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

                                    FORM 10-K

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

                                       OR

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

                          Commission File Number 1-3657

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

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

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

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

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


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


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

                                      None
                                (Title of class)

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

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

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

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

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

================================================================================

<PAGE>


                                TABLE OF CONTENTS

<TABLE>
                                                                                                          Page
                                                                                                         Number
                                                                                                         ------

PART I

<S>                                                                                                            <C>
Business....................................................................................................   1

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

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

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

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

PART II

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

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

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

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

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

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

PART III

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

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

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

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

PART IV

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

Signatures .................................................................................................  16
</TABLE>

<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 1,073 stores in 12 states operating  primarily
in the southeastern United States and the Bahama Islands. According to published
reports of sales at June 26, 2002,  the Company is one of the  nation's  largest
food  retailers and one of the largest  supermarket  chains in the  southeastern
region of the United States.

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

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

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

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

Store Formats and Business Strategy

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




                                       1
<PAGE>



ITEM 1:    BUSINESS, continued

<TABLE>
Store locations by state and by format:

                                Winn-     Market-    Thrift-      Save      Sack &     City Meat
      State          Total      Dixie      Place       way        Rite       Save       Markets
---------------------------------------------------------------------------------------------------
<S>                   <C>         <C>       <C>         <C>        <C>        <C>          <C>
Florida               434    |    57        371         -          6          -            -
Alabama               118    |    43         75         -          -          -            -
North Carolina        106    |    50         56         -          -          -            -
Georgia               95     |    4          53         -          38         -            -
Louisiana             80     |    19         61         -          -          -            -
Mississippi           69     |    42         19         -          1          7            -
South Carolina        61     |    23         38         -          -          -            -
Kentucky              40     |    6          29         5          -          -            -
Virginia              28     |    10         18         -          -          -            -
Ohio                  17     |    -          -          17         -          -            -
Bahamas               12     |    3          -          -          -          -            9
Tennessee             12     |    4          8          -          -          -            -
Indiana                1     |    -          1          -          -          -            -
                  ---------------------------------------------------------------------------------
                     1,073       261        729         22         45         7            9
                  =================================================================================
</TABLE>

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

Growth Strategy

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

<TABLE>
Store and Other Data:

                                                   2002         2001         2000         1999         1998
                                                   ----         ----         ----         ----         ----
<S>                                               <C>          <C>          <C>          <C>          <C>
Stores
In operation at year-end                          1,073        1,153        1,079        1,188        1,168
Opened and acquired during year                       5           94           34           79           84
Closed or sold during year                           85           20          143           59           90
Enlarged or remodeled during year                    29           11           42           64          136
New/enlarged/remodeled in last five years           578          706          790          908          912
   Percent to total stores in operation            53.9         61.2         73.2         76.4         78.1
Year-end retail square footage (000,000)           47.5         51.1         48.1         52.0         49.6
Average store size at year-end (000)               44.2         44.3         44.6         43.7         42.4
Other Year-end Data
Associates (000)                                    113          119          120          132          139
Shareholder accounts (000)                         46.5         48.8         45.7         48.1         52.0
Shareholders per store                               43           42           42           40           45
</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
                   Valdosta          Plants:  crackers and cookies; and snacks

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

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

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

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

BAHAMAS            Nassau            Distribution center
-------



                                       3
<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.  In addition,  an  insignificant  portion of sales are
derived from the Company's buy-resale operation.

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

Competition

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

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

Associates

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

Bahamas

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

Management Actions

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



                                       4
<PAGE>



ITEM 1:    BUSINESS, continued

Management Actions, continued

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

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

ITEM 2:    PROPERTIES

Stores

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

Support Properties

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

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

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

ITEM 3:         LEGAL PROCEEDINGS

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

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

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




                                       5
<PAGE>

Executive Officers of the Registrant

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




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



<S>                     <C>               <C>                                     <C>                  <C>
A. Dano Davis           57                Chairman of the Board                   1988                 1968

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

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

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

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

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

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

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

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

K. D. Ross              33         Vice President, Strategic Planning             2000                 2000
                                              and Treasurer
</TABLE>


<TABLE>
Division Managers:

<S>                     <C>                  <C>                                  <C>                  <C>
W. R. Baxley            39                   Vice President                       2002                 2000

J. D. Fitzgerald        52                   Vice President                       1998                 1970

C. M. Gore              43                   Vice President                       2001                 2001

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

M. J. Istre             51                   Vice President                       1999                 1969

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

M. A. Sellers           48                   Vice President                       1997                 1973
</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. Frank Lazaran,  Mr. Dennis Sheehan, Mr.
John Sheehan, Mr. August Toscano, Ms. Kellie Ross, Mr. Robert Baxley, Mr. Curtis
Gore and Mr.  George  Gue,  Jr.  have been  employed  for the past five years in
either the same capacity as listed,  or in a position with the Company which was
consistent in occupation with their present assignment.

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

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

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

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

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

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

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


                                       7
<PAGE>


Executive Officers of the Registrant, continued

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

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

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











                                       8
<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 26, 2002 was 46,491.

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

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

ITEM  6:   SELECTED FINANCIAL DATA

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

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

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

ITEM 7A:   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

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

ITEM  8:   FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

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

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

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



                                       9
<PAGE>



                                    PART III

ITEM 10:   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

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

ITEM 11:   EXECUTIVE COMPENSATION

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

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

     The following table highlights equity compensation plans.
<TABLE>

                                            Number of securities
                                             to be issued upon              Weighted-
                                                exercise of              average exercise        Number of securities
                                            outstanding options               price              remaining available
                                           ---------------------       -------------------    --------------------------
<S>                                                    <C>           <C>                                       <C>
Equity compensation plans
  approved by security holders                         1,550,045     $               20.32                    2,861,941

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

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

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

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

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


                                       10
<PAGE>


                              PART III, continued


ITEM 13:   CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

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


                                     PART IV

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

    (a)    Financial Statements and Financial Statement Schedules:

           (1)      Financial Statements:

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

           (2)      Financial Statement Schedules:

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

           (3)      Exhibits:

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










                                       11
<PAGE>


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


<TABLE>
Exhibit
Number                   Description of Exhibit               Incorporated by Reference From
------                   ----------------------               ------------------------------

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

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

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

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

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

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

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



                                       12
<PAGE>

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


<TABLE>
Exhibit
Number                   Description of Exhibit               Incorporated by Reference From
------                   ----------------------               ------------------------------

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

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

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

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

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

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

10.2.4*         Amendment to the Restricted Stock Plan        Previously  filed as  Exhibit 10.2.4
                effective August 9, 2000.                     to Form 10-K for the year ended June
                                                              27, 2001,  which  Exhibit  is herein
                                                              incorporated by reference.
----------
<FN>
* Management contract or compensatory plan or agreement.
</FN>
</TABLE>

                                       13
<PAGE>


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

<TABLE>
Exhibit
Number                   Description of Exhibit               Incorporated by Reference From
------                   ----------------------               ------------------------------

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

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

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

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

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

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

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

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

----------
<FN>
* Management contract or compensatory plan or agreement.
</FN>
</TABLE>


                                       14
<PAGE>


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

<TABLE>
Exhibit
Number                   Description of Exhibit               Incorporated by Reference From
------                   ----------------------               ------------------------------

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

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

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

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

21.1            Subsidiaries of Winn-Dixie Stores, Inc.

23.1            Consent of KPMG LLP.

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

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

         (b)    Reports on Form 8-K:
</TABLE>

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


                                       15
<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 7, 2002
                                               ---------------------------------


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


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


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


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


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








                                       16
<PAGE>



SIGNATURES, continued



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


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


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


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


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


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


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






                                       17
<PAGE>



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



<TABLE>

<S>                                                                                                             <C>
Selected Financial Data                                                                                         F-1

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

Consolidated Financial Statements and Supplemental Data:

         Report of Management                                                                                  F-13

         Independent Auditors' Report                                                                          F-14

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

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

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

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

         Notes to Consolidated Financial Statements                                                            F-19

Financial Statement Schedules:

         Independent Auditors' Report on Financial Statement Schedule                                           S-1

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


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


                                       18
<PAGE>


<TABLE>
                            SELECTED FINANCIAL DATA**



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

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

----------
<FN>
*53 weeks
**The selected data was reclassified to reflect the Texas and Oklahoma operation
  exit as a discontinued operation.
</FN>
</TABLE>


                                      F-1
<PAGE>

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

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

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

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

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

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


                                      F-2
<PAGE>

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

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

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

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

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

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

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


                                      F-3
<PAGE>

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

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

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

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

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

Liquidity and Capital Resources

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

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


                                      F-4
<PAGE>

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

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

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

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

Impact of Inflation

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

Critical Accounting Policies

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


                                      F-5
<PAGE>


Critical Accounting Policies, continued

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

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

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

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

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

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

                                      F-6
<PAGE>

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

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

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

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

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

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


                                      F-7
<PAGE>

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

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

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

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

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

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

                                      F-8
<PAGE>

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

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

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

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

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



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


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

                                      F-9
<PAGE>

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

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

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

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

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

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

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

                                      F-10
<PAGE>

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

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


<TABLE>
                                                        Expected Maturity Date
                                                    (Dollar amounts in thousands)

                                                                                      There-                    Fair
                               2003       2004       2005       2006        2007      after         Total       Value
                               ----       ----       ----       ----        ----      -----         -----       -----
<S>                       <C>              <C>       <C>        <C>          <C>      <C>        <C>          <C>
Liabilities:

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

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

Interest rate derivatives

Interest rate swaps

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

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


                                      F-11
<PAGE>

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

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

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

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

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

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

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

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

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

                                      F-12
<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-13
<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 26, 2002 and June 27, 2001,  and the
related consolidated  statements of operations,  shareholders'  equity, and cash
flows for each of the years in the three-year  period ended June 26, 2002. These
consolidated  financial  statements  are  the  responsibility  of the  Company's
management.  Our  responsibility is to express an opinion on these  consolidated
financial statements based on our audits.

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

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

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




                                                  KPMG  LLP


Jacksonville, Florida
August 7, 2002


                                      F-14
<PAGE>


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


<TABLE>
                                                                          2002                  2001                 2000
                                                                      ------------         ----------         ----------
                                                                             Amounts in thousands except per share data

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

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

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

See accompanying notes to consolidated financial statements.



                                      F-15
<PAGE>


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


<TABLE>
ASSETS                                                                                        2002                   2001
                                                                                            ---------              ---------
                                                                                      Dollar amounts in thousands expect par value
<S>                                                                                       <C>                        <C>
Current Assets:
Cash and cash equivalents                                                                 $   227,846                121,061
Marketable securities                                                                          18,606                      -
Trade and other receivables, less allowance for doubtful items of
$2,779 ($3,935 in 2001)                                                                       116,154                109,159
Merchandise inventories less LIFO reserve of
$215,873 ($220,411 in 2001)                                                                 1,063,288              1,198,602
Prepaid expenses and other assets                                                              53,934                 34,643
Deferred income taxes                                                                         158,478                135,736
                                                                                          -----------                -------
Total current assets                                                                        1,638,306              1,599,201
                                                                                          -----------                -------
Cash surrender value of life insurance, net                                                    16,197                 16,876
Property, plant and equipment, net                                                            966,752              1,146,654
Goodwill                                                                                       87,808                 87,808
Non-current deferred income taxes                                                             113,291                106,145
Other assets, net                                                                             115,224                 84,986
                                                                                          -----------                -------
Total assets                                                                              $ 2,937,578              3,041,670
                                                                                          ===========              =========

LIABILITIES AND SHAREHOLDERS' EQUITY

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


See accompanying notes to consolidated financial statements.

                                      F-16
<PAGE>


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

<TABLE>
                                                                                      2002                 2001              2000
                                                                                    ---------             ------           --------
                                                                                                Dollar amounts in thousands
<S>                                                                                 <C>                   <C>              <C>
Cash flows from operating activities:
Net earnings (loss)                                                                 $  86,866             45,311           (228,895)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Extraordinary item                                                                      2,310                  -                  -
Gain on sale of facilities                                                             (7,517)                 -                  -
Asset impairment write-off                                                             36,959                  -                  -
Depreciation and amortization                                                         175,520            183,559            256,671
Deferred income taxes                                                                 (28,141)            60,336           (189,046)
Defined benefit plan                                                                    3,860              3,786              4,007
Reserve for insurance claims and self-insurance                                        (9,807)             5,689             75,408
Stock compensation plans                                                                4,476              8,007             (1,144)
Change in operating assets and liabilities, net of effects
from acquisitions:
Trade and other receivables                                                            (6,995)            (1,734)            80,888
Merchandise inventories                                                               115,452            (39,962)           283,693
Prepaid expenses and other assets                                                       8,521             25,416            (11,776)
Accounts payable                                                                      (81,868)            23,009            (87,959)
Income taxes payable                                                                   41,734            (61,312)            74,867
Other current accrued expenses                                                         35,579             (7,217)           486,565
Net cash provided by operating activities                                             376,949            244,888            743,279

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

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

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

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



See accompanying notes to consolidated financial statements.

                                      F-17
<PAGE>


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


<TABLE>
                                         Number      Dollar                          Accumulated
                                           of       Value of                           Other           Associates'        Total
                                         Common      Common          Retained       Comprehensive        Stock         Shareholders'
                                         Shares       Stock          Earnings           Income           Loans            Equity
                                      ----------  -------------   --------------  -----------------  --------------   --------------
<S>                                     <C>       <C>                 <C>                    <C>              <C>     <C>
Balances at June 30, 1999               148,577   $    148,577        1,259,597              3,069            (164)   $   1,411,079
                                      ----------  -------------   --------------  -----------------  --------------   --------------

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

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

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


 See accompanying notes to consolidated financial statements

                                      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

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

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

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

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

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

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

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

                                      F-19
<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)               Revenue  Recognition:  Revenue is recognized at the point of
                    sale for  retail  sales.  Sales  discounts  are  offered  to
                    customers  at the time of purchase as part of the  Company's
                    Customer  Reward Card  program as well as other  promotional
                    events.  All sales  discounts are recorded as a reduction of
                    sales at the time of purchase.

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

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

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

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

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


                                      F-20
<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

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

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

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

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

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

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



                                      F-21
<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

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

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

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

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

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

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

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




                                      F-22
<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

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

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

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

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

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


                                      F-23
<PAGE>


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



2. Merchandise Inventories

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

3.  Goodwill and Other Intangible Assets

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

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

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

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

                                      F-24
<PAGE>

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

3. Goodwill and Other Intangible Assets, continued

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


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


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

<TABLE>
                                                   June 26, 2002         June 27, 2001           June 28, 2000
                                                -------------------   --------------------    --------------------
<S>                                              <C>                              <C>                   <C>
Continuing Operations:
Reported net earnings (loss)                     $         189,523                76,788                (213,380)
Goodwill amortization (net of tax)                               -                 1,954                   2,507
                                                   ---------------   -------------------     -------------------
Adjusted net earnings (loss)                     $         189,523                78,742                (210,873)
                                                   ===============   ====================    ====================
Adjusted basic earnings (loss)                   $            1.35                  0.56                   (1.45)
                                                   ===============   ====================    ====================
Adjusted diluted earnings (loss)                 $            1.35                  0.56                   (1.45)
                                                   ===============   ====================    ====================
</TABLE>



                                      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



4. Property, Plant and Equipment

<TABLE>
         Property, plant and equipment consists of the following:

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

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


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






                                      F-26
<PAGE>

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

Income Taxes

         Income tax expense (benefit) consists of:

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

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

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


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


<TABLE>
                                                              2002              2001              2000
                                                           ----------        ----------        ---------
<S>                                                             <C>               <C>             <C>
Federal statutory income tax rate                               35.0 %            35.0 %          (35.0)%
State and local income taxes, net of federal
  income tax benefits                                            2.9               2.8             (0.6)
Tax credits                                                     (1.4)             (4.0)            (0.9)
Company owned life insurance (COLI)                                -               2.8              9.6
Goodwill impairment                                                -                 -              2.9
Other, net                                                      (2.5)              1.9             (0.3)
                                                           ----------        ----------        ---------
                                                                34.0 %            38.5 %          (24.3)%
                                                           ==========        ==========        =========
</TABLE>

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



                                      F-27
<PAGE>

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


5. Income Taxes, continued

<TABLE>
                                                                         2002                    2001                   2000
                                                                  --------------------    -------------------    -------------------
Deferred tax assets:
<S>                                                                   <C>                        <C>                     <C>
Reserve for insurance claims and self-insurance                       $  82,504                  82,092                  79,039
Reserve for vacant store leases                                          72,496                  21,511                  38,308
Unearned promotional allowance                                           16,806                  18,292                   5,310
Reserve for accrued vacations                                            11,292                  13,352                  13,463
State net operating loss carry forwards                                  31,586                  32,315                  17,052
Excess of book over tax depreciation                                     64,335                  10,150                  12,032
Other comprehensive income                                                2,836                     991                       -
Excess of book over tax rent expense                                        857                     997                     956
Excess of book over tax retirement expense                               23,773                  21,046                  19,452
Uniform capitalization of inventory                                       9,890                   9,291                   9,718
Restructuring costs                                                      29,015                 102,375                 130,587
Other, net                                                               66,872                  50,701                  52,730
                                                                      ---------               ---------               ---------
Total gross deferred tax assets                                         412,262                 363,113                 378,647
Less:  Valuation allowance                                               35,913                  29,696                  16,489
                                                                      ---------               ---------               ---------
Net deferred tax assets                                                 376,349                 333,417                 362,158
                                                                      ---------               ---------               ---------
Deferred tax liabilities:
Excess of tax over book depreciation                                    (85,111)                (84,640)                (46,308)
Undistributed earnings of the Bahamas
subsidiary                                                               (5,382)                 (4,783)                 (4,761)
Uniform capitalization of inventory                                        (527)                      -                       -
Other, net                                                              (13,560)                 (2,113)                 (9,863)
                                                                      ---------               ---------               ---------
Total gross deferred tax liabilities                                   (104,580)                (91,536)                (60,932)
                                                                      ---------               ---------               ---------
                                                                      ---------               ---------               ---------
Net deferred tax assets                                               $ 271,769                 241,881                 301,226
                                                                      =========               =========               =========
</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-28
<PAGE>

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

5.       Income Taxes, continued

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

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


6.       Debt

<TABLE>
                                                                         2002                    2001
                                                                   ------------------     --------------------
<S>                                                                <C>                                  <C>
364-day $175,000 revolving credit facility due 2003;               $
   interest payable at LIBOR plus 2.50%                                          -                      -
Five-year $200,000 revolving credit facility due 2006;
   interest payable at LIBOR plus 2.50%                                          -                      -
Mortgage note payable with interest at 9.40% and
   monthly $22 principal and interest payments                               1,434                  1,705
   and 10.0% of principal paid annually each October
Six-year term loan due 2007; interest payable at
   LIBOR plus 2.75% and .25% of principal
   paid quarterly                                                          246,000                400,000
8.875% senior notes due 2008; interest payable
semiannually on April 1 and October 1                                      295,917                300,000
                                                                          --------               --------
   Total                                                                   543,351                701,705
Less current portion                                                         2,739                  4,291
                                                                          --------               --------
Long-term portion                                                         $540,612                697,414
                                                                          ========               ========
</TABLE>





                                      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

6. Debt, continued

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

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

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

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

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

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

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

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

                                      F-30
<PAGE>


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

7. Derivatives

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

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

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

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



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


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


                                      F-31
<PAGE>

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


7. Derivatives, continued

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

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

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

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

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


                                      F-32
<PAGE>

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


7. Derivatives, continued

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

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

8.  Stock Compensation Plans

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

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

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

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


                                      F-33
<PAGE>

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

8. Stock Compensation Plans, continued

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



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

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

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

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

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

Shares outstanding, June 26, 2002            247,668
                                             =======
</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.  At
               June 26, 2002 the Company had  recorded  $3.2 million of deferred
               compensation.



                                      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

 8. Stock Compensation Plans, continued

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

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

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

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

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


                                      F-35
<PAGE>

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



 8. Stock Compensation Plans, continued

         (c)   Stock Option Plans, continued

               5.   Options Outstanding:

                    Changes in options  during  the years  ended June 26,  2002,
                    June 27, 2001 and June 28, 2000, were as follows:
<TABLE>
                                                                                   Weighted
                                                                                   Average
                                                           Number of             Option Price
                                                            Shares                Per Share
                                                     ----------------------   -------------------

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

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

                                                                                         Weighted
                                     Weighted          Weighted                           Average
                                      Average           Average          Number       Exercise Prices
                      Number of     Exercise Price  Remaining Life     Currently       For Currently
        Range          Options         Price            (Years)       Exercisable       Exercisable
-------------------  -------------  ------------    ----------------  -------------  ------------------
<S>                       <C>           <C>               <C>              <C>                 <C>
  $ 11.10 to 16.63        992,412       $ 14.59           5.0              630,182             $ 14.49

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

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


                                      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



9. Leases

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

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

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


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

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

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


                                      F-37
<PAGE>

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



9. Leases, continued

   (b) Leases, continued


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

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


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

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


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

                                      F-38
<PAGE>

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

9. Leases, continued

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

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

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


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

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

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


                                      F-39
<PAGE>

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


10. Shareholders' Equity

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

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

11. Commitments and Contingent Liabilities

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

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

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

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




                                      F-40
<PAGE>

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


11. Commitments and Contingent Liabilities, Continued

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

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

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

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

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


12.      Related-Party Transactions

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



                                      F-41
<PAGE>

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

13. Discontinued Operations

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

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

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

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

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

<TABLE>

                           Employee               Lease
                         Termination           Termination         Other Location            Asset
                            Costs                 Costs             Closing Cost           Impairment          Total
                        ------------------  ------------------  ----------------------  -----------------   ------------
<S>                   <C>                              <C>                     <C>                <C>       <C>
Additions             $             8,478              74,701                  27,822             15,393    $   126,394
Utilization                        (3,178)             (2,300)                (24,088)           (15,393)       (44,959)
                        ------------------  ------------------  ----------------------  -----------------   ------------
June 26, 2002         $             5,300              72,401                   3,734                  -    $    81,435
                        ==================  ==================  ======================  =================   ============
</TABLE>


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



                                      F-42
<PAGE>

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


13.      Discontinued Operations, continued

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

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

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

14.      Restructuring and Other Non-recurring Charges

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

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

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

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

                                      F-43
<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

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

















                                      F-44
<PAGE>

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

15.      Quarterly Results of Operations (Unaudited)

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



<TABLE>

                                                                                    Quarters Ended
                                                          -----------------------------------------------------------------
                                                              Sept. 19           Jan. 9         April 3         June 26
                                                          -----------------------------------------------------------------
             2002                                            (12 Weeks)        (16 Weeks)      (12 Weeks)      (12 Weeks)
             ----                                         -----------------------------------------------------------------
<S>                                                       <C>                   <C>             <C>             <C>
Sales from continuing operations                          $     2,807,756       3,768,267       2,901,631       2,856,700
Gross profit on sales from continuing operations          $       751,360       1,053,068         797,383         816,035
Net earnings from continuing operations                   $        31,065          51,986          53,682          52,791
Loss on discontinued operations                           $        (8,654)         (9,887)         (7,086)        (74,721)
Extraordinary item, net of tax                            $             -               -          (2,310)              -
Net earnings (loss)                                       $        22,411          42,099          44,286         (21,930)
Basic earnings per share from continuing
  operations                                              $          0.22            0.37            0.38            0.37
Basic net earnings (loss) per share                       $          0.16            0.30            0.32           (0.16)
Diluted earnings per share from continuing
  operations                                              $          0.22            0.37            0.38            0.37
Diluted net earnings (loss) per share                     $          0.16            0.30            0.31           (0.16)
Net LIFO charge (credit)                                  $         1,845           2,460             923          (8,018)
Net LIFO charge (credit) per diluted share                $          0.01            0.02            0.01           (0.06)
Dividends per share                                       $         0.170           0.085           0.050           0.050
Market price range                                        $   26.13-19.63     19.78-10.50     17.36-11.91     20.26-15.71
</TABLE>


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


                                      F-45
<PAGE>


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


15.      Quarterly Results of Operations (Unaudited), continued

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


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

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



                                      F-46
<PAGE>



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

16.      Guarantor Subsidiaries

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


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

<TABLE>
52 Weeks ended June 26, 2002                                                         Guarantor
                                                                   Parent           Subsidiaries      Eliminations     Consolidated
                                                                   ------           ------------      ------------     ------------
<S>                                                             <C>                  <C>                        <C>      <C>
Net sales                                                       $ 5,674,157          6,660,196                  -        12,334,353
Cost of sales                                                     4,110,352          4,806,155                  -         8,916,507
                                                                -----------               ----                ---            ------
Gross profit                                                      1,563,805          1,854,041                  -         3,417,846
Other operating & administrative expenses                         1,313,115          1,738,725                  -         3,051,840
                                                                -----------               ----                ---            ------
Operating income                                                    250,690            115,316                  -           366,006
Equity in loss of consolidated subsidiaries                            (387)                 -                387                 -
Interest expense, net                                                57,839                  -                  -            57,839
                                                                -----------               ----                ---            ------
Earnings before income taxes                                        192,464            115,316                387           308,167
Income taxes                                                        103,288             15,356                  -           118,644
                                                                -----------               ----                ---            ------
Earnings from continuing operations                                  89,176             99,960                387           189,523
Net loss from discontinued operations                                     -           (100,347)                 -          (100,347)
Extraordinary item:  loss on early
 extinguishment of debt, net of taxes                                (2,310)                 -                  -            (2,310)
                                                                -----------               ----                ---            ------
Net earnings (loss)                                             $    86,866               (387)               387            86,866
                                                                ===========               ====                ===            ======
</TABLE>


<TABLE>

52 Weeks ended June 27, 2001                                                         Guarantor
                                                                   Parent           Subsidiaries      Eliminations     Consolidated
                                                                   ------           ------------      ------------     ------------
<S>                                                             <C>                  <C>                        <C>      <C>
Net sales                                                       $ 5,735,327          6,503,547                  -        12,238,874
Cost of sales                                                     4,217,260          4,724,783                  -         8,942,043
                                                                -----------               ----                ---            ------
Gross profit                                                      1,518,067          1,778,764                  -         3,296,831
Other operating & administrative expenses                         1,298,295          1,673,622                  -         2,971,917
Restructuring and other non-recurring charges                        80,410             66,835                  -           147,245
                                                                -----------               ----                ---            ------
Operating income                                                    139,362             38,307                  -           177,669
Equity in loss of consolidated subsidiaries                          (5,034)                 -              5,034                 -
Interest expense, net                                                52,845                  -                  -            52,845
                                                                -----------               ----                ---            ------
Earnings before income taxes                                         81,483             38,307              5,034           124,824
Income taxes                                                         36,172             11,864                  -            48,036
                                                                -----------               ----                ---            ------
Earnings from continuing operations                                  45,311             26,443              5,034            76,788
Net loss from discontinued operations                                     -            (31,477)                 -           (31,477)
                                                                -----------               ----                ---            ------
Net earnings (loss)                                             $    45,311             (5,034)             5,034            45,311
                                                                ===========             ======              =====            ======
</TABLE>



                                      F-47
<PAGE>

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




16.      Guarantor Subsidiaries, continued

<TABLE>
52 Weeks ended June 28, 2000                                                         Guarantor
                                                                   Parent           Subsidiaries      Eliminations     Consolidated
                                                                   ------           ------------      ------------     ------------
<S>                                                             <C>                  <C>                        <C>      <C>
Net sales                                                       $ 6,012,112          6,992,082                  -        13,004,194
Cost of sales                                                     4,426,602          5,023,861                  -         9,450,463
                                                                -----------               ----                ---            ------
Gross profit                                                      1,585,510          1,968,221                  -         3,553,731
Operating & administrative expenses                               1,525,112          1,862,686                  -         3,387,798
Restructuring and other non-recurring charges                       112,869            283,160                  -           396,029
                                                                -----------               ----                ---            ------
Operating (loss)                                                    (52,471)          (177,625)                 -          (230,096)
Equity in loss of consolidated subsidiaries                        (155,776)                 -            155,776                 -
Interest expense                                                     44,132              2,956                  -            47,088
                                                                -----------               ----                ---            ------
Loss before income taxes                                           (252,379)          (180,581)           155,776          (277,184)
Income taxes                                                        (23,484)           (40,320)                 -           (63,804)
                                                                -----------               ----                ---            ------
Loss from continuing operations                                    (228,895)          (140,261)           155,776          (213,380)
Net loss from discontinued operations                                     -            (15,515)                 -           (15,515)
                                                                -----------               ----                ---            ------
Net loss                                                        $  (228,895)          (155,776)           155,776          (228,895)
                                                                ===========           ========            =======          ========
</TABLE>


<TABLE>

                    WINN-DIXIE STORES, INC. AND SUBSIDIARIES
                     CONDENSED CONSOLIDATING BALANCE SHEETS
                             (Amounts in thousands)
June 26, 2002                                                               Guarantor
                                                           Parent          Subsidiaries       Eliminations           Consolidated
                                                           ------          ------------       ------------           ------------
<S>                                                 <C>                       <C>                       <C>             <C>
Merchandise inventories                             $     320,515             742,773                   -               1,063,288
Other current assets                                      387,696             187,322                   -                 575,018
                                                          -------             -------            --------                 -------
  Total current assets                                    708,211             930,095                   -               1,638,306
Property, plant and equipment, net                        375,029             591,723                   -                 966,752
Other non-current assets                                  213,434             119,086                   -                 332,520
Investments in and advances to/from subsidiaries          900,911                   -            (900,911)                      -
                                                          -------             -------            --------                 -------
  Total assets                                      $   2,197,585           1,640,904            (900,911)              2,937,578
                                                    =============           =========            ========               =========

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




                                      F-48
<PAGE>



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


16.      Guarantor Subsidiaries, continued



<TABLE>
June 27, 2001
                                                                                     Guarantor
                                                                    Parent         Subsidiaries      Eliminations      Consolidated
                                                                    ------         ------------      ------------      ------------
<S>                                                          <C>                        <C>                     <C>       <C>
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>



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

<TABLE>
Year ended June 26, 2002                                                             Guarantor
                                                                    Parent         Subsidiaries      Eliminations      Consolidated
                                                                    ------         ------------      ------------      ------------
<S>                                                          <C>                         <C>                    <C>         <C>
Net cash provided by operating activities                    $      343,918              33,031                 -           376,949
                                                             --------------              ------            ------           -------
  Purchases of property, plant and equipment, net                   (15,029)            (68,512)                -           (83,541)
  Decrease (increase) in other assets                                19,254             (13,326)          (34,314)          (28,386)
Increase in marketable securities                                   (18,333)                  -                 -           (18,333)
Proceeds from sale of facility                                            -              65,472                 -            65,472
                                                             --------------              ------            ------           -------
Net cash used in investing activities                               (14,108)            (16,366)          (34,314)          (64,788)
                                                             --------------              ------            ------           -------
  Dividends paid                                                    (49,899)                  -                 -           (49,899)
  Other                                                            (162,066)            (27,725)           34,314          (155,477)
                                                             --------------              ------            ------           -------
Net cash provided by financing activities                          (211,965)            (27,725)           34,314          (205,376)
                                                             --------------              ------            ------           -------

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


                                      F-49
<PAGE>

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



16.      Guarantor Subsidiaries, continued

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

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





<TABLE>
Year ended June 28, 2000                                                             Guarantor
                                                                    Parent         Subsidiaries     Eliminations       Consolidated
                                                                --------------- ----------------- ----------------- ----------------
<S>                                                           <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
                                                                =============== ================= ================= ================
</TABLE>

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

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


                                     F-50
<PAGE>


                          INDEPENDENT AUDITORS' REPORT
                         ON FINANCIAL STATEMENT SCHEDULE



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


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

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




                                                               KPMG LLP



Jacksonville, Florida
August 7, 2002




                                      S-1
<PAGE>

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


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





<TABLE>
                                                             Balance       Additions        Deductions     Balance
                                                            beginning     charged to           from       at end of
                       Description                           of year        income           reserves        year
----------------------------------------------------------  -------------  -------------  -------------   -----------
<S>                                                       <C>                    <C>            <C>            <C>
Year ended June 26, 2002:
Reserves deducted from assets to which they apply:
Allowance for doubtful receivables                        $        3,935         16,957         18,113         2,779
                                                            =============  =============  =============   ===========

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


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




                                      S-2