================================================================================
                                  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 27, 2001

                                       OR

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

                          Commission File Number 1-3657

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

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

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

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

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

        Title of each class            Name of each exchange on which registered
        -------------------            -----------------------------------------
Common Stock Par Value $1.00 Per Share          New York Stock Exchange
8.875% Senior Notes due 2008                    New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
                                      None
                                (Title of class)

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

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

     The aggregate  market value of the voting stock held by  non-affiliates  of
the  registrant,  based upon the closing  sale price of common stock on June 27,
2001,   as  reported  on  the  New  York  Stock   Exchange   was   approximately
$2,050,509,347.  Shares of  common  stock  held by each  executive  officer  and
director and by principal  shareholders  filing  Schedules 13D and 13G have been
excluded in that such persons may be deemed to be affiliates.  The determination
of affiliate  status is not  necessarily  a conclusive  determination  for other
purposes.

     As of June 27,  2001,  registrant  had  outstanding  140,466,235  shares of
common stock.

DOCUMENTS  INCORPORATED  BY  REFERENCE:   Portions  of  the  registrant's  Proxy
Statement in respect to the 2001 Annual Meeting of Shareholders are incorporated
by reference in Part III hereof, as more specifically described herein.

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<PAGE>

                                TABLE OF CONTENTS

                                                                           Page
                                                                          Number
                                                                          ------

PART I

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

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

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

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

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

PART II

Market for the Registrant's Common Equity and Related Shareholder Matters...   8

Selected Financial Data.....................................................   8

Management's Discussion and Analysis of Financial Condition
                and Results of Operations...................................   8

Quantitative and Qualitative Disclosure about Market Risk...................   8

Financial Statements and Supplemental Data..................................   8

Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure....................................   8

PART III

The  information  required by Part III is hereby  incorporated by  reference
to Winn-Dixie  Stores,  Inc.'s  definitive proxy statement to be filed on or
before  September  5,  2001  in  connection  with  its  Annual  Meeting   of
Shareholders................................................................   9

PART IV

Exhibits, Financial Statement Schedules and Reports on Form 8-K.............   9

Signatures..................................................................  13
<PAGE>


PART I

ITEM 1:     BUSINESS

General

     Winn-Dixie  Stores,  Inc.,  organized in Florida on December 26, 1928, is a
major food and drug retailer with 1,153 stores in 14 states located primarily in
the  southeastern  United States and the Bahama Islands.  According to published
reports of sales at June 27, 2001,  the Company is one of the  nation's  largest
food  retailers and one of the largest  supermarket  chains in the  southeastern
region of the United States.

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

     In October 2000, the Company  acquired  certain  supermarket  operations of
Gooding's  Supermarkets,  Inc. in the  Orlando,  Florida  area.  The  operations
consist of nine supermarkets averaging 47,300 square feet. This acquisition fits
the Company's  strategic  direction of seeking prime supermarket  locations that
offer potential for sales growth within its core markets.

     In January 2001,  the Company  acquired 68 stores  averaging  34,300 square
feet,  32 fuel  stations  and  other  assets  owned by Jitney  Jungle  Stores of
America,  Inc.  The  acquired  assets are  located in  Mississippi,  Alabama and
Louisiana.  The Company views the  acquisition  as an excellent  opportunity  to
expand existing operations.

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








                                       1
<PAGE>


ITEM 1:     BUSINESS, continued

Store Formats and Business Strategy

     The Company's retail stores sell groceries,  meats, seafood, fresh produce,
deli/bakery  products,  pharmaceutical  products and general  merchandise items,
such as magazines, soaps, paper products, health and cosmetic products, hardware
and numerous small household items. In addition, many locations also offer broad
lines of  merchandise  and  services  such as  company-operated  photo  labs and
in-store banks operated by independent third parties who rent space. The Company
supports  the retail  operations  through  16  strategically  located  warehouse
distribution  facilities  and 19  manufacturing  facilities.  In  addition,  the
Company  operates 34 fuel centers,  32 of which were acquired from Jitney Jungle
on January 11, 2001, and, as of June 27, 2001 operated seven liquor stores.

<TABLE>

Store locations by state and by format:


                                 Winn-     Market-    Thrift-   Jitney    Sack &     City Meat               Save
        State          Total     Dixie      Place       way     Jungle     Save       Markets     Buddies    Rite
--------------------------------------------------------------------------------------------------------------------
<S>                     <C>       <C>        <C>         <C>       <C>       <C>         <C>         <C>       <C>
Florida                 436       61         372         -         -         -           -           -         3
Alabama                 118       39         74          -         5         -           -           -         -
North Carolina          109       53         56          -         -         -           -           -         -
Georgia                  94       13         81          -         -         -           -           -         -
Louisiana                79       18         60          -         1         -           -           -         -
Texas                    71       14         56          -         -         -           -           1         -
Mississippi              69        7         12          -        42         8           -           -         -
South Carolina           62       24         38          -         -         -           -           -         -
Kentucky                 40        6         29          5         -         -           -           -         -
Virginia                 28       10         18          -         -         -           -           -         -
Ohio                     17        -          -         17         -         -           -           -         -
Bahamas                  12        3          -          -         -         -           9           -         -
Tennessee                12        4          8          -         -         -           -           -         -
Oklahoma                  5        4          1          -         -         -           -           -         -
Indiana                   1        -          1          -         -         -           -           -         -
                      ----------------------------------------------------------------------------------------------
                       1,153      256        806        22        48         8           9           1         3
                      ==============================================================================================

Stores  average 44,300 square feet and range in size from 7,100 to 85,200 square
feet.
</TABLE>





                                        2
<PAGE>

ITEM 1:    BUSINESS, continued

Support and Other Services

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

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

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

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

GEORGIA              Atlanta          Distribution center
-------              Fitzgerald       Plants:  jams, jellies, mayonnaise,  salad
                                      dressing,  peanut butter and condiments;
                                      canned and bottled carbonated beverages
                     Gainesville      Plants: margarine; natural cheese  cutting
                                      and wrapping, processed cheese and pimento
                                      cheese
                     Valdosta         Plants:  crackers and cookies; and snacks

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

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

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

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

TEXAS                Ft. Worth        Distribution center;  Plant: milk bottling
-----

BAHAMAS              Nassau           Distribution center
-------



                                       3
<PAGE>

ITEM 1:     BUSINESS, continued

     The  principal  function  of  manufacturing   operations  is  to  purchase,
manufacture and process private label merchandise sold in stores operated by the
Company. An insignificant  portion of the products produced by the manufacturing
plants is sold to others.

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

Marketing and Competition

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

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

Associates

     At the end of fiscal  2001,  the  Company had 46,000  full-time  and 73,000
part-time associates. None of the 119,000 associates are covered by a collective
bargaining agreement.

Bahamas

     All sales of the Company are to customers  within the United States and the
Bahama Islands.  The Company exports an  insignificant  amount of merchandise to
its subsidiary in the Bahamas, which operates 12 retail food stores.




                                       4
<PAGE>

ITEM 1:     BUSINESS, continued

Management Actions

     On April 20,  2000,  the Company  announced a major  restructuring  plan to
improve the support of the retail stores and the Company's  overall  efficiency.
The   restructuring   plan  included  the  closing  of  certain   manufacturing,
warehousing  and retail  locations  as well as  retrofitting  of over 50% of the
Company's retail stores to improve  efficiency and customer service.  As of June
27, 2001, the restructuring efforts were substantially  complete.  Any remaining
expenditures  relating to  retrofits  are not  considered  to be material to the
Company's  operations  and will be  included  as a component  of  operating  and
administrative expense.

ITEM 2:     PROPERTIES

Stores

     All but 16 of the retail  stores  operated  by the  Company are on premises
occupied on a rental basis. See Note 11 of the "Notes to Consolidated  Financial
Statements," page F-31, included herein.

Support Properties

     The  warehousing  and  distribution  centers,  with  the  exception  of the
facilities in Baldwin, FL; Montgomery,  AL; New Orleans, LA; Louisville, KY; and
Fort Worth,  TX; are rented under leases due to expire within 3 to 23 years. All
of these contain renewal options, which vary from lease to lease.

     The Company's  Valdosta,  GA cracker and cookie  bakery and snacks  bakery;
Fort Worth, TX dairy plant;  Madison,  FL meat processing plant;  Plant City, FL
ice cream and milk bottling plants;  Miami, FL reclaim center;  Gainesville,  GA
oleomargarine  and cheese processing and packaging  plants;  and Montgomery,  AL
milk bottling and frozen pizza plants are owned in fee. All other  manufacturing
facilities  are  rented  under  leases  due to expire in 23 years.  All of these
contain renewal options, which vary from lease to lease.

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

ITEM 3:     LEGAL PROCEEDINGS

     See Note 13(d) of the "Notes to Consolidated  Financial  Statements,"  page
F-34 included herein,  regarding various claims and lawsuits pending against the
Company.

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

     There were no matters  submitted to a vote of security  holders  during the
quarter ended June 27, 2001.


                                       5
<PAGE>

Executive Officers of the Registrant

<TABLE>

Set forth below is certain information  concerning the executive officers of the
Company as of June 27, 2001:

                                                                                   YEAR                  YEAR FIRST
                          AGE IN                                                 APPOINTED                EMPLOYED
                         YEARS AT                                               TO CURRENT                   BY
NAME                      06-27-01            OFFICE HELD                         POSITION               WINN-DIXIE
----                      --------            -----------                         --------               ----------

<S>                         <C>         <C>                                        <C>                     <C>
A. Dano Davis               56          Chairman of the Board                      1988                    1968

A. R.  Rowland              57          President and                              1999                    1999
                                          Chief Executive Officer

D. G. Lafever               52          Senior Vice President and                  2001                    1966
                                          Director of Sales and Procurement

R. P. McCook                48          Senior Vice President and                  1984                    1984
                                          Chief Financial Officer

D. M. Sheehan               46          Senior Vice President and                  2000                    2000
                                            Director of Real Estate

J. R. Sheehan               43          Senior Vice President and                  2001                    2000
                                          Director of Operations

A. B. Toscano               39          Senior Vice President and                  2000                    2000
                                          Director of Human Resources

E. E. Zahra, Jr.            54          Senior Vice President and                  1995                    1995
                                          General Counsel

D. M. Byrum                 48          Vice President, Corporate Controller       2000                    1972
                                          and Chief Accounting Officer

K. D. Ross                  32          Vice President, Strategic Planning         2000                    2000
                                          and Treasurer

Division Presidents:
J. D. Fitzgerald            51          Vice President                             1998                    1970
M. J. Istre                 50          Vice President                             1999                    1969
R. C. Lunn, Jr.             49          Vice President                             1997                    1969
D. J. Richardson            51          Vice President                             2000                    1966
M. A. Sellers               47          Vice President                             1997                    1973
H. M. Solana, Jr.           46          Vice President                             1999                    1971
D. A. Weaver                45          Vice President                             2000                    1972

</TABLE>

                                       6
<PAGE>

Executive Officers of the Registrant, continued

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

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

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

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

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

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

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



                                       7
<PAGE>

                                     PART II

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

     The principal  market on which the Company's  common stock is traded is the
New York Stock  Exchange.  The number of record holders of the Company's  common
stock as of June 27, 2001 was 48,761.

     Information  required by this Item concerning sales prices of the Company's
common stock and the frequency and amount of monthly  dividends is in Note 16 of
the "Notes to Consolidated Financial Statements," on page F-37 included herein.

ITEM  6:    SELECTED FINANCIAL DATA

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

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

         The information required by this Item is on page F-3 included herein.

ITEM 7A:    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The information required by this Item begins on page F-7 included herein.

ITEM  8:    FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

     Financial  statements and supplemental  data are set forth in the "Index to
Consolidated  Financial Statements,  Supporting Schedules and Supplemental Data"
on page 15 included herein.

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

     There have been no  disagreements  on accounting  and financial  disclosure
between  the  Company and its  auditors  within the 24 months  prior to June 27,
2001.


                                       8
<PAGE>

                                    PART III

ITEM 10:    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

ITEM 11:    EXECUTIVE COMPENSATION

ITEM 12:    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13:    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by these Items is incorporated herein by reference
to the Company's  definitive  proxy statement to be filed in connection with its
2001 Annual Meeting of Shareholders.

                                     PART IV

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

         (a)    Financial Statements and Financial Statement Schedules:

                (1)      Financial Statements:

                         See  "Index  to  Consolidated   Financial   Statements,
                         Supporting  Schedules and Supplemental Data" on page 15
                         included herein.

                (2)      Financial Statement Schedules:

                         See  "Index  to  Consolidated   Financial   Statements,
                         Supporting  Schedules and Supplemental Data" on page 15
                         included herein.

                (3)      Exhibits:

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



                                       9
<PAGE>

<TABLE>

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

Exhibit
Number                  Description of Exhibit                  Incorporated by Reference From
------                  ----------------------                  ------------------------------
<S>            <C>                                              <C>
3.1            Restated  Articles  of  Incorporation  as        Previously   filed   as   Exhibit   3.1  to   Form
               filed  with  the  Secretary  of  State of        10-K  for the year  ended  June  30,  1993,  which
               Florida.                                         Exhibit is herein incorporated by reference.

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

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

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

3.2            Restated  By-Laws  of the  Registrant  as
               amended through July 02, 2001.

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

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

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

                                       10
<PAGE>

<TABLE>

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

Exhibit
Number                  Description of Exhibit                 Incorporated by Reference From
------                  ----------------------                 ------------------------------
<S>            <C>                                             <C>
10.1           Annual  Officer  Incentive   Compensation       Previously  filed as Exhibit 10.1 to Form 10-Q for
               Plan, effective   June 15, 1998.                the  quarter  ended  September  16,  1998,   which
                                                               Exhibit is herein incorporated by reference.

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

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

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

10.2.4         Amendment  to the  Restricted  Stock Plan
               effective August 9, 2000

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

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

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

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

</TABLE>

                                       11
<PAGE>

<TABLE>

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

Exhibit
Number          Description of Exhibit                         Incorporated by Reference From
------          ----------------------                         ------------------------------
<S>             <C>                                            <C>
10.6            Senior  Corporate  Officer's  Management       Previously  filed as Exhibit 10.6 to Form 10-K for
                Security  Plan as amended  and  restated       the year ended  June 26,  1996,  which  Exhibit is
                effective June 30, 1982.                       herein incorporated by reference.

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


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

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


10.9            Credit Agreement,  dated March 29, 2001,       Previously  filed as  Exhibit 10 to Form 8-K filed
                among  Winn-Dixie  stores,  Inc.,  First       on  March  29,  2001,   which  Exhibit  is  herein
                Union  National  Bank and other  lenders       incorporated by reference.
                named  therein,  relating to  Winn-Dixie
                Stores,  Inc.'s senior  credit  facility
                in the amount of $800,000,000.

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

21.1            Subsidiaries of Winn-Dixie Stores, Inc.

23.1            Consent of KPMG LLP.
</TABLE>

(b) Reports on Form 8-K:

    There were no reports on Form 8-K filed for the quarter ended June 27, 2001.


                                       12
<PAGE>

SIGNATURES

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


                                             WINN-DIXIE STORES, INC.


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


                                      Date   August 8, 2001
                                           ---------------------


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


/s/         A. Dano Davis           Chairman and Director         August 8, 2001
-------------------------
           (A. Dano Davis)


/s/      Allen R. Rowland           President and Director        August 8, 2001
-------------------------          (Chief Executive Officer)
         (Allen R. Rowland)


/s/       Richard P. McCook         Senior Vice President         August 8, 2001
---------------------------        (Chief Financial Officer)
         (Richard P. McCook)


/s/       D. Michael Byrum             Vice President             August 8, 2001
---------------------------       (Corporate Controller and
         (D. Michael Byrum)        Chief Accounting Officer)


                                       13
<PAGE>


SIGNATURES, continued



/s/        T. Wayne Davis                Director                 August 8, 2001
-------------------------
          (T. Wayne Davis)


/s/       Radford D. Lovett              Director                 August 8, 2001
---------------------------
         (Radford D. Lovett)


/s/      Charles P. Stephens             Director                 August 8, 2001
----------------------------
        (Charles P. Stephens)


/s/       Armando M. Codina              Director                 August 8, 2001
---------------------------
         (Armando M. Codina)


/s/       Carleton T. Rider              Director                 August 8, 2001
---------------------------
         (Carleton T. Rider)


/s/        Julia B. North                Director                 August 8, 2001
-------------------------
          (Julia B. North)


/s/       Tillie K. Fowler               Director                 August 8, 2001
--------------------------
         (Tillie K. Fowler)


/s/        Ronald Townsend               Director                 August 8, 2001
--------------------------
          (Ronald Townsend)



                                       14
<PAGE>


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



Selected Financial Data                                                      F-1

Management's Discussion and Analysis of Financial Condition and Results
  of  Operations                                                             F-3

Consolidated Financial Statements and Supplemental Data:

      Report of Management                                                  F-10

      Independent Auditors' Report                                          F-11

      Consolidated Statements of Operations, Years ended
       June 27, 2001, June 28, 2000 and June 30, 1999                       F-12

      Consolidated Balance Sheets, June 27, 2001 and June 28, 2000          F-13

      Consolidated Statements of Cash Flows, Years ended
       June 27, 2001, June 28, 2000 and June 30, 1999                       F-14

      Consolidated Statements of Shareholders' Equity, Years ended
       June 27, 2001, June 28, 2000 and June 30, 1999                       F-15

      Notes to Consolidated Financial Statements                            F-16

Financial Statement Schedules:

      Independent Auditors' Report on Financial Statement Schedule           S-1

      II     Consolidated Valuation and Qualifying Accounts, Years ended
             June 27, 2001, June 28, 2000 and June 30, 1999                  S-2


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

                                       15
<PAGE>

<TABLE>



                             SELECTED FINANCIAL DATA
                                                                        2001        2000      1999*      1998      1997
                                                                        ----        ----      -----      ----      ----
Sales                                                                    Dollars in millions except per share data
<S>                                                               <C> <C>         <C>        <C>       <C>       <C>
   Net sales.................................................     $   12,903      13,698     14,137    13,617    13,219
   Percent (decrease) increase...............................           (5.8)       (3.1)       3.8       3.0       2.0
   Average annual sales per store............................     $     11.6        11.6       11.9      11.7      11.3
Earnings Summary
   Gross profit..............................................     $    3,454       3,727      3,903     3,729     3,411
     Percent of sales........................................           26.8        27.2       27.6      27.4      25.8
   LIFO (credit) charge......................................     $      (12)         15          4       (12)        3
   Operating and administrative expenses.....................     $    3,180       3,586      3,577     3,365     3,070
     Percent of sales........................................           24.7        26.2       25.3      24.7      23.2
   Restructuring and other non-recurring charges.............     $      147         396          -        18         -
     Percent of sales........................................            1.1         2.9          -       0.1         -
   Company owned life insurance (COLI) tax case (after tax)..     $        3          42          -         -         -
     Percent of sales........................................            0.0         0.3          -         -         -
   Net earnings (loss).......................................     $       45        (229)       182       199       204
     Basic earnings (loss) per share.........................     $     0.32       (1.57)      1.23      1.34      1.36
     Diluted earnings (loss) per share.......................     $     0.32       (1.57)      1.23      1.33      1.36
     Percent of net earnings (loss) to sales.................            0.4        (1.7)       1.3       1.5       1.5
     Percent of net earnings (loss) to average equity........            5.5       (20.1)      13.1      14.7      15.3
   Net earnings excluding COLI, restructuring and
       other non-recurring charges...........................     $      139          75        182       210       204
     Basic earnings per share................................     $     1.00        0.52       1.23      1.41      1.36
     Diluted earnings per share..............................     $     0.99        0.52       1.23      1.41      1.36
     Percent of net earnings to sales........................            1.1         0.5        1.3       1.5       1.5
     Percent of net earnings to average equity...............           17.0         6.6       13.1      15.5      15.3
EBITDA ......................................................     $    310.0         1.3      618.5     676.7     632.8
EBITDAR  ....................................................     $    658.1       325.8      961.4     985.9     911.6
EBITDA excluding restructuring and
     non-recurring charges...................................     $    457.3       397.4      618.5     694.8     632.8
EBITDAR excluding restructuring and
     non-recurring charges...................................     $    805.3       721.9      961.4   1,004.0     911.6
Dividends
   Dividends paid............................................     $    142.9       149.0      151.2     150.9     144.2
   Percent of net earnings (loss)............................          315.3       (65.1)      82.9      76.0      70.5
   Per share (present rate $1.02)............................     $     1.02        1.02       1.02      1.02      0.96
Common Stock (WIN)
   Total shares outstanding (000,000)........................          140.5       140.8      148.6     148.5     148.9
     NYSE - Common stock price range - High..................     $    33.12       41.94      52.19     59.25     42.38
                                     - Low...................     $    13.44       14.25      28.63     33.69     29.88
Financial Data
   Cash flow information:
     Net cash provided by operating activities...............     $    244.9       743.3      436.4     464.5     413.9
     Net cash used in investing activities...................     $   (443.6)     (196.1)    (335.1)   (325.9)   (477.7)
     Net cash provided by (used in) financing activities.....     $    290.2      (542.3)    (100.0)  (129.2)      45.7
   Capital expenditures, net.................................     $    313.3       213.0      334.3    368.6      423.1
   Depreciation and amortization.............................     $    183.6       256.7      292.4     330.4     291.2
   Working capital...........................................     $    449.3        50.4      285.0     262.6     220.1
   Current ratio.............................................            1.4         1.0        1.2       1.4       1.2
   Total assets..............................................     $    3,042       2,747      3,149     3,069     2,921
   Obligations under capital leases..........................     $       29          32         38        49        54
   Present value of future rentals under operating leases....     $    2,550       2,408      2,575     2,389     2,048
   Long-term rental obligations on closed stores.............     $      154         220         35        34        25
   Long-term debt............................................     $      697           -          -         -         -
   Total long-term obligations (Long-term debt + leases).....     $    3,430       2,660      2,648     2,472     2,127
   Long-term obligations to equity ratio.....................     $      4.4         3.1        1.9       1.8       1.6
   Comprehensive income (loss)...............................     $     43.7      (232.0)     182.6     199.4     206.4
   Shareholders' equity......................................     $      772         868      1,411     1,369     1,337
   Book value per share......................................     $     5.52        6.16       9.50      9.22      8.98
   Ratio of earnings to fixed charges........................            1.2          **        2.1       2.3       2.5
   Adjusted ratio of earnings to fixed charges...............            1.8         1.5        2.1       2.4       2.5
   *53 weeks
   **For  fiscal year ended June 28, 2000,  earnings  were  inadequate  to cover
   fixed charges due to non-recurring  charges totaling $405 million relating to
   the restructuring and other non-recurring  charges.  The dollar amount of the
   coverage  deficiency  for the  year  ended  June 28,  2000 was $302  million.
</TABLE>
                                       F-1
<PAGE>

<TABLE>

                       SELECTED FINANCIAL DATA - continued

                                                                        2001        2000      1999*      1998      1997
                                                                        ----        ----      -----      ----      ----
                                                                         Dollars in  millions except per share data

Taxes
<S>                                                               <C>    <C>         <C>        <C>       <C>       <C>
   Federal, state and local..................................     $      215         123        308       302       285
   Per diluted share.........................................     $     1.53        0.85       2.07      2.03      1.90
Stores
   In operation at year-end..................................          1,153       1,079      1,188     1,168     1,174
   Opened and acquired during year...........................             94          34         79        84        83
   Closed or sold during year................................             19          32         59        90        87
   Closed due to restructuring...............................              1         111          -         -         -
   Enlarged or remodeled during year.........................             11          42         64       136        79
   New/enlarged/remodeled in last five years.................            706         790        908       912       805
   Percent to total stores in operation......................           61.2        73.2       76.4      78.1      68.6
   Year-end retail square footage (000,000)..................           51.1        48.1       52.0      49.6      47.8
   Average store size at year-end (000)......................           44.3        44.6       43.7      42.4      40.7
Other Year-end Data
   Associates (000)..........................................            119         120        132       139       136
   Shareholder accounts (000)................................           48.8        45.7       48.1      52.0      55.2
   Shareholders per store....................................             42          42         40        45        47
   *53 weeks
</TABLE>


                                       F-2
<PAGE>

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

Results of Operations

     Sales for fiscal  2001, a 52-week  year,  were $12.9  billion,  compared to
fiscal 2000, $13.7 billion,  a 52-week year, and fiscal 1999,  $14.1 billion,  a
53-week  year.  This  reflects a decrease of 5.8% for fiscal 2001, a decrease of
3.1% for  fiscal  2000 and an  increase  of 3.8% in 1999.  Average  store  sales
decreased 0.6% for the current year, decreased 1.2% in fiscal 2000 and increased
2.1% in fiscal 1999.  Identical  store sales  decreased  4.4%, 2.7% and 0.9% for
2001, 2000 and 1999, respectively.

     Identical  sales  decreased  largely  as a  result  of the  elimination  of
unprofitable sales departments (deli/cafes, melon bars, salad bars, dry cleaners
and selected  floral,  seafood and pharmacy  departments),  the  elimination  of
unprofitable sales items in remaining departments,  a reduction in the number of
24-hour stores and construction  disruptions  from numerous store  modifications
(retrofits). The Company has substantially completed its planned store retrofits
and  believes  that  this  program  has  resulted  in labor  savings  and  other
efficiencies.  The Company  believes that the store  retrofits have enhanced the
Company's  competitive  position  and,  in  turn,  will  positively  impact  the
Company's sales during fiscal 2002.

     For the 52 weeks ended June 27,  2001,  the  Company  opened 94 new stores,
averaging 38,500 square feet, closed 20 stores, averaging 34,800 square feet and
enlarged or  remodeled  11 store  locations,  for a total of 1,153  locations in
operation  on June 27, 2001,  compared to 1,079 as of June 28, 2000.  As of June
27, 2001,  retail space  totaled 51.1 million  square feet, a 6.2% increase over
the prior year. The 94 store  openings  include 68 Jitney Jungle stores and nine
Gooding's  stores that were purchased  during fiscal 2001. The 20 store closings
includes one store that closed in the second  quarter of fiscal 2001, as part of
management's plan of restructuring.

     As a percent of sales,  gross profit margins were 26.8%, 27.2% and 27.6% in
fiscal 2001, 2000 and 1999, respectively. Gross profit dollars have decreased in
the current  year  partially as a result of the closing of 112 stores as part of
management's  plan  of  restructuring.   In  addition,  gross  profit  has  been
negatively  impacted by the elimination of high gross profit,  yet unprofitable,
sales  departments.  Higher cost of goods sold was incurred during the Company's
transition to centralized merchandise procurement at the beginning of the fiscal
year.  Since the first  quarter,  gross  profit  margins  on a FIFO  basis  have
improved.  A continued focus on the Company's  shrink  reduction  initiatives is
expected to add to the improvements during fiscal 2002.

     Approximately  84% of the Company's  inventories  are valued under the LIFO
(last-in,  first-out) method. The LIFO reserve adjustment  resulted in a pre-tax
increase in gross profit of $12.0  million in 2001, a decrease of $15.1  million
in 2000 and a decrease of $4.4 million in 1999.



                                       F-3
<PAGE>


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

Results of Operations, continued

     Operating and  administrative  expenses  decreased $406.1 million in fiscal
2001  and  increased   $9.1  million  and  $212.2  million  in  2000  and  1999,
respectively.  As a percent of sales, operating and administrative expenses were
24.7%, 26.2% and 25.3% in fiscal 2001, 2000 and 1999, respectively. The decrease
in operating  and  administrative  expenses was  primarily  due to a decrease in
retail and administrative  operating  expenses,  such as payroll,  depreciation,
rent and  leasehold  improvement  amortization.  The  expense  reduction  was an
expected result of the  restructuring and came primarily from the elimination of
high labor cost service  departments  and expense  reductions  from the retrofit
activity,  certain labor efficiency  initiatives adopted by the Company and from
the closing of the division offices and retail stores.

     Interest expense totaled $52.8 million,  $47.1 million and $29.6 million in
fiscal 2001, 2000 and 1999, respectively. Interest expense is primarily interest
on  short-term  and long-term  debt and interest on capital  lease  obligations.
Interest  expense also  reflects  accrued  interest  relating to an  unfavorable
opinion from the U.S. Tax Court in October 1999  relating to Company  Owned Life
Insurance  ("COLI")  (see Note 7 - Income  Taxes).  Year-to-date,  the  interest
expense on the COLI reserve  totaled  $5.5 million as compared to $19.7  million
for the previous year. Excluding interest on the COLI reserve,  interest expense
has  increased in the current  year as compared to the  previous  year due to an
increase  in the amount of total debt  outstanding  and an  increase in interest
rates in fiscal 2001.

     The  Company  capitalized  interest  totaling  $5.9  million  for the year,
related to  construction  of new stores and a  warehouse  facility  in  Baldwin,
Florida.

     Earnings  (loss) before income taxes were $73.6 million,  $(302.4)  million
and $296.5 million in fiscal 2001, 2000 and 1999, respectively.  The increase in
pretax  earnings for fiscal 2001 is primarily  due to the  restructuring  charge
recorded in fiscal 2000, and a decrease in operating and administrative expenses
in fiscal 2001.  The effective  income tax expense  (benefit)  rates were 38.5%,
(24.3)% and 38.5% for fiscal 2001,  2000 and 1999,  respectively.  The effective
tax rate for fiscal 2000 reflects the effects of certain restructuring  expenses
and COLI adjustments.

     Net earnings (loss)  amounted to $45.3 million,  or $0.32 per diluted share
for 2001,  $(228.9)  million,  or $(1.57) per diluted  share for 2000 and $182.3
million,  or $1.23  per  diluted  share for 1999.  The LIFO  reserve  adjustment
increased  net  earnings by $7.4  million,  or $0.05 per diluted  share in 2001,
increased the net loss by $9.3 million,  or $0.06 per diluted share in 2000, and
decreased net earnings by $2.7 million, or $0.02 per diluted share in 1999.


                                       F-4
<PAGE>

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

Results of Operations, continued
<TABLE>

     The following tables show the effect of the COLI adjustment,  restructuring
and other non-recurring charges on the quarter and year.

                                                               Dollar amounts in thousands except per share data
                                                         ----------------------------------------------------------
                                                                                     Non-               Excluding
                                                                                  recurring               Non-
            Quarter ending June 27, 2001                     As Reported           Charges              recurring
            ----------------------------                 ----------------      ---------------     ----------------
<S>                                                      <C>                              <C>            <C>
Net sales..........................................      $     2,989,861                  -              2,989,861
Cost of sales  ....................................            2,157,676                  -              2,157,676
                                                         ----------------      ---------------     ----------------
Gross profit on sales .............................              832,185                  -                832,185
Operating and administrative expenses..............              739,776                  -                739,776
Restructuring and other non-recurring
charges............................................               56,497             56,497                      -
                                                         ----------------      ---------------     ----------------
Operating income                                                   35,912           (56,497)                92,409
Interest expense                                                   14,800               887                 13,913
                                                         ----------------      --------------      ----------------
Earnings before income tax.........................                21,112           (57,384)                78,496
Income tax     ....................................                 8,107           (22,049)                30,156
                                                         ----------------      ---------------     ----------------
Net Earnings...    ................................      $         13,005           (35,335)                48,340
                                                         ================      ===============     ================
Basic earnings  per share..........................      $           0.09             (0.25)                  0.34
                                                         ================
                                                                               ===============     ================
Diluted earnings  per share........................      $           0.09             (0.25)                  0.34
                                                         ================      ===============     ================

                                                                                     Non-               Excluding
                                                                                  recurring               Non-
              Year ending June 27, 2001                      As Reported           Charges              recurring
                                                         ----------------      ---------------     ----------------
Net sales..........................................      $     12,903,373                 -             12,903,373
Cost of sales  ....................................             9,449,346                 -              9,449,346
                                                         ----------------      ---------------     ----------------
Gross profit on sales .............................             3,454,027                 -              3,454,027
Operating and administrative expenses..............             3,180,297                 -              3,180,297
Restructuring and other non-recurring
charges............................................               147,245           147,245                      -
                                                         ----------------      ---------------     ----------------
Operating income                                                  126,485          (147,245)               273,730
Interest expense                                                   52,843             5,512                 47,331
                                                         ----------------      ---------------     ----------------
Earnings before income tax.........................                73,642          (152,757)               226,399
Income tax     ....................................                28,331           (58,768)                87,099
                                                         ----------------      ---------------     ----------------
Net Earnings................. .....................      $         45,311           (93,989)               139,300
                                                         ================      ===============     ================
Basic earnings  per share..........................      $           0.32             (0.68)                  1.00
                                                         ================
                                                                               ===============     ================
Diluted earnings  per share........................      $           0.32             (0.67)                  0.99
                                                         ================      ===============     ================
</TABLE>

                                       F-5
<PAGE>

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

Liquidity and Capital Resources

     Cash and cash  equivalents  amounted to $121.1  million,  $29.6 million and
$24.7 million at the end of fiscal years 2001, 2000 and 1999, respectively. Cash
provided by  operating  activities  amounted to $244.9  million in 2001,  $743.3
million in 2000 and $436.4  million in 1999.  The reduction in net cash provided
by operations is largely due to the increase in merchandise inventories and cash
payments  related to the  restructuring.  Inventories  increased  due in part to
additional inventory purchased for the stores acquired in the current year.

     Working  capital  amounted  to $449.3  million,  $50.4  million  and $285.0
million in fiscal 2001, 2000 and 1999 respectively. The increase was due in part
to the refinancing of the Company's short-term borrowings into long-term debt.

     Net cash  used in  investing  activities  totaled  $443.6  million,  $196.1
million and $335.1  million in fiscal  2001,  2000 and 1999,  respectively.  The
increase in the current year was due to an increase in capital  expenditures and
the acquisition of 77 retail locations.  Net capital expenditures totaled $313.3
million,  $213.0  million  and  $334.3  million in fiscal  2001,  2000 and 1999,
respectively.  These  expenditures were for new store locations,  remodeling and
enlarging  of  store   locations  and   maintenance  and  expansion  of  support
facilities.  The Company has no material  construction  or purchase  commitments
outstanding as of June 27, 2001.

     Net cash provided by (used in)  financing  activities  was $290.2  million,
$(542.3) million and $(100.0) million in 2001, 2000 and 1999  respectively.  The
increase in the current year was due primarily to the net proceeds from the $800
million senior secured credit facilities (the "New Facilities"), the issuance of
$300 million in Senior  Unsecured  Notes (the "Notes") and the suspension of the
stock  repurchase  program in the  current  year.  See Note 8 - Debt for further
discussion on the New Facilities and Notes.

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

Impact of Inflation

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

Quantitative and Qualitative Disclosures About Market Risk



                                       F-6
<PAGE>


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

     As part of the New Facilities (see Note 8 - Debt),  the Company  obtained a
$400  million  six-year  term loan with a  variable  interest  rate based on the
one-month LIBOR. The Company utilizes derivative financial instruments to reduce
its  exposure to market risks from changes in interest  rates.  The  instruments
primarily used to mitigate  these risks are interest rate swaps.  All derivative
instruments  held by the Company are  designated as highly  effective  cash flow
hedges of interest rate risk on variable rate debt and, accordingly,  the change
in fair  value  of  these  instruments  is  recorded  as a  component  of  other
comprehensive income.

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

     The Company has entered into three  interest rate swap  agreements to hedge
the interest rate risk associated with the $400 million  outstanding in variable
rate debt.  The purpose of these swaps is to fix interest rates on variable rate
debt and reduce  certain  exposures to interest  rate  fluctuation.  At June 27,
2001,  the  Company  had  interest  rate swaps  with a  notional  amount of $400
million.  The  notional  amounts do not  represent  a measure of exposure to the
Company.

     The maturity and interest  rate on the interest rate swaps are shown in the
following table. The Company will pay the counterparty  interest at a fixed rate
as noted and the  counterparty  will pay the Company interest at a variable rate
equal to the one-month LIBOR (3.75% as of June 27, 2001).

            Notional
             Amount
         (in thousands)               Maturity                Fixed Rate
     -----------------------     ---------------------      ---------------
           $ 150,000                March 29, 2002              4.60%
              150,000               March 29, 2003              4.81%
              100,000               March 29, 2004              5.03%
     -----------------------
           $ 400,000
     =======================

     The fair value of the Company's interest rate swaps is obtained from dealer
quotes. These values represent the estimated amount the Company would receive or
pay to terminate the agreement, taking into consideration the difference between
the  contract  rate of interest and rates  currently  quoted for  agreements  of
similar terms and maturities.  At June 27, 2001, the fair value of the Company's
interest rate swaps resulted in an unrealized loss of $2.6 million ($1.6 million
after tax).  The Company  recorded  the  unrealized  loss in  accumulated  other
comprehensive  income in shareholders'  equity.  During the next 12 months,  the
Company will incur interest expense  including the effect of interest rate swaps
at a weighted average rate of 7.54% on the $400 million  outstanding in variable
rate debt.

Quantitative and Qualitative Disclosures About Market Risk, continued

                                       F-7
<PAGE>

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

     The  following   table  presents  the  future   principal  cash  flows  and
weighted-average  interest  rates expected on the Company's  existing  long-term
debt  instruments  and  interest  rate swap  agreements.  Fair  values have been
determined based on quoted market prices as of June 27, 2001.

<TABLE>

                                                            Expected Maturity Date
                                                            ----------------------
                                                         (Dollar amounts in thousands)

                                  2002         2003        2004        2005        2006    Thereafter       Total       Fair Value
                                  ----         ----        ----        ----        ----    ----------       -----       ----------
Liabilities:

Long-term debt
<S>                         <C>          <C>          <C>         <C>         <C>          <C>          <C>              <C>
   Fixed rate               $      291   $      288   $     285   $     282   $     279    $ 300,280    $ 301,705        $ 305,920
      Average interest            9.40%        9.40%       9.40%       9.40%       9.40%        8.88%        8.88%
        rate

   Variable rate            $    4,000   $    4,000   $   4,000   $   4,000   $   4,000    $ 380,000    $ 400,000        $ 400,000
     Average interest             6.70%        7.90%       8.74%       9.09%       9.29%        9.44%        9.38%
       rate

Interest rate derivatives

Interest rate swaps:

   Notional amount          $  150,000   $  150,000   $ 100,000   $       -   $       -    $       -    $ 400,000        $  (2,580)

     Average pay rate             4.60%        4.81%       5.03%          -           -            -         4.79%
     Average receive rate         3.95%        5.15%       5.99%          -           -            -         4.70%
</TABLE>











Cautionary Statement Regarding Forward-Looking Information and Statements



                                       F-8
<PAGE>

     This   Form   10-K   contains   certain    information   that   constitutes
"forward-looking  statements"  within  the  meaning  of the  Private  Securities
Litigation  Reform Act, which involves risks and  uncertainties.  Actual results
may  differ  materially  from  the  results  described  in  the  forward-looking
statements.  When  used in this  document,  the  words,  "estimate,"  "project,"
"intend," and "believe"  and other  similar  expressions,  as they relate to the
Company, are intended to identify such forward-looking statements.

     Such statements reflect the current views of the Company and are subject to
certain risks and uncertainties that include, but are not limited to:

o   the  Company's  ability  to  achieve  successfully  the  long-term  benefits
    contemplated  from the  restructuring of operations  adopted by the Board of
    Directors on April 19, 2000, and which has been substantially completed;

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

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

o   the  availability  and  terms of  financing,  including  in  particular  the
    possible  impact of  changes  in the  ratings  assigned  to the  Company  by
    nationally recognized rating agencies; and

o   general business and economic conditions in our operating regions, including
    the rate of inflation/deflation and changes in population,  consumer demands
    and spending, types of employment and number of jobs.


     Please refer to  discussions  of these and other  factors in this Form 10-K
and other  Company  filings with the  Securities  and Exchange  Commission.  The
Company   disclaims  any  intent  or  obligation   to  update   publicly   these
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.










                                       F-9

<PAGE>

                              REPORT OF MANAGEMENT


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

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

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




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




















                                      F-10
<PAGE>


                          INDEPENDENT AUDITORS' REPORT


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

     We have audited the accompanying  consolidated balance sheets of Winn-Dixie
Stores,  Inc. and  subsidiaries  as of June 27, 2001 and June 28, 2000,  and the
related consolidated  statements of operations,  shareholders'  equity, and cash
flows for each of the years in the three-year  period ended June 27, 2001. These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

     In our opinion,  the consolidated  financial  statements  referred to above
present fairly, in all material  respects,  the financial position of Winn-Dixie
Stores,  Inc.  and  subsidiaries  at June 27,  2001 and June 28,  2000,  and the
results  of their  operations  and their cash flows for each of the years in the
three-year period ended June 27, 2001, in conformity with accounting  principles
generally accepted in the United States of America.




                                                                  KPMG  LLP


Jacksonville, Florida
August 8, 2001












                                      F-11
<PAGE>


                    WINN-DIXIE STORES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
           Years ended June 27, 2001, June 28, 2000 and June 30, 1999
<TABLE>


                                                                                  2001                2000                 1999*
                                                                            ---------------      --------------      ---------------
                                                                                    Amounts in thousands except per share data
<S>                                                                         <C>                      <C>                  <C>
Net sales .............................................................     $    12,903,373          13,697,547           14,136,503
Cost of sales, including warehousing and delivery expense .............           9,449,346           9,970,497           10,233,155
                                                                            ---------------      --------------      ---------------
   Gross profit on sales ..............................................           3,454,027           3,727,050            3,903,348
Operating and administrative expenses .................................           3,180,297           3,586,351            3,577,220
Restructuring and other non-recurring charges .........................             147,245             396,029                    -
                                                                            ---------------      --------------      ---------------
   Operating income (loss) ............................................             126,485            (255,330)             326,128
Interest:
   Interest on capital lease obligations ..............................               4,188               4,458                5,152
    Interest on company owned life insurance (COLI ) ..................               5,512              19,707                    -
   Other interest .....................................................              43,143              22,916               24,496
                                                                            ---------------      --------------      ---------------
     Total interest ...................................................              52,843              47,081               29,648
                                                                            ---------------      --------------      ---------------
Earnings (loss) before income taxes ...................................              73,642            (302,411)             296,480
Income taxes ..........................................................              28,331             (73,516)             114,145
                                                                            ---------------      --------------      ---------------
Net earnings (loss) ...................................................     $        45,311            (228,895)             182,335
                                                                            ===============      ==============      ===============


Basic earnings (loss) per share .......................................     $          0.32               (1.57)                1.23
                                                                            ===============      ==============      ===============
Diluted earnings  (loss) per share ....................................     $          0.32               (1.57)                1.23
                                                                            ===============      ==============      ===============
Dividends per share ...................................................     $          1.02                1.02                 1.02
                                                                            ===============      ==============      ===============
Weighted average common shares outstanding-basic ......................             139,824             145,445              148,310
                                                                            ===============      ==============      ===============
Weighted average common shares outstanding-diluted ....................             140,399             145,445              148,680
                                                                            ===============      ==============      ===============

* 53 Weeks
See accompanying notes to consolidated financial statements.
</TABLE>













                                      F-12

<PAGE>


                    WINN-DIXIE STORES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                         June 27, 2001 and June 28, 2000

<TABLE>

ASSETS                                                                              2001                  2000
                                                                               ------------------  -----------------
                                                                            Dollar amounts in thousands except par value
Current Assets:
<S>                                                                         <C>         <C>               <C>
   Cash and cash equivalents                                                $           121,061              29,576
   Trade and other receivables, less allowance for doubtful items of
    $3,935 ($3,822 in 2000)                                                             109,159             107,425
   Merchandise inventories less LIFO reserve of
     $220,411 ($232,368 in 2000)                                                      1,198,602           1,141,405
   Prepaid expenses                                                                      34,643              58,739
   Deferred income taxes                                                                135,736             134,777
                                                                               ------------------  -----------------
     Total current assets                                                             1,599,201           1,471,922
                                                                               ------------------  -----------------
Cash surrender value of life insurance, net                                              16,876              14,035
Property, plant and equipment, net                                                    1,146,654           1,016,292
Intangible assets, net                                                                   92,875              18,606
Non-current deferred income taxes                                                       106,145             166,449
Other assets, net                                                                        79,919              59,789
                                                                               ------------------  -----------------
         Total assets                                                       $         3,041,670           2,747,093
                                                                               ==================  =================

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
   Short-term borrowings                                                    $                 -             235,000
   Current portion of long-term debt                                                      4,291                   -
   Current obligations under capital leases                                               3,270               2,843
   Accounts payable                                                                     599,850             575,877
   Reserve for insurance claims and self-insurance                                      100,850             101,874
   Reserve for restructuring expenses                                                    43,385              52,721
   Accrued wages and salaries                                                           109,183             114,883
   Accrued rent                                                                          88,452              88,247
   Accrued expenses                                                                     176,332             164,502
   Income taxes payable                                                                  24,294              85,606
                                                                               ------------------  -----------------
      Total current liabilities                                                       1,149,907           1,421,553
                                                                               ------------------  -----------------
Reserve for insurance claims and self-insurance                                         147,964             141,251
Long-term debt                                                                          697,414                   -
Obligations under capital leases                                                         28,953              32,239
Defined benefit plan                                                                     49,027              45,241
Long-term restructuring expenses                                                        118,745             143,188
Other liabilities                                                                        78,006              95,786
                                                                               ------------------  -----------------
      Total liabilities                                                               2,270,016           1,879,258
                                                                               ------------------  -----------------
Commitments and contingent liabilities  (Notes 7, 8, 9, 11, and 13)
Shareholders' Equity:
   Common stock $1 par value.  Authorized 400,000,000 shares;
140,466,235 shares outstanding  in 2001 and 140,830,197 in 2000                         140,466             140,830
   Retained earnings                                                                    634,694             727,005
   Accumulated other comprehensive income                                                (1,587)                  -
   Associates' stock loans                                                               (1,919)                  -
                                                                               ------------------  -----------------
      Total shareholders' equity                                                        771,654             867,835
                                                                               ------------------  -----------------
          Total liabilities and shareholders' equity                        $         3,041,670           2,747,093
                                                                               ==================  =================

See accompanying notes to consolidated financial statements.
</TABLE>



                                      F-13
<PAGE>


                  WINN-DIXIE STORES, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
         Years ended June 27, 2001, June 28, 2000 and June 30, 1999
<TABLE>

                                                                                       2001             2000             1999*
                                                                                  ---------------  ---------------  ---------------
                                                                                                Amounts in thousands
Cash flows from operating activities:
<S>                                                                                   <C>                <C>                <C>
   Net earnings (loss) .......................................................        $  45,311          (228,895)          182,335
   Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
       Depreciation and amortization .........................................          183,559           256,671           292,414
       Deferred income taxes .................................................           60,336          (189,046)           17,684
       Defined benefit plan ..................................................            3,786             4,007             4,132
       Non-cash restructuring and other non-recurring charges ................           68,774           395,053                 -
       Reserve for insurance claims and self-insurance .......................            5,689            75,408             2,424
       Stock compensation plans ..............................................            8,007            (1,144)            2,459
       Change in operating assets and liabilities, net of effects
        from acquisitions:
         Trade and other receivables .........................................           (1,734)           80,888           (42,148)
         Merchandise inventories .............................................          (39,962)          283,693           (20,181)
         Prepaid expenses ....................................................           25,416           (11,776)            8,596
         Accounts payable ....................................................           23,009           (87,959)           (1,191)
         Reserve for restructuring expenses ..................................          (53,765)                -                 -
         Income taxes payable ................................................          (61,312)           74,867            (1,380)
         Other current accrued expenses ......................................          (22,226)           91,512            (8,783)
                                                                                      ---------         ---------         ---------
           Net cash provided by operating activities .........................          244,888           743,279           436,361
                                                                                      ---------         ---------         ---------

Cash flows from investing activities:
   Purchases of property, plant and equipment, net ...........................         (313,319)         (212,990)         (334,283)
   (Increase) decrease in investments and other assets .......................           (6,519)           16,872              (858)
   Acquisitions, net of cash acquired ........................................         (123,753)                -                 -
                                                                                      ---------         ---------         ---------
           Net cash used in investing activities .............................         (443,591)         (196,118)         (335,141)
                                                                                      ---------         ---------         ---------

Cash flows from financing activities:
   (Decrease) increase in short-term borrowings ..............................         (235,000)         (230,000)           45,000
   Proceeds from issuance of long-term debt ..................................          700,000                 -                 -
   Debt issuance costs .......................................................          (24,210)                -                 -
   Principal payments on long-term debt ......................................             (257)                -                 -
   Principal payments on capital lease obligations ...........................           (2,857)           (2,612)           (2,583)
   Purchase of common stock ..................................................          (17,003)         (162,272)           (1,337)
   Proceeds of sales under associates' stock purchase plan ...................           11,833               164             2,923
   Dividends paid ............................................................         (142,853)         (148,966)         (151,231)
   Other .....................................................................              535             1,355             7,188
                                                                                      ---------         ---------         ---------
           Net cash provided by (used in) financing activities ...............          290,188          (542,331)         (100,040)
                                                                                      ---------         ---------         ---------

Increase in cash and cash equivalents ........................................           91,485             4,830             1,180
Cash and cash equivalents at the beginning of the year .......................           29,576            24,746            23,566
                                                                                      ---------         ---------         ---------
Cash and cash equivalents at end of the year .................................        $ 121,061            29,576            24,746
                                                                                      =========         =========         =========

Supplemental cash flow information:
   Interest paid .............................................................        $  37,064            23,058            21,958
   Interest and dividends received ...........................................        $   2,327               808             1,072
   Income taxes paid .........................................................        $  29,307            40,663            94,858

*53 Weeks
See accompanying notes to consolidated financial statements.
</TABLE>



                                      F-14
<PAGE>

                    WINN-DIXIE STORES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
           Years ended June 27, 2001, June 28, 2000 and June 30, 1999

<TABLE>

                                                                                  Accumulated
                                                                                     Other         Associates'          Total
                                                    Common         Retained      Comprehensive        Stock         Shareholders'
                                                     Stock         Earnings         Income            Loans            Equity
(Amounts in thousands except per share data)     -------------- --------------  --------------   --------------     --------------

<S>                                                 <C>             <C>                <C>              <C>          <C>
Balances at June 24, 1998 ...................       $  148,531      1,220,679          2,760            (3,087)      $   1,368,883
                                                 -------------- --------------  --------------   --------------     --------------

Comprehensive income:
   Net earnings .............................                -        182,335              -                 -             182,335
   Unrealized gain on securities,
      net of tax ............................                -              -            309                 -                 309
                                                 -------------- --------------  --------------   --------------     --------------
   Total comprehensive income ...............                -        182,335            309                 -             182,644
Cash dividends, $1.02 per share .............                -       (151,231)             -                 -            (151,231)
Common stock issued and stock
   compensation expense .....................               33          2,189              -                 -               2,222
Common stock acquired .......................              (37)        (1,300)             -                 -              (1,337)
Stock options exercised .....................               50          1,004              -                 -               1,054
Associates' stock loans, payments ...........                -              -              -             2,923               2,923
Other .......................................                -          5,921              -                 -               5,921
                                                 -------------- --------------  --------------   --------------     --------------
Balances at June 30, 1999 ...................          148,577      1,259,597          3,069              (164)          1,411,079
                                                 -------------- --------------  --------------   --------------     --------------

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

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



                                      F-15
<PAGE>

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


1.  Summary of Significant Accounting Policies and Other Information

    (a)           The Company: Winn Dixie Stores, Inc. and its subsidiaries (the
                  "Company") operate as a major food retailer in fourteen states
                  and the  Bahama  Islands.  As of June 27,  2001,  the  Company
                  operated 1,153 retail stores, 34 fuel centers and seven liquor
                  stores. In support of its retail  operations,  the Company has
                  16 warehouse distribution centers and 19 manufacturing plants.

    (b)           Fiscal  Year:  The fiscal year ends on the last  Wednesday  in
                  June.  Fiscal  year 2001 and 2000 are  comprised  of 52 weeks.
                  Fiscal year 1999 is comprised of 53 weeks.

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

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

    (e)           Revenue  Recognition:  Revenue is  recognized  at the point of
                  sale for retail sales.

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

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



                                      F-16
<PAGE>


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



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

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

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

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

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

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


                                      F-17
<PAGE>


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



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

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

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

                  The  following  weighted  average  numbers of shares of common
                  stock were used in the calculations for earnings per share.

                                    2001              2000              1999
                  Basic         139,823,835       145,445,416        148,309,653
                  Diluted       140,399,055       145,445,416        148,680,198

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

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

    (p)           New  Accounting  Pronouncements  In July 2001,  the  Financial
                  Accounting  Standards  Board  issued  Statement  of  Financial
                  Accounting  Standards  No. 142,  "Accounting  for Goodwill and
                  Other   Intangible   Assets"   ("SFAS  142").   SFAS  No.  142
                  discontinues   the   practice  of   amortizing   goodwill  and
                  indefinite  lived  intangible  assets and  initiates an annual
                  review  for  impairment.  Impairment  would be  examined  more
                  frequently if certain  indicators are encountered.  Intangible
                  assets with a  determinable  useful  life will  continue to be
                  amortized over the period. The Company is currently  assessing
                  but has not  yet  determined  the  impact  of SFAS  142 on its
                  financial  position  and  results of  operations.  The Company
                  plans to adopt SFAS 142 in the first  quarter  of fiscal  year
                  2002.




                                      F-18
<PAGE>


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

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

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

    (r)           Reclassification:  Cash  discounts  and other income have been
                  reclassified as a reduction of cost of sales and operating and
                  administrative  expenses,  respectively.  The reclassification
                  reduced  cost of sales for fiscal 2000 and 1999 by $87,203 and
                  $102,435, respectively. The reclassification reduced operating
                  and  administrative  expenses  for  fiscal  2000  and  1999 by
                  $22,897 and $16,431,  respectively.  This  reclassification is
                  consistent  with industry  practice.  Certain other prior year
                  amounts may have been  reclassified  to conform to the current
                  year's presentation.

2.  Trade and Other Receivables

    Accounts receivable at year-end were as follows:

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

     Trade and other receivables................  $     113,067         92,821
     Construction advances......................             27         18,426
                                                     ------------  -------------
                                                        113,094        111,247
     Less:  Allowance for doubtful items........          3,935          3,822
                                                     ------------  -------------
                                                 $     109,159        107,425
                                                     ============  =============
3.  Merchandise Inventories

At June 27, 2001, inventories valued by the LIFO method would have been $220,411
higher  ($232,368  higher at June 28,  2000) if they were stated at the lower of
FIFO cost or  market.  If the FIFO  method  inventory  valuation  had been used,
reported net earnings  would have been $7,354,  or $0.05 per diluted share lower
in 2001,  net loss would have been $9,283,  or $0.06 per diluted  share lower in
2000 and net earnings would have been $2,691,  or $0.02 per diluted share higher
in 1999.


                                      F-19
<PAGE>

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


4.  Intangible Assets

    Intangible assets at year-end were as follows:

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

    Goodwill..................................   $      98,940            25,591
    Other intangibles.........................           5,000                 -
                                                 -------------      ------------
                                                       103,940            25,591
    Less: Accumulated amortization............          11,065             6,985
                                                 -------------      ------------
                                                 $      92,875            18,606
                                                 =============      ============

Goodwill is amortized over the estimated useful life not to exceed 20 years. The
Company took a non-cash  impairment charge of $32,115 for fiscal 2000 as part of
the Company's restructuring (see Note 14 - Restructuring and Other Non-recurring
Charges). Goodwill impairment is measured as the difference between the carrying
value of the goodwill and the discounted  cash flows of the operations that gave
rise to the goodwill. There was no non-cash impairment charge in fiscal 2001.

5.  Property, Plant and Equipment

<TABLE>

    Property, plant and equipment consists of the following:

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

<S>                                                                                  <C>                <C>
    Land..............................................................         $        47,389             17,180
    Buildings.........................................................                 189,178             67,246
    Furniture, fixtures, machinery and equipment......................               2,234,384          2,307,047
    Transportation equipment..........................................                 132,669            135,733
    Improvements to leased premises...................................                 500,445            469,552
    Construction in progress..........................................                  26,432             21,188
                                                                                  -------------    ---------------
                                                                                     3,130,497          3,017,946
    Less:  Accumulated depreciation...................................               2,002,814          2,022,946
                                                                                  -------------    ---------------
                                                                                     1,127,683            995,000
    Leased property under capital leases, less accumulated
        amortization of $34,833 ($32,951 in 2000).....................                  18,971             21,292
                                                                                  -------------    ---------------
    Net property, plant and equipment.................................         $     1,146,654          1,016,292
                                                                                  =============    ===============
</TABLE>
The Company  took a non-cash  charge of $43,277 for fiscal 2001 due to losses on
assets disposed of as a result of store retrofits and took a non-cash impairment
charge of $147,184 for fiscal 2000 as part of the Company's  restructuring  (see
Note 14 - Restructuring and Other Non-recurring Charges).

                                      F-20
<PAGE>

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

6.  Comprehensive Income

Comprehensive  income  differs from net income because of the change in the fair
value  of  the  Company's  interest  rate  swaps  in  the  current  year  and  a
reclassification  adjustment of an unrealized  gain on  investments in the prior
year.  Comprehensive  income (loss) for fiscal 2001,  2000 and 1999 was $43,724,
$(231,964) and $182,644, respectively.

7.  Income Taxes

<TABLE>

    Income tax expense (benefit) consists of:
                                                                       Current        Deferred          Total
                                                                    --------------  -------------   -------------
    2001
<S>                                                              <C>                      <C>            <C>
             Federal.....................................        $       (33,422)         58,508         25,086
             State.......................................                  1,416           1,829          3,245
                                                                    --------------  -------------   -------------
                                                                 $       (32,006)         60,337         28,331
                                                                    ==============  =============   =============
    2000
             Federal.....................................        $       111,358        (182,074)       (70,716)
             State.......................................                  4,172          (6,972)        (2,800)
                                                                    --------------  -------------   -------------
                                                                 $       115,530        (189,046)       (73,516)
                                                                    ==============  =============   =============
    1999
             Federal.....................................        $        79,270          16,110         95,380
             State.......................................                 17,191           1,574         18,765
                                                                    --------------  -------------   -------------
                                                                 $        96,461          17,684        114,145
                                                                    ==============  =============   =============

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

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

    Federal statutory income tax rate....................                   35.0%          (35.0)%         35.0%
    State and local income taxes, net of federal
       income tax benefits...............................                    2.8            (0.6)           4.4
    Tax credits..........................................                   (4.0)           (0.9)          (0.6)
    Company owned life insurance (COLI)..................                    2.8                            0.7
                                                                                             9.6
    Goodwill impairment..................................                      -                              -
                                                                                             2.9
    Other, net...........................................                    1.9            (0.3)          (1.0)
                                                                    --------------  -------------   -------------
                                                                            38.5%          (24.3)%         38.5%
                                                                  ================  =============   =============

</TABLE>

The  effective  tax rate  for  fiscal  2000  reflects  the  effects  of  certain
restructuring expenses and COLI adjustments.

                                      F-21

<PAGE>

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




7.  Income Taxes, continued
<TABLE>

                                                                          2001         2000           1999
                                                                      ------------- ------------  -------------
    Deferred tax assets:
<S>                                                                <C>      <C>          <C>            <C>
       Reserve for insurance claims and self-insurance..........   $        82,092       79,039         62,429
       Reserve for vacant store leases..........................            21,511       38,308         20,511
       Unearned promotional allowance...........................            18,292        5,310          3,143
       Reserve for accrued vacations............................            13,352       13,463         14,225
       State net operating loss carry forwards..................            32,315       17,052         12,929
       Excess of book over tax depreciation.....................            10,150       12,032         12,196
       Other comprehensive income...............................               991            -              -
       Excess of book over tax rent expense.....................               997          956          1,084
       Excess of book over tax retirement expense...............            21,046       19,452         17,009
       Uniform capitalization of inventory......................             9,291        9,718          9,684
       Restructuring costs......................................           102,375      130,587              -
       Other, net...............................................            50,701       52,730         43,213
                                                                      ------------- ------------  -------------
         Total gross deferred tax assets........................           363,113      378,647        196,423
         Less:  Valuation allowance.............................            29,696       16,489         12,401
                                                                      ------------- ------------  -------------
         Net deferred tax assets................................           333,417      362,158        184,022
                                                                      ------------- ------------  -------------
    Deferred tax liabilities:
       Excess of tax over book depreciation.....................           (84,640)     (46,308)       (31,098)
       Undistributed earnings of the
    Bahamas                      subsidiary.....................            (4,783)      (4,761)       (14,347)
       Other comprehensive income...............................                 -            -         (1,921)
       Other, net...............................................            (2,113)      (9,863)       (26,397)
                                                                      ------------- ------------  -------------
         Total gross deferred tax liabilities...................            (91,53)     (60,932)       (73,763)
                                                                      ------------- ------------  -------------
         Net deferred tax assets................................   $       241,881      301,226        110,259
                                                                      ============= ============  =============
</TABLE>

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

                                      F-22
<PAGE>


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

7.  Income Taxes, continued

    The Company  reserved $30.4 million for taxes and $19.7 million for interest
    ($42.5  million  after tax, or $0.29 per diluted  share) after  receiving an
    unfavorable opinion in October 1999 and a computational  decision on January
    11, 2000 from the U.S. Tax Court.  Additional interest totaling $5.5 million
    was accrued in fiscal  2001.  Interest  will  continue  to accrue  until the
    matter is  finally  resolved.  The Tax Court  upheld  the  Internal  Revenue
    Service's  position that interest  related to loans on broad-based,  company
    owned life  insurance  policies  in 1993 was not  deductible  for income tax
    purposes.  The Eleventh  Circuit Court of Appeals  issued an opinion on June
    28, 2001 affirming the Tax Court's  decision.  Congress  passed  legislation
    phasing out such  deductions  over a three-year  period in the fall of 1996.
    The Company held such policies and deducted  interest on  outstanding  loans
    from March 1993 through  December  1997.  Management  disagrees with the Tax
    Court's  decision and plans further  appeal.  While the ultimate  outcome of
    this  litigation  cannot be  predicted  with  certainty,  in the  opinion of
    management,  the  ultimate  resolution  of this  matter  will  not  have any
    additional  material adverse impact on the Company's  financial condition or
    results of operations.

8.  Debt

<TABLE>
                                                                            2001                  2000
                                                                        ----------------    ------------------

<S>                                                                  <C>                             <C>
    Short-term borrowings                                            $               -               235,000
    364-day $200,000 revolving credit facility;
       interest payable at LIBOR plus 2.5%                                           -                     -
    Five-year $200,000 revolving credit facility;
      interest payable at LIBOR plus 2.5%                                            -                     -
    Mortgage note payable; interest at 9.4% and monthly
    $22 principal and interest payments and 10.0% of
    principal paid annually                                                      1,705                     -
    Six-year $400,000 term loan; interest payable at
      LIBOR plus 2.75% and $1,000
      quarterly principal payments                                             400,000                     -
    8.875% senior notes due 2008; interest payable
    semiannually on April 1 and October 1                                      300,000
                                                                        ----------------    ------------------
                                                                                                           -
                                                                        ----------------    ------------------
         Total                                                                 701,705               235,000
    Less current portion                                                         4,291               235,000
                                                                        ----------------    ------------------
    Long-term portion                                                $         697,414                     -
                                                                        ================    ==================
</TABLE>

On March 29, 2001,  the Company  replaced its  short-term  borrowings  with $800
million in Senior Secured Credit  Facilities (the "New  Facilities,") and issued
$300 million of Senior Unsecured Notes (the "Notes"). The New Facilities consist
of a $200 million 364-day  revolving credit facility,  a $200 million  five-year
revolving credit facility, and a $400 million six-year term loan.

                                      F-23
<PAGE>

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





8.  Debt, continued

    The 364-day  revolving  credit facility and the five-year  revolving  credit
    facility will be used to fund working  capital needs,  capital  expenditures
    and general corporate purposes.

    The New  Facilities  are secured by a first lien on  essentially  all of the
    Company's  assets and are  guaranteed  by the capital stock of the Company's
    subsidiaries.

    Pricing on the New Facilities is based on the corporate  credit ratings from
    Standard and Poor's and Moody's Investors  Services.  Based on the Company's
    BBB-/Ba1  corporate  ratings,  the LIBOR spread on the 364-day and five-year
    revolving  credit  facilities  is  2.50%.  The  Company  also pays an unused
    commitment  fee of 37.5 basis  points on the  364-day  line of credit and 50
    basis  points on the  five-year  line of  credit.  The  LIBOR  spread on the
    six-year term loan is 2.75% at the Company's current rating.

    The Company entered into interest rate swap agreements,  which expire in one
    to three years on the six-year term loan, that effectively converts the $400
    million six-year term loan from variable to fixed rate debt. Under the terms
    of these  agreements,  the  Company  makes  payments  at a weighted  average
    interest  rate of 7.54% and receives a variable  interest  rate based on the
    one-month  LIBOR.  See Note 9 -  Derivatives  for further  discussion of the
    Company's  interest rate swap activity.  The Company incurred  approximately
    $24.2  million  in debt  issue  costs  related  to the  issuance  of the New
    Facilities and the Notes.  These debt issue costs will be amortized over the
    life of the debt as additional interest expense.

    The  Company had no  borrowings  outstanding  on the  364-day and  five-year
    revolving  credit  facilities  and $400 million  outstanding on the six-year
    term  loan at June 27,  2001.  As of June 27,  2001 the  Company  had  $18.6
    million in outstanding letters of credit used to support inventory purchases
    and insurance obligations.

    The  Company   issued  $300  million  in  unsecured   notes  under  a  shelf
    registration  statement filed with the Securities and Exchange Commission in
    December 2000 (the "2000 Registration  Statement").  The Notes are priced at
    8.875%,  pay  interest  semiannually  on April 1 and October 1 and mature on
    April 1, 2008.  At, June 27,  2001,  the  Company's  outstanding  fixed rate
    borrowings  approximated fair market value. Additional securities up to $700
    million remain available for issuance under the Company's 2000  Registration
    Statement.

    The New  Facilities  and Notes contain  certain  covenants as defined in the
    credit  agreement and indenture,  as amended.  The Company was in compliance
    with all of these covenants at June 27, 2001.


                                      F-24
<PAGE>

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




8.  Debt, continued

    Aggregate  principal  maturities  on long-term  debt and  capitalized  lease
    obligations for each of the twelve-month periods subsequent to June 27, 2001
    are as follows:


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

             2002                            $           4,291
             2003                                        4,288
             2004                                        4,285
             2005                                        4,282
             2006                                        4,279
             Thereafter                                680,280
                                                ---------------
                                             $         701,705
                                                ===============

9.  Derivatives

    The Company  follows  Statement of Financial  Accounting  Standards No. 133,
    "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133").
    SFAS 133 requires that all derivative instruments be recorded on the balance
    sheet at their fair  value.  Changes in the fair  value of  derivatives  are
    recorded  each  period in current  earnings or other  comprehensive  income,
    depending  on  whether  a  derivative  is  designated  as  part  of a  hedge
    transaction  and,  if it is,  the type of  hedge  transaction.  The  Company
    adopted SFAS 133 in the first quarter of 2001.  However,  the Company had no
    derivatives to be measured at the time of adoption.

    As part of the  New  Facilities  described  in  Note 8 - Debt,  the  Company
    obtained a $400 million  six-year  term loan with a variable  interest  rate
    based on the one-month  LIBOR.  The Company  utilizes  derivative  financial
    instruments  to reduce its exposure to market risks from changes in interest
    rates.  The instruments  primarily used to mitigate these risks are interest
    rate swaps. All derivative instruments held by the Company are designated as
    highly  effective  cash flow hedges of interest  rate risk on variable  rate
    debt and,  accordingly,  the  change in fair value of these  instruments  is
    recorded as a component of other comprehensive income.

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


                                      F-25
<PAGE>

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



9.  Derivatives, continued

    The Company has entered into three  interest  rate swap  agreements to hedge
    the  interest  rate risk  associated  with the $400 million  outstanding  in
    variable rate debt.  The purpose of these swaps is to fix interest  rates on
    variable   rate  debt  and  reduce   certain   exposures  to  interest  rate
    fluctuation.  At June 27, 2001,  the Company had interest  rate swaps with a
    notional  amount of $400  million.  The notional  amounts do not represent a
    measure of exposure of the Company.

    The maturity and interest  rate on the interest  rate swaps are shown in the
    following table.  The Company will pay the counterparty  interest at a fixed
    rate as noted  and the  counterparty  will  pay the  Company  interest  at a
    variable rate equal to the one-month LIBOR (3.75% as of June 27, 2001).


                  Notional
                  Amount                 Maturity                 Fixed Rate
            -------------------    -------------------       -------------------
                $ 150,000             March 29, 2002                 4.60%
                  150,000             March 29, 2003                 4.81%
                  100,000             March 29, 2004                 5.03%
            -------------------
                $ 400,000
            ===================


    The fair value of the Company's  interest rate swaps is obtained from dealer
    quotes.  These  values  represent  the  estimated  amount the Company  would
    receive or pay to terminate the  agreement,  taking into  consideration  the
    difference  between the contract rate of interest and rates currently quoted
    for agreements of similar terms and  maturities.  At June 27, 2001, the fair
    value of the Company's interest rate swaps resulted in an unrealized loss of
    $2.6 million ($1.6 million, net of tax). The Company recorded the unrealized
    loss in accumulated  other  comprehensive  income in  shareholders'  equity.
    During  the  next 12  months,  the  Company  will  incur  interest  expense,
    including  the effect of interest  rate swaps at a weighted  average rate of
    7.54% on the $400 million outstanding in variable rate debt.

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


                                      F-26
<PAGE>

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

10. Stock Compensation Plans

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

    Compensation  cost charged  against income was $8.0 million and $2.5 million
    in fiscal 2001 and 1999, respectively. Compensation costs resulted in income
    of $1.1 million in fiscal 2000.  The primary reason for the income in fiscal
    2000 was due to the reversal of compensation  expense previously  recognized
    for restricted stock that did not vest.

    The per share  weighted  fair value of the stock  options  granted in fiscal
    2001 and 2000 is $3.09 and $6.62, respectively. These amounts were estimated
    on the date of the grant using the Black-Scholes  option pricing model under
    the  following  assumptions:  risk-free  interest  rate  of 6.2%  and  6.7%;
    dividend  yield of 7.0% and  5.4%;  expected  lives of 6.5 and 7 years;  and
    volatility of 34.0% and 38.0%, respectively.

    (a)       Stock  Purchase  Plan:  The Company has a stock  purchase  plan in
              effect for  associates.  Under the terms of this Plan, the Company
              may grant options to purchase  restricted  shares of the Company's
              common  stock at a price  not less  than the  lesser of 85% of the
              fair  market  value at the date of grant or 85% of the fair market
              value at the time of exercise.  There are 5,481,835  shares of the
              Company's  common stock  available  for the grant of options under
              the Plan.  Loans to  associates  for the purchase of the Company's
              common stock are reported in the consolidated financial statements
              as a reduction of Shareholders'  Equity,  rather than as a current
              asset.  The total number of loans  outstanding as of June 27, 2001
              were $1.9 million. No loans were outstanding at June 28, 2000.








                                      F-27
<PAGE>


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

10. Stock Compensation Plans, continued

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

<TABLE>


                                              Weighted                             Number of shares
                                              Average
                                             Issue Price              Total        FY 2001       FY 2000     FY 1999
                                         -----------------    ------------------------------------------------------
              1999 Plan
              ---------
<S>                                        <C>                       <C>           <C>            <C>        <C>
                 Issued                    $     41.12               252,097             -             -     252,097
                 Forfeited                                           232,402       169,263        18,592      44,547
                                                                 ------------
                 Outstanding                                          19,695
                                                                 ------------
              2000 Plan
              ---------
                 Issued                    $     25.75               239,030             -       239,030           -
                 Forfeited                                           127,958        34,834        93,124           -
                                                                 ------------
                 Outstanding                                         111,072
                                                                 ------------
              2001 Plan
              ---------
                 Issued                    $     15.22               103,164       103,164             -           -
                 Forfeited                                             2,192         2,192             -           -
                 Shares Vested                                        32,254        32,254             -           -
                                                                 ------------
                 Outstanding                                          68,718
                                                                 ------------

               Shares outstanding, June 27, 2001                     199,485
                                                                 ============
</TABLE>

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








                                      F-28
<PAGE>

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


10. Stock Compensation Plans, continued

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

              1. Key Employee:  Under the  Company's  Key Employee  Stock Option
                 Plan,  5,000,000 shares of the Company's common stock were made
                 available  for grant at an  exercise  price of no less than the
                 market value at date of grant.  Options granted under this plan
                 prior to June 1, 1998 are earned over a three year  period,  if
                 certain  performance  goals are attained;  and options  granted
                 after  June 1, 1998 but  before  January,  2000 also are earned
                 after three years, if certain  performance  goals are attained.
                 Options  granted in or after  January  2000 become  exercisable
                 over time. Some of these options vest over a three-year  period
                 with  one-third of the options  vesting each year  beginning on
                 June 15, 2001.  Other options vest over a five-year period with
                 one-fifth of options  vesting each year  beginning on the first
                 anniversary  date  of  the  recipient's   employment  with  the
                 company.

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

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

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




                                      F-29
<PAGE>


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

10. Stock Compensation Plans, continued

    (c)       Stock Option Plans, continued

              5. Options Outstanding:

                 Changes in options  during the years ended June 27, 2001,  June
                 28, 2000 and June 30, 1999, were as follows:
<TABLE>

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

<S>                                                                       <C>              <C>
                 Outstanding - June 24, 1998...................           332,000          $       29.76
                 Granted.......................................           181,277                  41.51
                 Exercised.....................................           (50,000)                 21.06
                 Forfeited.....................................           (25,842)                 35.65
                                                                    --------------          --------------
                 Outstanding - June 30, 1999...................           437,435                  35.27
                 Granted.......................................         1,828,306                  23.34
                 Exercised.....................................           (50,000)                 22.44
                 Forfeited.....................................          (886,234)                 27.43
                                                                    --------------          --------------
                 Outstanding - June 28, 2000...................         1,329,507                  24.57
                 Granted.......................................           977,158                  14.71
                 Exercised.....................................            (5,000)                 14.25
                 Forfeited.....................................           (74,574)                 19.37
                                                                    --------------          --------------
                 Outstanding - June 27, 2001...................         2,227,091          $       20.44
                                                                    ==============          ==============
                 Exercisable -  June 27, 2001..................           945,587          $       21.81
                                                                    ==============          ==============
                 Shares available for additional grant.........         3,920,370
                                                                    ==============
</TABLE>

                 The following table sets forth  information  regarding  options
                 outstanding at June 27, 2001.
<TABLE>

                                                                          Weighted                      Weighted
                                                         Weighted         Average                       Average
                                                          Average        Remaining      Number       Exercise Prices
                                        Number of        Exercise          Life       Currently       For Currently
                          Range          Options          Price           (Years)    Exercisable      Exercisable
                   ------------------------------------------------------------------------------------------------
<S>                     <C>             <C>                <C>               <C>         <C>              <C>
                     $  14.25 to
                         20.00          1,554,208      $   16.49             6.9         444,983       $  15.97
                     $  21.31 to
                         27.00            503,487          26.96             8.4         500,329          27.00
                     $  33.03 to
                         41.51            169,396          37.37             3.8             275          33.03
                                     ------------      ----------      --------------  ---------       --------
                                        2,227,091      $   20.44             7.0         945,587       $  21.81
                                     ============      ==========      ==============  =========       ========
</TABLE>


                                      F-30
<PAGE>


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



11. Leases

    (a)       Leasing  Arrangements:  There were 1,468 leases in effect on store
              locations  and other  properties  at June 27, 2001. Of these 1,468
              leases, 25 store leases and 3 warehouse and manufacturing facility
              leases are classified as capital leases.  Substantially  all store
              leases will expire  during the next twenty years and the warehouse
              and  manufacturing  facility leases will expire during the next 23
              years.  However, in the normal course of business,  it is expected
              that these  leases  will be renewed or replaced by leases on other
              properties.

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

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

<TABLE>

                                                                               2001              2000
                                                                               ----              ----
              <S>                                                              <C>                <C>
              Store facilities.....................................  $         38,082             38,521
              Warehouses and manufacturing facilities..............            15,722             15,722
                                                                          ------------       ------------
                                                                               53,804             54,243
              Less: Accumulated amortization.......................            34,833             32,951
                                                                                             ------------
                                                                          ------------
                                                                     $         18,971             21,292
                                                                          ============       ============
</TABLE>






                                      F-31
<PAGE>

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

11. Leases, continued

    The following is a schedule by year of future minimum lease payments on open
    facilities  under  capital and operating  leases,  together with the present
    value of the net minimum lease payments as of June 27, 2001.
<TABLE>

                                                                           Capital                Operating
                                                                           -------                ---------
    Fiscal Year:
<S>                                                                          <C>                     <C>
                 2002.............................................   $       7,246                   356,001
                 2003.............................................           7,246                   352,003
                 2004.............................................           6,640                   346,590
                 2005.............................................           6,083                   336,752
                 2006.............................................           6,103                   323,039
                 Later years......................................          21,628                 2,987,575
                                                                        -----------            --------------
    Total minimum lease payments..................................          54,946                 4,701,960
                                                                                               ==============

    Less:  Amount representing estimated
             taxes, maintenance and insurance
             costs included in total minimum
             lease payments.......................................             970
                                                                        -----------
    Net minimum lease payments....................................          53,976
    Less:  Amount representing interest...........................          21,753
                                                                        -----------
    Present value of net minimum lease payments...................   $      32,223
                                                                        ===========
</TABLE>

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

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

    <S>                                                                  <C>          <C>         <C>
    Minimum rentals...............................................   $   347,130      323,117     341,296
    Contingent rentals............................................           878        1,380       1,581
                                                                        -----------  ----------- -----------
                                                                     $   348,008      324,497     342,877
                                                                        ===========  =========== ===========
</TABLE>

    An expense is  recorded  for the present  value of expected  future net rent
    payments in the year a store  closes.  The accrued  balance at June 27, 2001
    for stores that closed not related to the restructuring is $59,381.



                                      F-32
<PAGE>


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


12. Shareholders' Equity

    On April 19, 2000,  the Board of Directors  authorized  the  repurchase,  in
    either open market or private  transactions,  of up to 10,000,000  shares of
    the outstanding  common stock in addition to the 5,000,000 share  repurchase
    program announced on October 6, 1999. From October 6, 1999 through September
    20, 2000, the Company repurchased  9,034,400 shares having an aggregate cost
    of $179.0 million or $19.82 per share. No shares were repurchased  under the
    program during the three quarters ended June 27, 2001.

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

13. Commitments and Contingent Liabilities

    (a)       Associate  Benefit  Programs:  The Company has a  noncontributory,
              trusteed  profit sharing  retirement  program and a  contributory,
              trusteed 401k retirement program, which are in effect for eligible
              associates  and may be amended or terminated at any time.  Charges
              to earnings for contributions to the programs amounted to $42,317,
              $17,625 and $67,250 in 2001, 2000 and 1999, respectively.

    (b)       Defined  Benefit Plan: The Company has a Management  Security Plan
              (MSP),  which is a  non-qualified  defined  benefit plan providing
              disability,  death and retirement benefits to 406 qualified active
              associates of the Company and 650 former  participants.  Total MSP
              cost charged to operations was $6,686,  $6,104 and $6,132 in 2001,
              2000 and 1999,  respectively.  The projected benefit obligation at
              June 27, 2001 was approximately  $50,822.  The effective  discount
              rate used in  determining  the net  periodic MSP cost was 8.0% for
              2001, 2000 and 1999.

              Life  insurance  policies,  which are not considered as MSP assets
              for liability accrual computations, were purchased to fund the MSP
              payments.  These insurance policies are shown on the balance sheet
              at their cash surrender  values,  net of policy loans  aggregating
              $224,593  and  $210,655  at June  27,  2001  and  June  28,  2000,
              respectively.

    (c)       Supplemental   Retirement   Plan:   The  Company  has  a  deferred
              compensation  Supplemental  Retirement Plan in effect for eligible
              management associates. The Company recorded an asset and liability
              at June 27, 2001 and June 28, 2000 in the amount of $16.6  million
              and $17.0 million, respectively.




                                      F-33
<PAGE>

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


13. Commitments and Contingent Liabilities, continued

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

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

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

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

              See Note 7 - Income  Taxes  with  respect  to  certain  litigation
              pending before the U.S. Tax Court.







                                      F-34
<PAGE>

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




14. Restructuring and Other Non-recurring Charges

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

    As  a  result  of  the  restructuring,  the  Company  recorded  expenses  of
    approximately  $396  million  ($256  million  after tax or $1.76 per diluted
    share) in the fourth quarter of fiscal 2000. Charges totaling $147.2 million
    ($90.6  million  after tax or $0.64 per diluted  share) were recorded in the
    current  year.  A summary of the  restructuring  charges  and the  remaining
    accrual follows:
<TABLE>

                                                              Other                         Asset
                               Employee        Lease         Location                      Removal
                             Termination    Termination      Closing           Asset       & Related
                                 Costs         Costs          Costs          Impairment     Costs            Total
                           --------------- --------------- --------------- ------------- -------------- --------------
<S>                       <C>    <C>             <C>             <C>          <C>             <C>      <C>
          Additions       $      16,713          189,295         10,722       179,299              -   $    396,029
          Utilization            (7,546)          (2,628)       (10,647)     (179,299)             -       (200,120)
                           --------------- --------------- --------------- ------------- -------------- --------------
          Balance
          at  6/28/00     $       9,167          186,667             75             -              -   $    195,909

          Additions               2,153           19,889         12,348        43,277         71,634        149,301
          Adjustments            (2,018)               -            (38)            -              -         (2,056)

          Utilization            (9,302)         (44,426)       (12,385)      (43,277)       (71,634)      (181,024)
                           --------------- --------------- --------------- ------------- -------------- --------------

          Balance at
          6/27/01         $           -          162,130              -             -              -   $    162,130
                           =============== =============== =============== ============= ============== ==============
</TABLE>

    The  adjustment  to  employee   termination  costs  represents  the  accrued
    severance for  employees in closed  stores where the employees  subsequently
    became  ineligible  for severance.  The addition to other  location  closing
    costs includes travel expenses,  inventory retagging and employee relocation
    costs in connection with the restructuring.  Asset removal and related costs
    and asset  impairments are the expenses involved in the retrofit of selected
    stores.  In addition,  other asset  impairments were recorded as part of the
    restructuring.  The addition to lease termination costs reflects the updated
    estimate of the remaining liability.

    The  following  table  shows  the  number of people  that are  eligible  for
    severance under the restructuring plan.
<TABLE>

                                                                           Manufacturing and
                                                           Retail           Support Facilities          Total
                                                        ------------      ----------------------       ---------
         <S>                                               <C>                            <C>           <C>
         Eligible for severance                            3,351                          655           4,006
         Number paid                                         636                          240             876
         Became ineligible                                 1,275                           63           1,338
                                                        ------------      ----------------------       ---------
         Number eligible at June 28, 2000                  1,440                          352           1,792


         Number paid                                         417                          258             675
         Became ineligible                                 1,023                           94           1,117
                                                        ------------      ----------------------       ---------
         Number eligible at June 27, 2001                      -                            -               -
                                                        ============      ======================       =========
</TABLE>

                                      F-35
<PAGE>


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

14. Restructuring and Other Non-recurring Charges, continued

    As part of the Company's  restructuring in fiscal year 2000, all stores were
    evaluated  based on current  and  projected  profitability.  As part of this
    evaluation,  the Company  performed an impairment  review of its  long-lived
    assets.  During this review,  the Company  identified  impairment losses for
    assets to be disposed of and assets to be held and used.

    The impairment  charge for assets to be disposed of related primarily to the
    carrying  value of  equipment  and  leasehold  improvements  for the stores,
    division  offices,  warehouse and  manufacturing  plants that were closed as
    part  of the  restructuring  discussed  above.  The  impairment  charge  was
    determined  using the fair  value  less the cost to sell.  The amount of the
    impairment charge for assets to be disposed of included in the restructuring
    charge for fiscal 2000 was $77.9 million.

    The  impairment  charge for assets to be held and used related  primarily to
    the carrying  value of equipment,  leasehold  improvements  and goodwill for
    certain  stores that will continue to be operated by the Company.  Projected
    future  undiscounted  cash flows were used to  determine  whether the assets
    were  impaired.  For the assets that were  determined  to be  impaired,  the
    impairment  charge was calculated to be the difference  between the carrying
    value of the asset and the greater of  discounted  cash flows and  estimated
    fair value of the asset.  Goodwill impairment was measured as the difference
    between the carrying value of the goodwill and the discounted  cash flows of
    the operations  that gave rise to the goodwill.  As a result,  an impairment
    charge  of  $101.4  million  related  to  assets  to be held  and  used  was
    recognized in fiscal 2000,  reducing the carrying  value of fixed assets and
    goodwill by $69.3 million and $32.1 million, respectively.

    Any remaining  expenditures  relating to retrofits are not  considered to be
    material to the Company's  operations and will be included as a component of
    operating and administrative expense.

15. Business Combinations

    In October  2000,  the  Company  acquired  nine  Gooding's  supermarkets  in
    Orlando,  Florida.  The  acquisition  was  accounted  for as a purchase.  On
    January 11, 2001, the Company acquired 68 stores, 32 fuel stations and other
    assets owned by Jitney  Jungle Stores of America,  Inc. The acquired  assets
    are located in  Mississippi,  Alabama and  Louisiana.  The  acquisition  was
    accounted  for as a purchase.  Proforma  results of the Gooding's and Jitney
    Jungle  acquisitions,  assuming the  transactions  were  consummated  at the
    beginning  of 2001 and 2000,  would  not be  materially  different  from the
    results reported.


                                      F-36
<PAGE>

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


16. Quarterly Results of Operations (Unaudited)

    The following is a summary of the unaudited  quarterly results of operations
    for the years ended June 27, 2001 and June 28, 2000:
<TABLE>


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


<S>                                                 <C>  <C>             <C>             <C>              <C>
       Net sales.................................   $    2,940,862       3,956,338       3,016,312        2,989,861
       Gross profit on sales.....................   $      746,899       1,061,114         813,829          832,185
       Net earnings .............................   $        9,413          12,169          10,724           13,005
       Basic earnings  per share.................   $         0.07            0.09            0.08             0.09
       Diluted earnings  per share...............   $         0.07            0.09            0.08             0.09
       Net LIFO charge (credit)..................   $        1,845           2,460           1,845          (13,504)
       Net LIFO charge (credit) per diluted share   $         0.01            0.02            0.01            (0.10)
       Dividends per share.......................   $        0.170           0.340           0.255            0.255
       Market price range........................   $  15.44-13.44     23.13-13.56     30.35-16.88      33.12-25.01

                                                                                Quarters Ended
                                                        ------------------------------------------------------------
                                                         Sept. 22        Jan. 12          April 5          June 28
                         2000                           (12 Weeks)     (16 Weeks)       (12 Weeks)      (12 Weeks)
                         ----                           ----------     ----------       ----------      ----------


       Net sales.................................   $    3,162,171       4,276,024       3,199,356        3,059,996
       Gross profit on sales.....................   $      869,592       1,169,681         865,419          822,358
       Net earnings (loss).......................   $       22,069         (18,793)         10,273         (242,444)
       Basic earnings (loss) per share...........   $         0.15           (0.13)           0.07            (1.70)
       Diluted earnings (loss) per share.........   $         0.15           (0.13)           0.07            (1.70)
       Net LIFO charge...........................   $        1,833           2,444           1,833            3,173
       Net LIFO charge per diluted share.........   $         0.01            0.02            0.01             0.02
       Dividends per share.......................   $        0.170           0.340           0.255            0.255
       Market price range........................   $  41.94-31.31     33.00-22.31     24.00-14.38      21.31-14.25

</TABLE>










                                      F-37

<PAGE>

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


16. Quarterly Results of Operations (Unaudited), continued

    During 2001 and 2000, the fourth quarter  results  reflect a change from the
    estimate of  inflation  used in the  calculation  of LIFO  inventory  to the
    actual rate  experienced  by the Company of 1.0% to (0.8)% and 1.0% to 1.1%,
    respectively.
<TABLE>

                                                                                 Fourth Quarter Results of
                                                                                 -------------------------
                                                                                        Operations
                                                                                        ----------
                                                                            June 27, 2001            June 28, 2000
                                                                            (12 Weeks)               (12 Weeks)
                                                                         ------------------       -----------------

<S>                                                                  <C>        <C>                     <C>
         Net sales...............................................    $          2,989,861               3,059,996
         Cost of sales...........................................               2,157,676               2,237,638
                                                                         -----------------       -----------------
         Gross profit on sales...................................                 832,185                 822,358
         Operating and administrative expenses...................                 739,776                 793,417
         Restructuring and other non-recurring charges...........                  56,497                 396,029
                                                                         -----------------       -----------------
         Operating income (loss).................................                  35,912                (367,088)
         Interest expense........................................                  14,800                   6,784
                                                                         -----------------       -----------------
         Earnings (loss) before income taxes.....................                  21,112                (373,872)
         Income taxes............................................                   8,107                (131,428)
                                                                         -----------------
                                                                                                 -----------------
         Net earnings (loss).....................................    $             13,005                (242,444)
                                                                         =================       =================
</TABLE>










                                      F-38

<PAGE>


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

17. Guarantor Subsidiaries

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

<TABLE>

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

52 Weeks ended June 27, 2001

                                                                       Guarantor
                                                       Parent        Subsidiaries      Eliminations     Consolidated
                                                    ---------------  ---------------  ---------------  ---------------
<S>                                               <C>                    <C>                  <C>        <C>
Net sales                                         $    5,735,327         7,168,046                -       12,903,373
Cost of sales                                          4,217,260         5,232,086                -        9,449,346
                                                    ---------------  ---------------  ---------------  ---------------
Gross profit                                           1,518,067         1,935,960                -        3,454,027
Operating & administrative expenses                    1,298,295         1,882,002                -        3,180,297
Restructuring and other non-recurring charges             80,410            66,835                -          147,245
                                                    ---------------  ---------------  ---------------  ---------------
Operating income (loss)                                  139,362           (12,877)               -          126,485
Equity in (loss) of consolidated subsidiaries             (5,036)                -            5,036                -
Interest expense                                          52,843                 -                -           52,843
                                                    ---------------  ---------------  ---------------  ---------------
Earnings (loss) before income taxes                       81,483          (12,877)            5,036           73,642
Income taxes                                              36,172           (7,841)                -           28,331
                                                    ---------------  ---------------  ---------------  ---------------
Net earnings (loss)                               $       45,311           (5,036)            5,036           45,311
                                                    ===============  ===============  ===============  ===============


52 Weeks ended June 28, 2000
                                                                       Guarantor
                                                       Parent        Subsidiaries      Eliminations    Consolidated
                                                    ---------------  ---------------  ---------------  ---------------
Net sales                                         $    6,012,112         7,685,435                -       13,697,547
Cost of sales                                          4,426,602         5,543,895                -        9,970,497
                                                    ---------------  ---------------  ---------------  ---------------
Gross profit                                           1,585,510         2,141,540                -        3,727,050
Operating & administrative expenses                    1,525,112         2,061,239                -        3,586,351
Restructuring and other non-recurring charges            112,869           283,160                -          396,029
                                                    ---------------  ---------------  ---------------  ---------------
Operating loss                                           (52,471)         (202,859)                -        (255,330)
Equity in (loss) of consolidated subsidiaries           (155,776)                -          155,776               -
Interest expense                                          44,132             2,949                -           47,081
                                                    ---------------  ---------------  ---------------  ---------------
Loss before income taxes                                (252,379)         (205,808)         155,776         (302,411)
Income taxes                                             (23,484)          (50,032)                -         (73,516)
                                                    ---------------  ---------------  ---------------  ---------------
Net loss                                          $     (228,895)         (155,776)         155,776         (228,895)
                                                    ===============  ===============  ===============  ===============
</TABLE>




                                      F-39

<PAGE>


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

17. Guarantor Subsidiaries, continued
<TABLE>

53 Weeks ended June 30, 1999
                                                                       Guarantor
                                                       Parent        Subsidiaries      Eliminations    Consolidated
                                                    ---------------  ---------------  ---------------  ---------------
<S>                                               <C>                    <C>                <C>              <C>
Net sales                                         $    6,103,021         8,033,482                -       14,136,503
Cost of sales                                          4,490,544         5,742,611                -       10,233,155
                                                       ---------         ---------          ---------     ----------
Gross profit                                           1,612,477         2,290,871                -        3,903,348
Operating & administrative expenses                    1,461,761         2,115,459                -        3,577,220
Restructuring and other non-recurring charges                  -                 -                -                -
                                                       ---------         ---------          ---------      ---------
Operating  income                                        150,716           175,412                -          326,128
Equity in earnings of consolidated subsidiaries          105,687                 -         (105,687)               -
Interest expense                                          26,086             3,562                -           29,648
                                                       ---------         ---------          ---------      ---------
Earnings before income taxes                             230,317           171,850         (105,687)         296,480
Income taxes                                              47,982            66,163                -          114,145
                                                       ---------         ---------          ---------      ---------
Net earnings                                      $      182,335           105,687         (105,687)         182,335
                                                       =========         =========          =========      =========

                    WINN-DIXIE STORES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATING BALANCE SHEETS
                     (Amounts in thousands except par value)

Year ended June 27, 2001
                                                                              Guarantor
                                                             Parent          Subsidiaries     Eliminations      Consolidated
                                                           ---------------  ---------------  ----------------  ----------------
Merchandise inventories                                  $     311,974          886,628                 -          1,198,602
Other current assets                                           256,186          144,413                 -            400,599
                                                           ---------------  ---------------  ----------------  ----------------
  Total current assets                                         568,160        1,031,041                 -          1,599,201
Property, plant and equipment, net                             424,478          722,176                 -          1,146,654
Other non-current assets                                       238,032           57,783                 -            295,815
Investments in and advances to/from subsidiaries               935,225                -          (935,225)                 -
                                                           ---------------  ---------------  ----------------  ----------------
  Total assets                                           $   2,165,895        1,811,000          (935,225)         3,041,670
                                                           ===============  ===============  ================  ================

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


                                      F-40

<PAGE>

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



17. Guarantor Subsidiaries, continued

<TABLE>


Year ended June 28, 2000
                                                                              Guarantor
                                                              Parent         Subsidiaries     Eliminations      Consolidated
                                                           ---------------  ---------------  ----------------  ----------------
<S>                                                      <C>     <C>              <C>              <C>             <C>
Merchandise inventories                                  $       354,424          786,981                -         1,141,405
Other current assets                                             202,605          127,912                -           330,517
                                                           ---------------  ---------------  ----------------  ----------------
  Total current assets                                           557,029          914,893                -         1,471,922
Property, plant and equipment, net                               423,346          592,946                -         1,016,292
Other non-current assets                                         242,454           16,425                -           258,879
Investments in and advances to/from subsidiaries                 724,970                -         (724,970)                -
                                                           ---------------  ---------------  ----------------  ----------------
  Total assets                                           $     1,947,799        1,524,264         (724,970)        2,747,093
                                                           ===============  ===============  ================  ================

Accounts payable                                         $       352,732          223,145                -           575,877
Short-term borrowings                                            235,000                -                -           235,000
Other current liabilities                                        304,608          306,068                -           610,676
                                                           ---------------  ---------------  ----------------  ----------------
  Total current liabilities                                      892,340          529,213                -         1,421,553
Other non-current liabilities                                    187,624          270,081                -           457,705
Common stock of $1 par value                                     140,830            6,285           (6,285)          140,830
Retained earnings                                                727,005          718,685         (718,685)          727,005
                                                           ---------------  ---------------  ----------------  ----------------
  Total liabilities and stockholders' equity             $     1,947,799        1,524,264         (724,970)        2,747,093
                                                           ===============  ===============  ================  ================



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

 Year ended June 27, 2001
                                                                              Guarantor
                                                              Parent         Subsidiaries     Eliminations      Consolidated
                                                            --------------  ---------------  ----------------  ----------------
Net cash provided by operating activities                $       127,529          117,359                -           244,888
                                                            --------------  ---------------  ----------------  ----------------
  Purchases of property, plant and equipment, net                (69,348)        (243,971)               -          (313,319)
  Increase in other assets                                      (218,241)          (4,205)         215,927            (6,519)
  Acquisitions, net of cash acquired                             (30,942)         (92,811)               -          (123,753)
                                                            --------------  ---------------  ----------------  ----------------
Net cash used in investing activities                           (318,531)        (340,987)         215,927          (443,591)
                                                            --------------  ---------------  ----------------  ----------------
  Decrease in short-term borrowings                             (235,000)               -                -          (235,000)
  Proceeds from issuance of  long-term debt                      700,000                -                -           700,000
  Purchases of common stock                                      (17,003)               -                -           (17,003)
  Dividends paid                                                (142,853)               -                -          (142,853)
  Other                                                          (18,163)         219,134         (215,927)          (14,956)
                                                            --------------  ---------------  ----------------  ----------------
Net cash provided by financing activities                        286,981          219,134         (215,927)          290,188
                                                            --------------  ---------------  ----------------  ----------------

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


                                      F-41

<PAGE>

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


17. Guarantor Subsidiaries, continued

<TABLE>

Year ended June 28, 2000


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

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



Year ended June 30, 1999
                                                                              Guarantor
                                                               Parent        Subsidiaries      Eliminations       Consolidated
                                                            --------------  ---------------  ----------------
                                                                                                               ----------------
Net cash provided by operating activities                 $    121,999          314,362                  -            436,361
                                                            --------------  ---------------  ----------------  ----------------
  Purchases of property, plant and equipment, net             (140,706)        (193,577)                 -           (334,283)
  Decrease (increase) in other assets                          120,159           14,294           (135,311)              (858)
                                                            --------------  ---------------  ----------------  ----------------
Net cash used in investing activities                          (20,547)        (179,283)          (135,311)          (335,141)
                                                            --------------  ---------------  ----------------  ----------------
  Increase in short-term borrowings                             45,000                -                  -             45,000
  Purchases of common stock                                     (1,337)               -                  -             (1,337)
  Dividends paid                                              (151,231)               -                  -           (151,231)
  Other                                                          7,078         (134,861)           135,311              7,528
                                                            --------------  ---------------  ----------------  ----------------
Net cash used in financing activities                         (100,490)        (134,861)           135,311           (100,040)
                                                            --------------  ---------------  ----------------  ----------------

Increase in cash and cash equivalents                              962              218                  -              1,180
Cash and cash equivalents at the beginning of the year          16,886            6,680                  -             23,566
                                                            --------------  ---------------  ----------------  ----------------
Cash and cash equivalents at end of the year              $     17,848            6,898                  -             24,746
                                                            ==============  ===============  ================  ================
</TABLE>

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

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

                                      F-42

<PAGE>



                          INDEPENDENT AUDITORS' REPORT
                         ON FINANCIAL STATEMENT SCHEDULE



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


Under date of August 8, 2001, we reported on the consolidated  balance sheets of
Winn-Dixie Stores,  Inc. and subsidiaries as of June 27, 2001 and June 28, 2000,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for each of the years in the  three-year  period ended June 27, 2001,
as contained in the annual  report on Form 10-K for the year 2001. In connection
with our audits of the aforementioned consolidated financial statements, we also
audited the related  consolidated  financial statement schedule as listed in the
accompanying  index on page 15 of the  annual  report  on Form 10-K for the year
2001. This consolidated  financial  statement  schedule is the responsibility of
the Company's  management.  Our  responsibility is to express an opinion on this
consolidated financial statement schedule based on our audits.

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




                                                                   KPMG LLP



Jacksonville, Florida
August 8, 2001








                                      S-1

<PAGE>

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


                    WINN-DIXIE STORES, INC. AND SUBSIDIARIES
                 Consolidated Valuation and Qualifying Accounts
           Years Ended June 27, 2001, June 28, 2000 and June 30, 1999
                             (Amounts in thousands)

<TABLE>

                                                          Balance at      Additions     Deductions      Balance at
                                                           beginning      charged          from             end
                     Description                            of year       to income      reserves         of year
------------------------------------------------------    ------------    -----------   ------------    ------------
<S>                                                   <C>       <C>           <C>            <C>              <C>
Year ended June 27, 2001:
Reserves deducted from assets to which they apply:
   Allowance for doubtful receivables                 $         3,822         17,024         16,911           3,935
                                                          ============    ===========   ============    ============


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


Year ended June 30, 1999:
Reserves deducted from assets to which they apply:
   Allowance for doubtful receivables                 $         2,623         14,506         13,514           3,615
                                                          ============    ===========   ============    ============

</TABLE>




                                      S-2