranteed by substantially all of our subsidiaries and were secured by senior liens on substantially all of our assets.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



On March 18, 2011, Winn-Dixie Stores, Inc. and certain of its subsidiaries entered
into a Second Amended and Restated Credit Agreement (Credit Agreement). The Credit Agreement, to be used for working capital and general corporate purposes, provides for a $600.0 million (Maximum Credit) senior secured
revolving credit facility, of which a maximum of $300.0 million may be utilized for letters of credit. The Credit Agreement matures March 18, 2016, at which time all principal amounts outstanding under the agreement will be due and payable. At
the request of the Company, under certain conditions the facility may be increased by up to $100.0 million. Obligations under the Credit Agreement are guaranteed by certain of the Companys subsidiaries and are secured by senior liens on
substantially all assets of the Company. Debt issuance costs of $9.0 million are being amortized over the term of the Credit Agreement. This Form 10-K contains only a general description of the terms of the Credit Agreement and is qualified in its
entirety by reference to the full Credit Agreement (filed as Exhibit 10.1 to the Form 8-K filed on March 21, 2011). The following capitalized terms have specific meanings as defined in the Credit Agreement: Agent, Borrowing Base, Minimum Excess
Availability, Maximum Credit and Reserves.

The Company had no borrowings on the Credit Agreement, other than fees charged by
the lender, during 2011 and 2010. Costs associated with the Amended and Restated Credit Agreement were also included in the borrowings for fiscal 2011. As of June 29, 2011, no amount was outstanding.

At the Companys option, interest under the Credit Agreement is based on LIBOR or the banks prime rate (Prime),
plus an applicable margin that varies based on the level of Excess Availability under the Credit Agreement. As of June 29, 2011, the rates in effect were LIBOR plus 2.75% or Prime plus 1.75%, at the Companys option. Also in effect as of
June 29, 2011, were a standby letter of credit fee and a sub-facility letter of credit fee of 2.75% each and an unused line fee of 0.625%. In addition, there is a letter of credit fronting fee of 0.25%.

The Credit Agreement contains various representations, warranties and covenants that are customary for such financings, including among
others, reporting requirements. In addition, certain covenants restrict the Companys ability to incur additional indebtedness, create liens, make certain investments, sell assets or pay dividends. The Companys obligations under the
Credit Agreement may be accelerated on certain events of default, including any breach of any of the representations, warranties or covenants made in the Credit Agreement.

Borrowing availability was $345.9 million as of June 29, 2011, as summarized below:



|                              |  |               |          |  
|----------------------------- |  | ------------- | -------- | -
|                              |  | June 29, 2011 |         
|Borrowing Base1               |  | $             | 544,897  |  
|Outstanding letters of credit |  |               | (144,460 | )
|Minimum Excess Availability   |  |               | (54,490  | )
|Outstanding borrowings        |  |               |         |  
|                              |  |               |          |  
|Borrowing availability        |  | $             | 345,947  |  
|                              |  |               |          |  



| | 1 | The lesser of the
value of collateral or the Maximum Credit net of Reserves.
| | - | ----------------------------------------------------------------------------

As shown in the table above, the Borrowing Base
under the Credit Agreement is determined net of Reserves, which are subject to revision by the Agent to reflect events or circumstances that adversely affect the value of the Borrowing Base assets. Accordingly, a determination by the Agent to
increase Reserves would reduce availability.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



As of June 29, 2011, letters of credit totaling $144.5 million were issued under
the Credit Agreement. Outstanding letters of credit relate primarily to insurance programs, including workers compensation programs. Minimum Excess Availability is the greater of 10% of the Borrowing Base or $40.0 million.



|9. | Interest Expense, Net
|-- | ---------------------

Interest expense, net, consisted of the following:



|                      |  |      |       |   |      |  |        |      |  |  |        |  
|--------------------- |  | ---- | ----- | - | ---- |  | ------ | ---- |  |  | ------ | -
|                      |  | 2011 |       |   | 2010 |  |        | 2009 | 
|Interest expense      |  | $    | 8,194 |   |      |  | 6,267  |      |  |  | 8,160  |  
|Capitalized interest  |  |      | (699  | ) |      |  | (1,331 | )    |  |  | (1,108 | )
|Interest income       |  |      | (278  | ) |      |  | (286   | )    |  |  | (2,074 | )
|                      |  |      |       |   |      |  |        |      |  |  |        |  
|Interest expense, net |  | $    | 7,217 |   |      |  | 4,650  |      |  |  | 4,978  |  
|                      |  |      |       |   |      |  |        |      |  |  |        |  



|10. | Retirement Plans
|--- | ----------------

Profit Sharing/401(k) Plan

The Company has a Profit Sharing/401(k) Plan that has a noncontributory, trusteed profit-sharing feature and a contributory, trusteed 401(k) feature. The plan is in effect for eligible team members and
may be amended or terminated at any time. For 2011, 2010, and 2009, charges to operations for plan contributions amounted to $8.0 million, $8.5 million and $8.6 million, respectively. The assets and liabilities of this plan are excluded from the
Consolidated Balance Sheets.

Post-retirement benefits

The Company provides medical insurance benefits to current and future retirees until age 65. Employees are eligible for benefits after
attaining 55 years of age and ten years of full-time service with the Company. Other than retirees and active employees who had reached 55 years of age and had twenty years of service as of January 1, 2003, all covered individuals contribute
amounts expected to be the full cost of coverage under the plan. In addition, the Company has a non-qualified defined benefit plan that provides death benefits for those covered as of the Effective Date.

The components of net periodic benefit expense for the retiree medical plan and the death benefit consisted of the following:



|                              |  |      |       |   |      |  |       |      |  |  |       |  
|----------------------------- |  | ---- | ----- | - | ---- |  | ----- | ---- |  |  | ----- | -
|                              |  | 2011 |       |   | 2010 |  |       | 2009 | 
|Interest cost                 |  | $    | 1,123 |   |      |  | 1,239 |      |  |  | 1,292 |  
|Recognized net actuarial gain |  |      | (523  | ) |      |  | (423  | )    |  |  | (429  | )
|                              |  |      |       |   |      |  |       |      |  |  |       |  
|Net periodic benefit expense  |  | $    | 600   |   |      |  | 816   |      |  |  | 863   |  
|                              |  |      |       |   |      |  |       |      |  |  |       |  



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



Accumulated gain not yet reflected in net periodic benefit cost and included in
accumulated other comprehensive income was $4.6 million, $5.0 million and $6.4 million as of June 29, 2011, June 30, 2010, and June 24, 2009, respectively. The Company expects to recognize $0.5 million of the accumulated gain as
a component of net periodic benefit expense in 2012.

Changes in the post-retirement benefit obligation were as follows:



|                                       |  |   |        |  
|-------------------------------------- |  | - | ------ | -
|Benefit obligation as of June 24, 2009 |  | $ | 20,942 |  
|Interest cost                          |  |   | 1,239  |  
|Actuarial loss                         |  |   | 963    |  
|Benefits paid                          |  |   | (1,017 | )
|                                       |  |   |        |  
|Benefit obligation as of June 30, 2010 |  | $ | 22,127 |  
|                                       |  |   |        |  
|Interest cost                          |  |   | 1,123  |  
|Actuarial gain                         |  |   | (108   | )
|Benefits paid                          |  |   | (1,862 | )
|                                       |  |   |        |  
|Benefit obligation as of June 29, 2011 |  | $ | 21,280 |  
|                                       |  |   |        |  

The benefit obligation is included in accrued expenses and other liabilities in the accompanying
Consolidated Balance Sheets.

The discount rate used to determine net periodic benefit expense for the retiree medical plan was
5.25%, 6.19% and 6.75% for 2011, 2010 and 2009, respectively.

Assumed health care cost trend rates significantly affect
amounts related to the retiree medical plan. The health care cost trend rate assumed was 8.3% for 2011 and 8.5% for 2010 and 2009. The rate to which the cost trend is assumed to decline (the ultimate trend rate) is 5.0%, which is assumed to be
reached in 2029. The effect of a one-percentage point change in assumed health care cost trend rates is not significant.

The
Company expects to pay the following benefits during the indicated years:



|          |  |   |       | 
|--------- |  | - | ----- | 
|2012      |  | $ | 1,326 | 
|2013      |  |   | 1,224 | 
|2014      |  |   | 1,203 | 
|2015      |  |   | 1,214 | 
|2016      |  |   | 1,208 | 
|2017-2021 |  |   | 6,443 | 



|11. | Share-Based Payments
|--- | --------------------

General information

Under the Fiscal 2010 Equity Incentive Plan (2010 EIP Plan), the Compensation Committee of the Companys Board of Directors may grant up to 6.1 million share-based payments to
officers, employees and non-employee directors, among others. The 2010 EIP Plan was approved by shareholders on November 4, 2009, and is effective for all grants made on or after November 4, 2009. Grants may include stock options,
restricted stock, restricted stock units and performance awards as well as other forms of share-based payments. As of June 29, 2011, 1.7 million share-based payments were available for future grant under the 2010 EIP Plan.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



The shares will be issued from authorized and unissued shares of the Companys
common stock. Expired and/or forfeited awards become available for re-issuance. Vesting and exercise of share-based awards are contingent on continued employment.

The Company recognizes compensation expense on a straight-line basis over the vesting period of share-based payments. Total compensation expense related to share-based payments was $10.2 million, $17.0
million and $15.5 million for 2011, 2010, 2009, respectively. As of June 29, 2011, the Company had $14.8 million of unrecognized compensation expense related to share-based payments, which it expects to recognize over a weighted-average period
of 1.7 years.

Options

In accordance with the 2010 EIP Plan, the exercise price of an option cannot be less than the fair value of the Companys common stock on the grant date. Options generally vest in equal installments
on the first three or four anniversary dates of the grants. In addition, performance options included in a one-time grant to certain executives allow for cliff vesting at the end of five years if performance targets are achieved at that time. All
options expire seven years from the grant date. Changes during 2011 were as follows:



|                                               |  |                            |       |   |                                        |   |       |                                                  |  |  |                             |  |  |   |     | 
|---------------------------------------------- |  | -------------------------- | ----- | - | -------------------------------------- | - | ----- | ------------------------------------------------ |  |  | --------------------------- |  |  | - | --- | 
|                                               |  | Number ofShares(thousands) |       |   | Weighted-AverageExercisePrice perShare |   |       | Weighted-AverageRemainingContractualTerm (Years) |  |  | AggregateIntrinsicValue ($) | 
|Outstanding as of June 30, 2010                |  |                            | 4,306 |   |                                        | $ | 14.94 |                                                  |  |  |                             |  |  |   |     | 
|Granted                                        |  |                            | 416   |   |                                        |   | 7.11  |                                                  |  |  |                             |  |  |   |     | 
|Exercised                                      |  |                            |      |   |                                        |   |      |                                                  |  |  |                             |  |  |   |     | 
|Forfeited                                      |  |                            | (355  | ) |                                        |   | 11.49 |                                                  |  |  |                             |  |  |   |     | 
|Expired                                        |  |                            | (330  | ) |                                        |   | 18.08 |                                                  |  |  |                             |  |  |   |     | 
|                                               |  |                            |       |   |                                        |   |       |                                                  |  |  |                             |  |  |   |     | 
|Outstanding as of June 29, 2011                |  |                            | 4,037 |   |                                        | $ | 14.18 |                                                  |  |  | 4.09                        |  |  | $ | 513 | 
|                                               |  |                            |       |   |                                        |   |       |                                                  |  |  |                             |  |  |   |     | 
|Exercisable as of June 29, 2011                |  |                            | 2,407 |   |                                        | $ | 16.30 |                                                  |  |  | 3.29                        |  |  | $ |    | 
|                                               |  |                            |       |   |                                        |   |       |                                                  |  |  |                             |  |  |   |     | 
|Vested and expected to vestas of June 29, 2011 |  |                            | 4,434 |   |                                        | $ | 14.89 |                                                  |  |  | 3.95                        |  |  | $ | 461 | 
|                                               |  |                            |       |   |                                        |   |       |                                                  |  |  |                             |  |  |   |     | 



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



The fair value of options is estimated at the grant date using the Black-Scholes
option-pricing model, which requires the use of various assumptions. The risk-free interest rate is based on the U.S. Treasury yield curve in effect for the expected term of the option at the grant date. The Company assumes a dividend yield of 0%,
since it does not pay dividends and has no current plans to do so. The volatility assumptions are based on historical volatilities of comparable publicly traded companies using daily closing prices for the historical period commensurate with the
expected term of the option and, for grants subsequent to January 7, 2009, are based on both historical volatilities of comparable publicly traded companies and the Companys own historical volatility. The expected life of the options is
determined based on the simplified assumption that the options will be exercised evenly from vesting to expiration. The weighted-average grant-date fair value of the options granted (excluding exchanged options in 2010) during 2011, 2010 and 2009
was $3.23, $5.43 and $4.38, respectively, which was determined using the following assumptions.



|                              |  |        |  |                 |  |                
|----------------------------- |  | ------ |  | --------------- |  | ---------------
|                              |  | 2011   |  | 2010            |  | 2009           
|Risk-free interest rate range |  | 1.08%  |  | 1.92% - 2.68%   |  | 1.78% - 2.81%  
|Expected dividend yield       |  | 0.0%   |  | 0.0%            |  | 0.0%           
|Expected life (years)         |  | 4.50   |  | 4.50 - 5.83     |  | 4.75           
|Volatility range              |  | 55.15% |  | 50.78% - 52.04% |  | 30.60% - 51.07%

Restricted Stock Units

Restricted stock units (RSUs) are payable upon vesting as one share of common stock for each unit. Time-based RSUs generally vest in equal installments on the first three or four anniversary
dates of the grants. Performance based RSUs generally vest on the achievement of one or more performance targets including RSUs that provide for potential vesting in three equal installments over a three-year period if financial metric targets are
met. In addition, performance-based RSUs included in a one-time grant to certain executives allow for cliff vesting at the end of five years if performance targets are achieved at that time. RSUs do not have voting rights and are not entitled to
dividends, if declared. The grant-date fair value of RSUs is equal to the closing price of the Companys stock on the grant dates. The total value of shares vested during 2011, 2010 and 2009 was $4.0 million, $8.9 million and $5.1 million,
respectively. Changes during 2011 were:



|                                                |  |                            |       |   |                                                |   |       | 
|----------------------------------------------- |  | -------------------------- | ----- | - | ---------------------------------------------- | - | ----- | 
|                                                |  | Number ofShares(thousands) |       |   | Weighted-AverageGrant Date FairValue per share |  
|Nonvested balance as of June 30, 2010           |  |                            | 1,937 |   |                                                | $ | 12.91 | 
|Granted                                         |  |                            | 1,200 |   |                                                |   | 7.16  | 
|Vested                                          |  |                            | (591  | ) |                                                |   | 13.76 | 
|Forfeited                                       |  |                            | (281  | ) |                                                |   | 10.96 | 
|                                                |  |                            |       |   |                                                |   |       | 
|Nonvested balance as of June 29, 2011           |  |                            | 2,265 |   |                                                | $ | 9.89  | 
|                                                |  |                            |       |   |                                                |   |       | 
|Vested and expected to vest as of June 29, 2011 |  |                            | 4,152 |   |                                                | $ | 12.37 | 
|                                                |  |                            |       |   |                                                |   |       | 



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



|12. | Leases
|--- | ------

The Company
leases substantially all of its stores and other facilities, as well as certain information technology and transportation equipment. The majority of the Companys lease obligations relate to real properties with remaining terms ranging from
less than one year to twenty years. Many of the Companys leases contain renewal options after the initial term. In addition to minimum rents, certain store leases require contingent rental payments if sales volumes exceed specified amounts.

Lease Commitments

As of June 29, 2011, future contractual minimum lease payments under both capital and operating leases that have remaining terms in excess of one year are:



|                                            |  |         |        |  |           |  |           |           |  |  |        |   |  |  |           | 
|------------------------------------------- |  | ------- | ------ |  | --------- |  | --------- | --------- |  |  | ------ | - |  |  | --------- | 
|                                            |  | Capital |        |  | Operating |  |           | Subleases |  |  | Net    |  
|Fiscal Year:                                |  |         |        |  |           |  |           |           |  |  |        |   |  |  |           | 
|2012                                        |  | $       | 13,344 |  |           |  | 205,779   |           |  |  | (1,336 | ) |  |  | 217,787   | 
|2013                                        |  |         | 10,936 |  |           |  | 188,707   |           |  |  | (981   | ) |  |  | 198,662   | 
|2014                                        |  |         | 13,509 |  |           |  | 176,396   |           |  |  | (351   | ) |  |  | 189,554   | 
|2015                                        |  |         | 7,012  |  |           |  | 155,748   |           |  |  | (181   | ) |  |  | 162,579   | 
|2016                                        |  |         | 4,692  |  |           |  | 133,218   |           |  |  | (170   | ) |  |  | 137,740   | 
|Thereafter                                  |  |         | 1,274  |  |           |  | 415,025   |           |  |  | (322   | ) |  |  | 415,977   | 
|                                            |  |         |        |  |           |  |           |           |  |  |        |   |  |  |           | 
|Total minimum lease payments                |  |         | 50,767 |  |           |  | 1,274,873 |           |  |  | (3,341 | ) |  |  | 1,322,299 | 
|                                            |  |         |        |  |           |  |           |           |  |  |        |   |  |  |           | 
|Less: Amount representing interest          |  |         | 8,004  |  |           |  |           |           |  |  |        |   |  |  |           | 
|                                            |  |         |        |  |           |  |           |           |  |  |        |   |  |  |           | 
|Present value of net minimum lease payments |  | $       | 42,763 |  |           |  |           |           |  |  |        |   |  |  |           | 
|                                            |  |         |        |  |           |  |           |           |  |  |        |   |  |  |           | 

The carrying amount of the Companys capital lease obligations of $42.8 million and $29.5 million
approximates fair value as of June 29, 2011, and June 30, 2010, respectively.

Minimum rentals, contingent rentals
and sublease rentals under operating leases were as follows:



|                       |  |      |         |   |      |  |         |      |  |  |         |  
|---------------------- |  | ---- | ------- | - | ---- |  | ------- | ---- |  |  | ------- | -
|                       |  | 2011 |         |   | 2010 |  |         | 2009 | 
|Minimum rentals        |  | $    | 183,991 |   |      |  | 188,036 |      |  |  | 185,803 |  
|Contingent rentals     |  |      | 371     |   |      |  | 460     |      |  |  | 398     |  
|Less: Sublease rentals |  |      | (877    | ) |      |  | (1,032  | )    |  |  | (954    | )
|                       |  |      |         |   |      |  |         |      |  |  |         |  
|Total                  |  | $    | 183,485 |   |      |  | 187,464 |      |  |  | 185,247 |  
|                       |  |      |         |   |      |  |         |      |  |  |         |  



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



|13. | Discontinued Operations
|--- | -----------------------

In evaluating whether store closures qualify for discontinued operations classification, the Company considers each store to be a
component of a business, as this is the lowest level at which the operations and cash flows can be clearly distinguished, operationally and for financial reporting purposes. If the cash flows of a store to be exited will not be significant to the
Companys ongoing operations and cash inflows of nearby Company stores are not expected to increase significantly because of the exit, the results of operations of the store are reported in discontinued operations. Costs incurred to dispose of
a location are included in loss on disposal of discontinued operations only if the location qualifies for discontinued operations classification; otherwise, such costs are reported as continuing operations.

During 2011, the Company closed 30 non-remodeled, underperforming stores. Results of operations for the 30 stores were classified as
discontinued operations. Net sales from discontinued operations for 2011, 2010 and 2009 were $49.1 million, $267.6 million and $287.8 million, respectively. For 2011, the loss on disposal of discontinued operations consisted of $7.6 million net gain
on sale or retirement of assets, including pharmacy prescription files, $31.4 million of lease termination costs and $3.6 million of other costs.

The following table presents the detail of liability activity for costs related to closed stores.



|                         |  |       |         |   |             |  |         |         |  |  |        |  
|------------------------ |  | ----- | ------- | - | ----------- |  | ------- | ------- |  |  | ------ | -
|                         |  |       |         |   | Lease       |  |         | Other   | 
|                         |  |       |         |   | Termination |  |         | Closing | 
|                         |  | Total |         |   | Costs       |  |         | Costs   | 
|Balance at June 30, 2010 |  | $     | (12,490 | ) |             |  | (12,490 | )       |  |  |       |  
|Expense                  |  |       | (37,995 | ) |             |  | (34,321 | )       |  |  | (3,674 | )
|Cash payments            |  |       | 16,522  |   |             |  | 12,848  |         |  |  | 3,674  |  
|                         |  |       |         |   |             |  |         |         |  |  |        |  
|Balance at June 29, 2011 |  | $     | (33,963 | ) |             |  | (33,963 | )       |  |  |       |  
|                         |  |       |         |   |             |  |         |         |  |  |        |  

The balance at June 30, 2010, includes $4.8 million of closed store lease liability related to stores
closed prior to the 30 closures and $7.7 million of accrued expenses related to the leases of the 30 closures that were reclassified to the closed store lease liability in 2011. The expense amount includes leases added to the accrual and the effect
on operations from the accretion of the present value of the expected future rental payments, and adjustments due to the settlement of certain leases. The cash payments include payments made for rent and related costs.



|14. | Insurance
|--- | ---------

The
Companys primary commercial general liability, business interruption, workers compensation, property loss and auto liability insurance coverages are issued under arrangements with insurance carriers pursuant to which the
Company effectively self-insures such primary coverages. Above the respective primary policy limits, the Company maintains commercial property and liability umbrella and excess workers compensation liability stop-loss coverage. Excess
insurance applies above retentions of $2.0 million per occurrence for automobile and general liability, $1.5 million per occurrence for workers compensation, $10.0 million per occurrence for property losses and business interruption losses
related to named windstorms, $2.0 million per occurrence and $5.0 million aggregate for all other property losses in excess of $0.1 million per occurrence. The reserve for self-insurance related to workers compensation, general liability
and auto liability was $175.6 million and $171.3 million as of June 29, 2011, and June 30, 2010, respectively, and is included in reserve for self-insurance liabilities in the accompanying Consolidated Balance Sheets. The Company also
self-insures its employee medical benefits program.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



The Company incurred losses and damage due to hurricanes in 2006, particularly in the
New Orleans and coastal Mississippi areas due to Hurricane Katrina. During fiscal 2009, the Company reached a final settlement with its insurers related to its claim resulting from these hurricanes. Final payments totaling approximately $25.0
million received during 2009 exceeded the insurance receivable. Accordingly, the Company recorded a gain of $22.4 million in the Consolidated Statements of Operations during 2009.



|15. | Supplemental Cash Flows Information
|--- | -----------------------------------



|                                |  |      |       |  |      |  |       |      |  |  |       | 
|------------------------------- |  | ---- | ----- |  | ---- |  | ----- | ---- |  |  | ----- | 
|                                |  | 2011 |       |  | 2010 |  |       | 2009 | 
|Interest paid                   |  | $    | 4,918 |  |      |  | 4,499 |      |  |  | 5,708 | 
|Interest and dividends received |  | $    | 266   |  |      |  | 307   |      |  |  | 2,375 | 
|Income taxes paid               |  | $    | 47    |  |      |  | 155   |      |  |  | 56    | 
|Income taxes received           |  | $    | 3,695 |  |      |  | 4,333 |      |  |  | 4,629 | 

The Company entered into capital leases totaling $13.4 million, $5.8 million and $19.0 million during
2011, 2010 and 2009, respectively. Purchases of property, plant and equipment included in accounts payable were $8.5 million, $18.6 million and $17.3 million as of June 29, 2011, June 30, 2010 and June 24, 2009, respectively.



|16. | Commitments and Contingencies
|--- | -----------------------------

Purchase Commitments

The Company enters into supply contracts to purchase
products for resale in the ordinary course of business. These contracts may include specific merchandising obligations related to the products, and, if so, typically include either a volume commitment or a fixed expiration date; pricing terms based
on the vendors published list price; termination provisions; and other standard contractual considerations. Certain of these contracts are cancelable, typically upon return of the related vendor allowances. Remaining purchase obligations for
both non-cancelable contracts, contracts for which the Companys obligations on cancellation are not specified, and open purchase orders totaled $161.3 million as of June 29, 2011, with remaining terms that range from one to three years,
based on anticipated purchase volumes when applicable. These contracts are not recorded in the Consolidated Balance Sheets.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



Litigation and Claims

On August 21, 2009, the Company was served with a putative class action lawsuit filed by two former employees in the United States
District Court for the Middle District of Florida against Winn-Dixie Stores, Inc., alleging company-wide violations of the federal Fair Credit Reporting Act related to the Companys background check procedures. The Company denied all
allegations raised in the lawsuit, answered the complaint and filed motions asserting various defenses to the claims. On October 21, 2010, the parties reached a mutually agreed upon resolution of the case. The resolution of this claim will not
result in a material adverse impact on the Companys financial condition or results of operations.

Various claims and
lawsuits arising in the normal course of business are pending against the Company, including claims alleging violations of certain employment or civil rights laws, claims relating to both regulated and non-regulated aspects of the business and
claims arising under federal, state or local environmental regulations. The Company vigorously defends these actions.

While no
one can predict the outcome of any pending or threatened litigation with certainty, management believes that any resolution of these proceedings will not have a material adverse effect on its financial condition or results of operations.



|17. | Recently Adopted Accounting Standards
|--- | -------------------------------------

The Company adopted ASC Topic 805, Business Combinations (Topic 805), on June 25, 2009. Topic 805 addresses the accounting for business combinations with acquisition dates
subsequent to the adoption and requires changes in valuation allowances for acquired deferred tax assets and acquired income tax uncertainties in a business combination to adjust income tax expense. The Company currently maintains a full valuation
allowance against substantially all of its net deferred tax assets. Decreases in the valuation allowance for deferred tax assets that existed at the time of emergence from bankruptcy protection previously reduced intangible assets. Decreases in the
valuation allowance reduced income tax expense for 2010 and 2011. There were no business combinations during 2011.



|18. | Quarterly Results of Operations (Unaudited)
|--- | -------------------------------------------

The following is a summary of the unaudited quarterly results of operations for the years ended June 29, 2011, and June 30, 2010. Amounts for all periods in 2010 were reclassified from those
originally reported to the SEC on Form 10-Q or Form 10-K in order to separately present discontinued operations that occurred in 2011, as discussed in Note 13. As a result, net sales changed by $60.6 million, $81.2 million, $62.2 million and $63.6
million for the quarters ended September 16, 2009, January 6, 2010, March 31, 2010, and June 30, 2010, respectively. Gross profit on net sales also changed by $16.9 million, $22.7 million, $17.0 million and $17.8
million for the quarters ended September 16, 2009, January 6, 2010, March 31, 2010, and June 30, 2010, respectively. Earnings per share amounts for each quarter are computed individually and may not equal the amount
computed for the entire year.



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



|                                                                       |  |                |           |   |            |  |           |            |  |  |            |   |  |            |           |   |  |  |           |  
|---------------------------------------------------------------------- |  | -------------- | --------- | - | ---------- |  | --------- | ---------- |  |  | ---------- | - |  | ---------- | --------- | - |  |  | --------- | -
|                                                                       |  | Quarters Ended |           |   |            | 
|                                                                       |  | Sept. 22       |           |   | Jan. 12    |  |           | April 6    |  |  | June 29    |   |  | Total      |          
|Fiscal 2011                                                            |  | (12 Weeks)     |           |   | (16 Weeks) |  |           | (12 Weeks) |  |  | (12 Weeks) |   |  | (52 weeks) |          
|Net sales from continuing operations                                   |  | $              | 1,544,350 |   |            |  | 2,098,005 |            |  |  | 1,620,535  |   |  |            | 1,617,886 |   |  |  | 6,880,776 |  
|Gross profit on net sales from continuing operations                   |  | $              | 423,789   |   |            |  | 580,991   |            |  |  | 465,841    |   |  |            | 447,647   |   |  |  | 1,918,268 |  
|Net (loss) income from continuing operations                           |  | $              | (36,643   | ) |            |  | (22,302   | )          |  |  | 23,524     |   |  |            | 5,629     |   |  |  | (29,792   | )
|Net (loss) gain from discontinued operations                           |  | $              | (40,148   | ) |            |  | (1,703    | )          |  |  | (159       | ) |  |            | 1,672     |   |  |  | (40,338   | )
|Net (loss) income                                                      |  | $              | (76,791   | ) |            |  | (24,005   | )          |  |  | 23,365     |   |  |            | 7,301     |   |  |  | (70,130   | )
|Basic and diluted (loss) earnings per share from continuing operations |  | $              | (0.66     | ) |            |  | (0.40     | )          |  |  | 0.42       |   |  |            | 0.10      |   |  |  | (0.54     | )
|Basic and diluted (loss) earnings per share                            |  | $              | (1.39     | ) |            |  | (0.43     | )          |  |  | 0.42       |   |  |            | 0.13      |   |  |  | (1.26     | )
|                                                                       |  |               
|                                                                       |  | Quarters Ended |           |   |            | 
|                                                                       |  | Sept. 16       |           |   | Jan. 6     |  |           | Mar. 31    |  |  | June 30    |   |  | Total      |          
|Fiscal 2010                                                            |  | (12 Weeks)     |           |   | (16 Weeks) |  |           | (12 Weeks) |  |  | (13 Weeks) |   |  | (53 weeks) |          
|Net sales from continuing operations                                   |  | $              | 1,580,982 |   |            |  | 2,094,335 |            |  |  | 1,623,279  |   |  |            | 1,681,522 |   |  |  | 6,980,118 |  
|Gross profit on net sales from continuing operations                   |  | $              | 448,298   |   |            |  | 590,844   |            |  |  | 462,194    |   |  |            | 490,589   |   |  |  | 1,991,925 |  
|Net (loss) income from continuing operations                           |  | $              | (5,633    | ) |            |  | 4,276     |            |  |  | 22,102     |   |  |            | 16,039    |   |  |  | 36,784    |  
|Net loss from discontinued operations                                  |  | $              | (2,425    | ) |            |  | (2,181    | )          |  |  | (1,221     | ) |  |            | (2,060    | ) |  |  | (7,887    | )
|Net (loss) income                                                      |  | $              | (8,058    | ) |            |  | 2,095     |            |  |  | 20,881     |   |  |            | 13,979    |   |  |  | 28,897    |  
|Basic and diluted (loss) earnings per share from continuing operations |  | $              | (0.10     | ) |            |  | 0.08      |            |  |  | 0.40       |   |  |            | 0.29      |   |  |  | 0.67      |  
|Basic (loss) earnings per share                                        |  | $              | (0.15     | ) |            |  | 0.04      |            |  |  | 0.38       |   |  |            | 0.25      |   |  |  | 0.53      |  
|Diluted (loss) earnings per share                                      |  | $              | (0.15     | ) |            |  | 0.04      |            |  |  | 0.38       |   |  |            | 0.25      |   |  |  | 0.52      |  



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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Dollar amounts in thousands except per share data, unless otherwise stated



|                                                        |  |                                     |           |   |                         |  |           |  
|------------------------------------------------------- |  | ----------------------------------- | --------- | - | ----------------------- |  | --------- | -
|                                                        |  | Fourth QuarterResults of Operations |          
|                                                        |  | June 29, 2011(12 Weeks)             |           |   | June 30, 2010(13 Weeks) | 
|Net sales                                               |  | $                                   | 1,617,886 |   |                         |  | 1,681,522 |  
|Cost of sales, including warehouse and delivery expense |  |                                     | 1,170,239 |   |                         |  | 1,190,933 |  
|                                                        |  |                                     |           |   |                         |  |           |  
|Gross profit on net sales                               |  |                                     | 447,647   |   |                         |  | 490,589   |  
|Operating and administrative expenses                   |  |                                     | 440,697   |   |                         |  | 473,846   |  
|Impairment charges                                      |  |                                     | 681       |   |                         |  | 436       |  
|                                                        |  |                                     |           |   |                         |  |           |  
|Operating income                                        |  |                                     | 6,269     |   |                         |  | 16,307    |  
|Interest expense, net                                   |  |                                     | 1,160     |   |                         |  | 940       |  
|                                                        |  |                                     |           |   |                         |  |           |  
|Income from continuing operations before income tax     |  |                                     | 5,109     |   |                         |  | 15,367    |  
|Income tax benefit                                      |  |                                     | (520      | ) |                         |  | (672      | )
|                                                        |  |                                     |           |   |                         |  |           |  
|Net income from continuing operations                   |  |                                     | 5,629     |   |                         |  | 16,039    |  
|Discontinued operations:                                |  |                                     |           |   |                         |  |           |  
|Loss from discontinued operations                       |  |                                     | (68       | ) |                         |  | (2,060    | )
|Gain on disposal of discontinued operations             |  |                                     | 1,740     |   |                         |  |          |  
|                                                        |  |                                     |           |   |                         |  |           |  
|Net gain (loss) from discontinued operations            |  |                                     | 1,672     |   |                         |  | (2,060    | )
|                                                        |  |                                     |           |   |                         |  |           |  
|Net income                                              |  | $                                   | 7,301     |   |                         |  | 13,979    |  
|                                                        |  |                                     |           |   |                         |  |           |  

During the first three quarters of each year, the Company uses an estimated annual inflation rate to
calculate LIFO inventory. During the fourth quarter of each year, the Company uses its actual annual inflation rate in the calculations. The fourth quarter results of operations for 2011 reflect a charge from LIFO of $3.8 million, which includes a
credit of $5.0 million in layer liquidations. The fourth quarter results of operations for 2010 reflect a benefit from LIFO of $4.4 million from a reduction in the estimated inflation rate and layer liquidations.



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Schedule II

WINN-DIXIE STORES, INC. AND SUBSIDIARIES

Consolidated Valuation and Qualifying Accounts

(in thousands)



|                                                   |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|-------------------------------------------------- |  | ---------------------------- | ------- |  | -------------------------- |  | ------ | ----------------------- |  |  | ----------------------- | --- |  |  | ------- | 
|Description                                        |  | Balance atbeginning ofperiod |         |  | Additionscharged toexpense |  |        | Deductions fromreserves |  |  | Balance atend of period |    
|Successor:                                         |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Fiscal year ended June 29, 2011:                   |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Reserves deducted from assets to which they apply: |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Valuation allowance on deferred tax assets         |  | $                            | 345,770 |  |                            |  | 17,120 | (3)                     |  |  |                        |     |  |  | 362,890 | 
|Allowance for doubtful receivables                 |  | $                            | 3,730   |  |                            |  | 2,883  |                         |  |  | 3,383                   |     |  |  | 3,230   | 
|Reserves not deducted from assets:                 |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Reserve for self-insurance liabilities (1)         |  | $                            | 171,253 |  |                            |  | 63,857 |                         |  |  | 59,514                  |     |  |  | 175,596 | 
|Fiscal year ended June 30, 2010:                   |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Reserves deducted from assets to which they apply: |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Valuation allowance on deferred tax assets         |  | $                            | 325,263 |  |                            |  | 20,507 | (3)                     |  |  |                        |     |  |  | 345,770 | 
|Allowance for doubtful receivables                 |  | $                            | 3,946   |  |                            |  | 3,586  |                         |  |  | 3,802                   |     |  |  | 3,730   | 
|Reserves not deducted from assets:                 |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Reserve for self-insurance liabilities (1)         |  | $                            | 176,701 |  |                            |  | 49,337 |                         |  |  | 54,785                  |     |  |  | 171,253 | 
|Fiscal year ended June 24, 2009:                   |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Reserves deducted from assets to which they apply: |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Valuation allowance on deferred tax assets         |  | $                            | 334,571 |  |                            |  | 35,008 | (3)                     |  |  | 44,316                  | (2) |  |  | 325,263 | 
|Allowance for doubtful receivables                 |  | $                            | 1,906   |  |                            |  | 7,687  |                         |  |  | 5,647                   |     |  |  | 3,946   | 
|Reserves not deducted from assets:                 |  |                              |         |  |                            |  |        |                         |  |  |                         |     |  |  |         | 
|Reserve for self-insurance liabilities (1)         |  | $                            | 183,160 |  |                            |  | 48,488 |                         |  |  | 54,947                  |     |  |  | 176,701 | 



|(1) | Contains reserve for workers compensation, general liability and auto liability and does not include reserves for the Companys self-insured medical program.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Amount relates to tax attributes that existed as of November 15, 2006, and reduced intangible assets.
|--- | -----------------------------------------------------------------------------------------------------



|(3) | Amount relates to the change in net deferred tax assets.
|--- | --------------------------------------------------------



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

None.



|ITEM 9A: | CONTROLS AND PROCEDURES
|-------- | -----------------------

(a)
Evaluation of Disclosure Controls and Procedures

As of June 29, 2011, the Chief Executive Officer and the Chief Financial Officer,
together with a disclosure review committee appointed by the Chief Executive Officer, evaluated the Companys disclosure controls and procedures. Based on the evaluation, the Chief Executive Officer and the Chief Financial Officer concluded
that, as of June 29, 2011, the Companys disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it
files or submits under the Securities Exchange Act of 1934, as amended (the Exchange Act), and are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Managements Report on Internal Control Over Financial Reporting

The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. With the participation of the Chief Executive Officer and
the Chief Financial Officer, our management conducted an evaluation of the effectiveness of the Companys internal control over financial reporting as of June 29, 2011. This assessment was performed using the criteria established under the
Internal Control-Integrated Framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. The Companys internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation
of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Companys assets that could have a material effect on the Companys financial statements.

Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent
limitations, including the possibility of human error or circumvention or overriding of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement
preparation and reporting and may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.



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Based on the assessment performed using the criteria established by COSO, management concluded that the
Company maintained effective internal control over financial reporting as of June 29, 2011.

(c) Changes in Internal Control Over
Financial Reporting

There was no change in the Companys internal control over financial reporting during the quarter ended
June 29, 2011, that has materially affected, or is reasonably likely to materially affect, the Companys internal control over financial reporting.



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Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Winn-Dixie Stores, Inc.:

We have audited
Winn-Dixie Stores, Inc.s internal control over financial reporting as of June 29, 2011, based on criteria established in Internal Control  Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Winn-Dixie Stores, Inc.s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting,
included in the accompanying Managements Report on Internal Control Over Financial Reporting, appearing under Item 9A. Our responsibility is to express an opinion on the Companys internal control over financial reporting based on
our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal
control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A
companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A companys internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect
the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Winn-Dixie Stores, Inc. maintained, in all material respects, effective internal control over financial reporting as of June 29,
2011, based on criteria established in Internal Control-Integrated Framework issued by Committee of Sponsoring Organizations of the Treadway Commission.



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We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States), the consolidated balance sheets of Winn-Dixie Stores, Inc. and subsidiaries as of June 29, 2011 and June 30, 2010, and the related consolidated statements of operations, shareholders equity, and cash flows for each
of the years in the three-year period ended June 29, 2011, and our report dated August 29, 2011 expressed an unqualified opinion on those consolidated financial statements.

KPMG LLP

August 29, 2011

Jacksonville, Florida

Certified Public Accountants



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|ITEM 9B: | OTHER INFORMATION
|-------- | -----------------

None.

PART III



|ITEM 10: | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|-------- | ------------------------------------------------------

The information required by this Item not otherwise set forth below is presented under the captions Proposal 1Election of Directors  Information About Our Board of Directors,
Section 16(a) Beneficial Ownership Reporting Compliance, Governance of the Company  Committee Structure, and Governance of the Company  Other Governance Matters in our 2011 Proxy Statement to be filed
by the Company with the SEC and is hereby incorporated by reference into this report.

Executive Officers of the Company

Officers serve until their successors are duly elected and qualified. Set forth below is certain information concerning the executive officers of the
Company as of June 29, 2011. The year appointed to current position and year first employed by the Company are both based on a calendar year.



|                      |  |     |  |                                                                            |  |                                 |  |                                
|--------------------- |  | --- |  | -------------------------------------------------------------------------- |  | ------------------------------- |  | -------------------------------
|NAME                  |  | AGE |  | OFFICE HELD                                                                |  | YEARAPPOINTED TOCURRENTPOSITION |  | YEAR FIRSTEMPLOYED BYWINN-DIXIE
|Peter L. Lynch        |  | 59  |  | President and Chief Executive Officer                                      |  | 2004                            |  | 2004                           
|                      |  |     |  |                                                                           
|Bennett L. Nussbaum   |  | 64  |  | Senior Vice President and Chief Financial Officer                          |  | 2004                            |  | 2004                           
|                      |  |     |  |                                                                           
|Laurence B. Appel     |  | 50  |  | Senior Vice President, Retail Operations                                   |  | 2011                            |  | 2002                           
|                      |  |     |  |                                                                           
|Anita Dahlstrom-Gutel |  | 52  |  | Senior Vice President, Human Resources                                     |  | 2011                            |  | 2009                           
|                      |  |     |  |                                                                           
|Timothy L. Williams   |  | 43  |  | Senior Vice President, General Counsel and Corporate Secretary             |  | 2011                            |  | 2003                           
|                      |  |     |  |                                                                           
|Matthew Gutermuth     |  | 45  |  | Group Vice President, Non-Perishables                                      |  | 2009                            |  | 2008                           
|                      |  |     |  |                                                                           
|Maura Hart            |  | 45  |  | Group Vice President, Information Technology and Chief Information Officer |  | 2010                            |  | 2005                           
|                      |  |     |  |                                                                           
|Mary Kellmanson       |  | 44  |  | Group Vice President, Marketing                                            |  | 2009                            |  | 2008                           
|                      |  |     |  |                                                                           
|Christopher L. Scott  |  | 48  |  | Group Vice President, Logistics & Distribution                             |  | 2006                            |  | 2002                           
|                      |  |     |  |                                                                           
|James P. Smits        |  | 51  |  | Group Vice President, Perishables                                          |  | 2009                            |  | 2009                           
|                      |  |     |  |                                                                           
|D. Michael Byrum      |  | 58  |  | Vice President, Corporate Controller and Chief Accounting Officer          |  | 2000                            |  | 1972                           
|                      |  |     |  |                                                                           
|Lynn Schweinfurth     |  | 44  |  | Vice President, Finance and Treasurer                                      |  | 2010                            |  | 2010                           



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| |  |  | President and Chief Executive Officer, Mr. Lynch has been employed for the past five years either in the same capacity or in a position with the
Company that was consistent in occupation with his present assignment.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Senior Vice President and Chief Financial Officer, Mr. Nussbaum has been employed for the past five years either in the same capacity or in a
position with the Company that was consistent in occupation with his present assignment.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Senior Vice President, Retail Operations, Mr. Appel was Senior Vice President, Human Resources, Legal and General Counsel of the Company from 2008
to 2011. He was Senior Vice President, Legal and General Counsel of the Company from 2002 to 2008.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Senior Vice President, Human Resources, Ms. Dahlstrom-Gutel was Vice President, Corporate Human Resources, Talent Acquisition/Management from
October 2009 to January 2011. She was Senior Director of Corporate Human Resources and Organizational Effectiveness at Darden Restaurants, Inc. from 2007 to 2009.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Senior Vice President, General Counsel and Corporate Secretary, Mr. Williams was Vice President and Assistant General Counsel from 2008 to 2011.
He was Senior Director, Group Leader-Employment Law from 2003 to 2008.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Group Vice President, Non-Perishables, Mr. Gutermuth was Vice President, Non-Perishables since 2008. He was President and CEO of Safeway.com from
2006 to 2008.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Group Vice President, Information Technology, and Chief Information Officer since August 2010, Ms. Hart was Vice President, IT
Merchandising & Marketing Systems since March 2010. She was Senior Director, Information Technology from 2007 to 2010.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Group Vice President, Marketing, Ms. Kellmanson was Vice President, Marketing from 2008 to 2009. She was Vice President, Marketing of Wegmans Food
Markets, Inc. from 1998 to 2007.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Group Vice President, Logistics and Distribution, Mr. Scott has been employed for the past five years either in the same capacity or in a position
with the Company that was consistent in occupation with his present assignment.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Group Vice President, Perishables, Mr. Smits was Group Vice President, Fresh Food Merchandising at SUPERVALU, Inc. from 2005 to 2009.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Vice President, Corporate Controller and Chief Accounting Officer, Mr. Byrum has been employed for the past five years either in the same capacity
or in a position with the Company that was consistent in occupation with his present assignment.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Vice President, Finance and Treasurer, Ms. Schweinfurth was CFO for Lone Star Steakhouse from 2009 to 2010. She was Vice President, Finance, at
Brinker International, Inc. from 2004 to 2009.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Code of Ethics and Code of Conduct

We adopted a Code of Ethics for Senior Executive and Financial Officers (the Code of Ethics) that applies to our chief executive officer,
chief financial officer, chief accounting officer and treasurer. The Code of Ethics is filed as exhibit 14.1 to this report, which exhibit is herein incorporated by reference. Any amendments to, or waivers of, the Code of Ethics will be disclosed on
our web site promptly following the date of such amendment or waiver. We also have a Code of Business Conduct and Ethics that applies to all Company team members, including senior executive and financial officers. Both the Code of Ethics and the
Code of Business Conduct and Ethics are available on our web site at www.winn-dixie.com, under the Investors link under the Corporate Governance caption.



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|ITEM 11: | EXECUTIVE COMPENSATION
|-------- | ----------------------

The information
required by this Item is presented under the captions Executive Compensation, Governance of the Company  Director Compensation and Governance of the Company  Compensation Committee Interlocks and Insider
Participation in our 2011 Proxy Statement to be filed by the Company with the SEC and is hereby incorporated by reference into this report.



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

The information required to be reported by item 201(d) of Regulation S-K is contained in Item 5 of this report. All other information required by
this Item is presented under the caption Stock Ownership by Directors, Management and 5% Shareholders in our 2011 Proxy Statement to be filed by the Company with the SEC and is hereby incorporated by reference into this report.



|ITEM 13: | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|-------- | ------------------------------------------------------------------------

The information required by this Item is presented under the captions Related Party Transactions and Governance of the Company  Board Structure in our 2011 Proxy Statement to
be filed by the Company with the SEC and is hereby incorporated by reference into this report.



|ITEM 14: | PRINCIPAL ACCOUNTING FEES AND SERVICES
|-------- | --------------------------------------

The information required by this Item is presented under the caption Audit Committee Report Independent Registered Public Accounting Firm Fees
and Services in our 2011 Proxy Statement to be filed by the Company with the SEC and is hereby incorporated by reference into this report.



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PART IV



|ITEM 15: | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------



| | (a) | Financial Statements and Financial Statement Schedules:
| | --- | -------------------------------------------------------



| | (1) | Consolidated Financial Statements: See Index to Consolidated Financial Statements at Item 8 on page 27 of this report.
| | --- | ----------------------------------------------------------------------------------------------------------------------



| | (2) | Financial Statement Schedules: See Schedule II at Item 8 on page 56 of this report.
| | --- | -----------------------------------------------------------------------------------



| | (3) | Exhibits are incorporated herein by reference or are filed with this report as set forth in the Index to Exhibits on pages 66 through 67 hereof.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------



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|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                                                                                                                          
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                              |  | Incorporated by Reference From                                                                                                           
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2.1           |  | Joint Plan of Reorganization of Winn-Dixie Stores, Inc. and Affiliated Debtors.                                                                                                                                                                                                                                                                                                                                                     |  | Previously filed as Exhibit 2.1 to Form 8-K on August 11, 2006, which Exhibit is herein incorporated by reference.                       
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2.2           |  | First Modification to Joint Plan of Reorganization of Winn-Dixie Stores, Inc. and Affiliated Debtors.                                                                                                                                                                                                                                                                                                                               |  | Previously filed as Exhibit 2.1 to Form 10-Q for the quarter ended September 20, 2006, which Exhibit is herein incorporated by reference.
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|2.3           |  | Order Confirming Joint Plan of Reorganization of Winn-Dixie Stores, Inc. and Affiliated Debtors entered November 9, 2006.                                                                                                                                                                                                                                                                                                           |  | Previously filed as Exhibit 99.2 to Form 8-K on November 15, 2006, which Exhibit is herein incorporated by reference.                    
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.1           |  | Amended and Restated Certificate of Incorporation of Winn-Dixie Stores, Inc.                                                                                                                                                                                                                                                                                                                                                        |  | Previously filed as Exhibit 3.1 to Form 8-A/A on November 21, 2006, which Exhibit is herein incorporated by reference.                   
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|3.2           |  | Amended and Restated By-Laws of Winn-Dixie Stores, Inc.                                                                                                                                                                                                                                                                                                                                                                             |  | Previously filed as Exhibit 3.1 to Form 8-K on November 12, 2008, which Exhibit is herein incorporated by reference.                     
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|4.1           |  | Registration Rights Agreement dated as of December 5, 2006.                                                                                                                                                                                                                                                                                                                                                                         |  | Previously filed as Exhibit 4.1 to Form 8-K on December 11, 2006, which Exhibit is herein incorporated by reference.                     
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.1*         |  | Employment Agreement, dated October 23, 2006, between Winn-Dixie Stores, Inc. and Peter L. Lynch.                                                                                                                                                                                                                                                                                                                                   |  | Previously filed as Exhibit 10.1 to Form 8-K on November 20, 2006, which Exhibit is herein incorporated by reference.                    
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.2*         |  | First Amendment to Employment Agreement, dated November 20, 2007 between Winn-Dixie Stores, Inc. and Peter Lynch.                                                                                                                                                                                                                                                                                                                   |  | Previously filed as Exhibit 10.2 to Form 10-K on August 25, 2008, with Exhibit is herein incorporated by reference.                      
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.3          |  | Amended and Restated Credit Agreement, dated November 21, 2006, among Winn-Dixie Stores, Inc. and Certain of its Subsidiaries, as Borrowers, Various Financial Institutions and Other
Persons from Time to Time Parties thereto, as Lenders, and Wachovia Bank, National Association, as the Administrative Agent and Collateral Agent for the Lenders.                                                                             |  | Previously filed as Exhibit 10.1 to Form 8-K on November 28, 2006, which Exhibit is herein incorporated by reference.                    
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.4          |  | Amendment Number 1 to Amended and Restated Credit Agreement dated as of September 2, 2008.                                                                                                                                                                                                                                                                                                                                          |  | Previously filed as Exhibit 99.1 to Form 8-K on September 4, 2008, which Exhibit is herein incorporated by reference.                    
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.5          |  | Second Amended and Restated Credit Agreement, dated March 18, 2011, among Winn-Dixie Stores, Inc. and Certain of its Subsidiaries, as Borrowers, Various Financial Institutions and
Other Persons from Time to Time Parties thereto, as Lenders, Wells Fargo Bank, National Association, as the Administrative Agent, and Wells Fargo Bank, National Association and General Electric Capital Corporation, as Co-Collateral
Agents. |  | Previously filed as Exhibit 10.1 to Form 8-K on March 21, 2011, which Exhibit is herein incorporated by reference.                       
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                    
|10.6          |  | Winn-Dixie Stores, Inc. Employee Stock Purchase Plan.                                                                                                                                                                                                                                                                                                                                                                               |  | Previously filed as Appendix A to the Companys proxy statement on September 22, 2008, which is herein incorporated by
reference.        



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|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |  |                                                                                                                                  
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                          |  | Incorporated by Reference From                                                                                                   
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.7*         |  | Winn-Dixie Stores, Inc. Equity Incentive Plan Form of Non-Qualified Stock Option Award Agreement.                                                                                                                                                                                                                                                                                                                                                               |  | Previously filed as Exhibit 10.2 to Form 8-K on December 21, 2006, which Exhibit is herein incorporated by reference.            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.8*         |  | Winn-Dixie Stores, Inc. Equity Incentive Plan Form of Restricted Stock Unit Award Agreement.                                                                                                                                                                                                                                                                                                                                                                    |  | Previously filed as Exhibit 10.3 to Form 8-K on December 21, 2006, which Exhibit is herein incorporated by reference.            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.9*         |  | Winn-Dixie Stores, Inc. Directors Deferred Compensation Plan.                                                                                                                                                                                                                                                                                                                                                                                                  |  | Previously filed as Exhibit 10.7 to Form 10-K on August 28, 2007, with Exhibit is herein incorporated by reference.              
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.10*        |  | Winn-Dixie Stores, Inc. Amended and Restated Equity Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                             |  | Previously filed as Exhibit 10.1 on Form 10-Q on February 19, 2008, which Exhibit is herein incorporated by reference.           
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.11*        |  | Winn-Dixie Stores, Inc. Executive Severance Plan, effective January 31, 2008.                                                                                                                                                                                                                                                                                                                                                                                   |  | Previously filed as Exhibit 10.1 on Form 8-K on March 10, 2008, which Exhibit is herein incorporated by reference.               
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.12*        |  | Winn-Dixie Stores, Inc. Fiscal 2010 Equity Incentive Plan.                                                                                                                                                                                                                                                                                                                                                                                                      |  | Previously filed as Appendix A to the Companys proxy statement on September 21, 2009, which is herein incorporated by reference.
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.13*        |  | Forms of equity award agreements under the Winn-Dixie Stores, Inc. Fiscal 2010 Equity Incentive Plan: (1) Form of Time-Vested Non-Qualified Stock Option Award; (2) Form of
Time-Vested Restricted Stock Unit Award; (3) Form of Performance-Based Restricted Stock Unit Award; (4) Form of Non-Qualified Outperformance Stock Option Award; (5) Form of Outperformance Restricted Stock Unit Award; and (6) Form of Restricted Stock
Unit Award for Directors. |  | Previously filed as Exhibit 10.1 on Form 10-Q on February 16, 2010, which Exhibit is herein incorporated by reference.           
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.14*        |  | Letter Agreement, dated February 14, 2011, between Winn-Dixie Stores, Inc. and Frank O. Eckstein.                                                                                                                                                                                                                                                                                                                                                               |  | Previously filed as Exhibit 10.1 on Form 8-K on February 17, 2011, which Exhibit is herein incorporated by reference.            
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.15*        |  | Winn-Dixie Stores, Inc. Executive Severance Plan General Release and Separation Agreement between Winn-Dixie Stores, Inc. and Dan Portnoy.                                                                                                                                                                                                                                                                                                                      |  | Previously filed as Exhibit 10.1 on Form 8-K on March 2, 2011, which Exhibit is herein incorporated by reference.                
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|11.0          |  | Computation of Earnings Per Share.                                                                                                                                                                                                                                                                                                                                                                                                                              |  | See Note 2 of Notes to Consolidated Financial Statements.                                                                        
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|14.1          |  | Senior Executive and Financial Officers Code of Ethics of Winn-Dixie Stores, Inc.                                                                                                                                                                                                                                                                                                                                                                              |  | Previously filed as Exhibit 14.1 on Form 10-K on August 24, 2009, which Exhibit is herein incorporated by reference.             
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|21.0          |  | Subsidiaries of Winn-Dixie Stores, Inc.                                                                                                                                                                                                                                                                                                                                                                                                                         |  |                                                                                                                                  
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|23.1          |  | Consent of Independent Registered Public Accounting Firm.                                                                                                                                                                                                                                                                                                                                                                                                       |  |                                                                                                                                  
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|31.1          |  | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                             |  |                                                                                                                                  
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|31.2          |  | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                                                                                                             |  |                                                                                                                                  
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|32.1          |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                                                                                                  
|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|32.2          |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.                                                                                                                                                                                                                                                                                                                                                                                    |  |                                                                                                                                  



|* | Management contract or compensatory plan or agreement
|- | -----------------------------------------------------



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SIGNATURES

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



WINN-DIXIE STORES, INC.By

/s/ Peter L. LynchPeter L. LynchPresident and Chief Executive OfficerDate:

August 29, 2011


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



|                                              |  |                                                                                                  |  |                
|--------------------------------------------- |  | ------------------------------------------------------------------------------------------------ |  | ---------------
|/s/ Peter L. Lynch
(Peter L. Lynch)           |  | Chairman of the Board,
President and Chief
Executive Officer
(Principal Executive Officer)       |  | August 29, 2011
|                                              |  |                                                                                                 
|/s/ Bennett L. Nussbaum
(Bennett L. Nussbaum) |  | Senior Vice President
and Chief Financial Officer
(Principal Financial Officer)                  |  | August 29, 2011
|                                              |  |                                                                                                 
|/s/ D. Michael Byrum
(D. Michael Byrum)       |  | Vice President,
Corporate Controller and
Chief Accounting Officer
(Principal Accounting Officer) |  | August 29, 2011



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|                                                  |  |          |  |                
|------------------------------------------------- |  | -------- |  | ---------------
|                                                  |  |         
|/s/ Evelyn V. Follit
(Evelyn V. Follit)           |  | Director |  | August 29, 2011
|                                                  |  |         
|/s/ Charles P. Garcia
(Charles P. Garcia)         |  | Director |  | August 29, 2011
|                                                  |  |         
|/s/ Jeffrey C. Girard
(Jeffrey C. Girard)         |  | Director |  | August 29, 2011
|                                                  |  |         
|/s/ Yvonne R. Jackson
(Yvonne R. Jackson)         |  | Director |  | August 29, 2011
|                                                  |  |         
|/s/ Gregory P. Josefowicz
(Gregory P. Josefowicz) |  | Director |  | August 29, 2011
|                                                  |  |         
|/s/ James P. Olson
(James P. Olson)               |  | Director |  | August 29, 2011
|                                                  |  |         
|/s/ Terry Peets
(Terry Peets)                     |  | Director |  | August 29, 2011
|                                                  |  |         
|/s/ Richard E. Rivera
(Richard E. Rivera)         |  | Director |  | August 29, 2011



70