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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------

FORM 10-Q
(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended January 8, 2003

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)

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

Unchanged
(Former name, former address and former fiscal year,
if changed since last report)
---------------------

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 __

As of January 8, 2003, there were 140,820,038 shares outstanding of the
registrant's common stock, $1 par value.

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WINN-DIXIE STORES, INC. AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS

Part I: Financial Information

Item 1. Financial Statements Page

Condensed Consolidated Statements of Operations 1 - 2
(Unaudited), For the 16 and 28 Weeks Ended
January 8, 2003 and January 9, 2002

Condensed Consolidated Balance Sheets 3
January 8, 2003 (Unaudited) and June 26, 2002 (Note A)

Condensed Consolidated Statements of Cash Flows 4
(Unaudited), For the 28 Weeks Ended
January 8, 2003 and January 9, 2002

Notes to Condensed Consolidated Financial Statements 5 - 16
(Unaudited)

Item 2. Management's Discussion and Analysis of Financial 17 - 23
Condition and Results of Operations

Item 3. Quantitative and Qualitative Disclosures About Market Risk 24 - 26


Item 4. Controls and Procedures 27

Part II: Other Information

Item 1. Legal Proceedings 28

Item 2. Changes in Securities and Use of Proceeds 28

Item 3. Defaults Upon Senior Securities 28

Item 4. Submission of Matters to a Vote of Security Holders 28

Item 5. Other Information 28

Item 6. Exhibits and Reports on Form 8-K 28

Signatures 29

Certifications 30 - 31




Part I: Financial Information

Item 1. Financial Statements

WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Amounts in thousands except per share data



For the 16 Weeks Ended

MOST RECENT QUARTER January 8, 2003 January 9, 2002
--------------- ---------------

Net sales $ 3,786,485 3,768,267
Cost of sales, including warehouse and delivery expenses 2,692,054 2,715,199
----------- ---------
Gross profit on sales 1,094,431 1,053,068
Other operating and administrative expenses 997,264 947,962
----------- ---------
Operating income 97,167 105,106
Bank agreement termination income (Note F) 52,740 -
----------- ---------
149,907 105,106
Interest expense, net 9,134 20,575
----------- ---------
Earnings from continuing operations before income taxes 140,773 84,531
Income taxes (Note K) 49,410 32,545
----------- ---------
Net earnings from continuing operations 91,363 51,986
----------- ---------
Discontinued operations (Note P)
Loss from discontinued operations - (16,077)
Income tax benefit - (6,190)
----------- ---------
Net loss from discontinued operations - (9,887)
----------- ---------
Net earnings $ 91,363 42,099
=========== =========

Basic earnings per share:
Earnings from continuing operations $ 0.65 0.37
Loss from discontinued operations - (0.07)
----------- ---------
Basic earnings per share $ 0.65 0.30
=========== =========
Diluted earnings per share:
Earnings from continuing operations $ 0.65 0.37
Loss from discontinued operations - (0.07)
----------- ---------
Diluted earnings per share $ 0.65 0.30
=========== =========

Dividends per share $ 0.050 0.085
=========== =========
Weighted average common shares outstanding - basic 140,390 140,287
=========== =========
Weighted average common shares outstanding - diluted 140,822 140,579
=========== =========


See accompanying notes to condensed consolidated financial statements.





WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Amounts in thousands except per share data



For the 28 Weeks Ended
FISCAL YEAR-TO-DATE January 8, 2003 January 9, 2002
--------------- ---------------

Net sales $6,619,250 6,576,023
Cost of sales, including warehouse and delivery expenses 4,725,258 4,771,595
---------- ----------
Gross profit on sales 1,893,992 1,804,428
Other operating and administrative expenses 1,727,097 1,633,934
---------- ----------
Operating income 166,895 170,494
Bank agreement termination income (Note F) 52,740 --
---------- ----------
219,635 170,494
Interest expense, net 24,055 35,453
---------- ----------
Earnings from continuing operations before income taxes 195,580 135,041
Income taxes (Note K) 69,415 51,990
---------- ----------
Net earnings from continuing operations 126,165 83,051
---------- ----------
Discontinued operations (Note P)
Loss from discontinued operations -- (30,147)
Income tax benefit -- (11,606)
---------- ----------
Net loss from discontinued operations -- (18,541)
---------- ----------
Net earnings $ 126,165 64,510
========== ==========
Basic earnings per share:
Earnings from continuing operations $ 0.90 0.59
Loss from discontinued operations -- (0.13)
---------- ----------
Basic earnings per share $ 0.90 0.46
========== ==========

Diluted earnings per share:
Earnings from continuing operations $ 0.90 0.59
Loss from discontinued operations -- (0.13)
---------- ----------
Diluted earnings per share $ 0.90 0.46
========== ==========

Dividends per share $ 0.100 0.255
========== ==========
Weighted average common shares outstanding - basic 140,376 140,284
========== ==========
Weighted average common shares outstanding - diluted 140,816 140,747
========== ==========


See accompanying notes to condensed consolidated financial statements.


2



WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
Dollar amounts in thousands except par value




January 8, 2003 June 26, 2002
--------------- -------------
ASSETS (Unaudited) (Note A)
- ------
Current Assets:

Cash and cash equivalents $ 76,891 227,846
Marketable securities 19,002 18,606
Trade and other receivables 136,891 116,154
Merchandise inventories less LIFO reserve of
$218,873 ($215,873 as of June 26, 2002) 1,130,611 1,063,288
Prepaid expenses and other assets 43,547 53,934
Deferred income taxes 154,828 158,478
----------- -----------
Total current assets 1,561,770 1,638,306
----------- -----------
Cash surrender value of life insurance, net 7,542 16,197
Property, plant and equipment, net 968,570 966,752
Goodwill 87,808 87,808
Non-current deferred income taxes 103,689 113,291
Other assets, net 128,645 115,224
----------- -----------
Total assets $ 2,858,024 2,937,578
=========== ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Current portion of long-term debt $ 1,696 2,739
Current obligations under capital leases 3,454 3,471
Accounts payable 512,247 509,704
Reserve for insurance claims and self-insurance 82,370 98,450
Accrued wages and salaries 105,204 111,556
Accrued rent 119,558 144,597
Accrued expenses 130,051 174,805
Income taxes payable 66,347 64,582
----------- -----------
Total current liabilities 1,020,927 1,109,904
----------- -----------
Reserve for insurance claims and self-insurance 160,346 160,226
Long-term debt 447,448 540,612
Obligations under capital leases 22,933 24,787
Defined benefit plan 53,784 52,887
Lease liability on closed stores, net of current portion 176,281 180,785
Other liabilities 46,416 55,993
----------- -----------
Total liabilities 1,928,135 2,125,194
----------- -----------
Commitments and contingent liabilities (Notes J, K, M, P, & Q)
Shareholders' Equity:
Common stock $1 par value Authorized 400,000,000 shares
issued and outstanding 140,820,038 as of January 8, 2003
and 140,592,009 as of June 26, 2002 140,820 140,592
Retained earnings 792,087 676,322
Accumulated other comprehensive loss (3,018) (4,530)
----------- -----------
Total shareholders' equity 929,889 812,384
----------- -----------
Total liabilities and shareholders' equity $ 2,858,024 2,937,578
=========== ===========



See accompanying notes to condensed consolidated financial statements.

3




WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Dollar amounts in thousands



For the 28 Weeks Ended
January 8, 2003 January 9, 2002
--------------- ---------------
Cash flows from operating activities:

Net earnings $ 126,165 64,510
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 88,762 93,742
Deferred income taxes 12,151 9,399
Defined benefit plan 897 2,119
Reserve for insurance claims and self-insurance (15,960) 22
Stock compensation plans 2,405 2,520
Change in operating assets and liabilities, net of effects
from acquisitions:
Trade and other receivables (20,735) (22,180)
Merchandise inventories (67,323) 6,663
Prepaid expenses and other assets 14,073 (4,925)
Accounts payable 4,481 (82,157)
Income taxes payable 31,925 30,607
Other current accrued expenses (58,315) (2,900)
--------- ---------
Subtotal 118,526 97,420
Income taxes paid on company owned life insurance (52,002) --
--------- ---------
Net cash provided by operating activities 66,524 97,420
--------- ---------
Cash flows from investing activities:
Purchases of property, plant and equipment, net (92,186) (33,853)
Increase in investments and other assets (18,439) (7,344)
Proceeds from sale of facilities 10,361 --
Increase in marketable securities -- (13,333)
--------- ---------
Net cash used in investing activities (100,264) (54,530)
--------- ---------
Cash flows from financing activities:
Principal payments on long-term debt (103,217) (3,231)
Principal payments on capital lease obligations (1,871) (1,761)
Purchase of common stock (40) (37)
Proceeds of sales under associates' stock purchase plan -- 1,641
Dividends paid (14,068) (35,841)
Other 1,981 660
--------- ---------
Net cash used in financing activities (117,215) (38,569)
--------- ---------
(Decrease) increase in cash and cash equivalents (150,955) 4,321
Cash and cash equivalents at beginning of year 227,846 121,061
--------- ---------
Cash and cash equivalents at end of period $ 76,891 125,382
========= =========
Supplemental cash flow information:
Interest paid $ 22,622 34,900
Interest and dividends received $ 1,581 793
Income taxes paid $ 77,343 818


See accompanying notes to condensed consolidated financial statements.

4



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(A) Basis of Presentation: The accompanying unaudited Condensed Consolidated
Financial Statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the quarter and year-to-date
ended January 8, 2003, are not necessarily indicative of the results that
may be expected for the year ending June 25, 2003.

The balance sheet at June 26, 2002, has been derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.

For further information, refer to the consolidated financial statements and
footnotes thereto included in the Winn-Dixie Stores, Inc. and subsidiaries
annual report on Form 10-K for the fiscal year ended June 26, 2002. The
Condensed Consolidated Financial Statements include the accounts of
Winn-Dixie Stores, Inc. and its subsidiaries, which operate as a major food
retailer in twelve states and the Bahama Islands. Reference to the
"Company" includes Winn-Dixie Stores, Inc. and all of its subsidiaries,
collectively.

(B) 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.

(C) 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.

(D) 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.

5



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(E) 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 fee or discounted products or services to be delivered in the
future. Accordingly, the Company had no liability established for points
redemption as of January 8, 2003.

(F) Bank Agreement Termination: During the second quarter of fiscal year 2003,
Canadian Imperial Bank of Commerce ("CIBC") terminated its in-store bank
agreement with the Company and paid a termination fee of $60.0 million. The
Company will be responsible for the costs associated with the
de-installation of the in-store Marketplace Bank locations and other
related costs, which are estimated to be approximately $7.3 million. As a
result, the Company recorded other income in the amount of $52.7 million
($34.0 million net of tax, or $0.24 per diluted share) in the second
quarter of fiscal year 2003. Refer to Management's Discussion and Analysis
of Financial Condition and Results of Operations for additional
information.

(G) 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.

(H) LIFO: The Company's current estimates of expected year-end inventory levels
and costs show the change in the LIFO reserve to be relatively flat for the
year. Accordingly, no charge to earnings was made for the LIFO adjustment
in the current quarter. A pre-tax LIFO charge of $4.0 million was reflected
in the results for the same quarter of fiscal year 2002. The year-to-date
LIFO charge is $3.0 million in fiscal year 2003 and $7.0 million for fiscal
year 2002. If the FIFO method had been used, the second quarter of fiscal
year 2002 net earnings would have been $54.4 million, or $0.39 per diluted
share, compared to the current quarter net earnings from continuing
operations of $91.4 million, or $0.65 per diluted share. If the FIFO method
had been used for the year, net earnings would have been $128.1 million, or
$0.91 per diluted share, as compared with net earnings from continuing
operations of $87.4 million, or $0.62 per diluted share, in the previous
year.

6



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(H) LIFO, continued: An actual valuation of inventory under the LIFO method can
be made only at the end of each fiscal year based on the inventory levels
and costs at that time. Accordingly, interim LIFO calculations must be
based on management's estimates of expected year-end inventory levels and
costs. Because these are subject to forces beyond management's control,
interim results are subject to the final year-end LIFO inventory
valuations.

(I) Comprehensive Income: Comprehensive income differs from net income for the
quarter and year-to-date due to changes in the fair value of the Company's
interest rate swaps related to the cash flow hedge and marketable
securities. Comprehensive income from continuing operations for the quarter
ended January 8, 2003, was $91.9 million, or $0.65 per diluted share,
compared to $52.2 million, or $0.37 per diluted share, for the
corresponding quarter of the previous year. For the year, comprehensive
income from continuing operations was $127.7 million, or $0.91 per diluted
share, at January 8, 2003, compared to $79.3 million, or $0.56 per diluted
share, in the previous year.

(J) Debt:



January 8, 2003 June 26, 2002
--------------- -------------

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
and 10.0% of principal paid annually each October 1,216 1,434
Six-year term loan due 2007; interest payable
at LIBOR plus 2.75% and .25% of principal
paid quarterly 143,000 246,000
8.875% senior notes due 2008; interest payable
semiannually on April 1 and October 1 304,928 295,917
-------- -------
Total 449,144 543,351
Less current portion 1,696 2,739
-------- -------
Long-term portion $447,448 540,612
======== =======


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 January 8,
2003. During the year, the Company prepaid $100.0 million on the six-year
term loan.

7



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(J) Debt, continued: In accordance with Statement of Financial Account
Standards No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13, and Technical Corrections" ("SFAS
145"), the unamortized debt issue cost of $2.6 million ($1.6 million, net
of tax) association with the early extinguishment of the debt is recorded
in continuing operations as interest expense. As of January 8, 2003 the
Company had $74.1 million in outstanding letters of credit used to support
inventory purchases and insurance obligations.

The Company has a cash flow hedge on the six-year term loan due 2007. See
Quantitative and Qualitative Disclosures About Market Risk for additional
information.

The Company entered into an interest rate swap agreement, designated as a
fair value hedge as defined under SFAS 133, "Accounting for Derivative
Instruments and Hedge Activities," with a notional amount totaling $300.0
million and a variable interest rate, which is fixed semi-annually on the
first of April and October based on six-month LIBOR. This agreement was
entered to exchange the fixed interest rate on the Company's 8.875% senior
notes for a variable interest rate. In accordance with SFAS 133, changes in
the fair value of the interest rate swap agreements offset changes in the
fair value of the fixed rate debt due to changes in the market interest
rate. Accordingly, the long-term debt on the Condensed Consolidated Balance
Sheets as of January 8, 2003, increased by $9.0 million, which reflected an
increase in the fair value of the debt. The corresponding decrease in the
hedge liability was recorded in other liabilities. The agreement is deemed
to be a perfectly effective fair value hedge and therefore qualifies for
the short-cut method of accounting under SFAS 133. As a result, no
ineffectiveness is expected to be recognized in the Company's earnings
associated with the interest rate swap agreement on the 8.875% senior
notes.

(K) Income Taxes: The provision for income taxes reflects management's best
estimate of the effective tax rate expected for the fiscal year. The
effective tax rate on earnings from continuing operations for fiscal years
2003 and 2002 is 35.5% and 38.5%, respectively. The current year effective
tax rate decreased due to contributions made to the State of Florida for
the Nonprofit Scholarship Funding Organizations Program for which the
Company will receive a tax credit for 100% of the contribution amount. The
Company contributed $2.5 million in the second quarter of fiscal year 2003
and expects to contribute the maximum contribution of $5.0 million within
the current fiscal year. In addition, the current year effective tax rate
was affected by the expected utilization of previously unrecognized tax
benefits arising from state net operating loss carry forwards.

8



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(K) Income Taxes, continued: The Company has a reserve established for taxes
and interest related to the company-owned life insurance (COLI) tax
liability. In July 2002, the Company paid $52.0 million to the Internal
Revenue Service from the reserve. Additional amounts, if any, will be paid
upon receiving a final assessment from the Internal Revenue Service and, in
the opinion of management, will not have any additional material adverse
impact on the Company's financial condition or results of operations.

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

(M) 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 sub-lease income. The following amounts are
included in accrued rent and lease liability on closed stores, as of
January 8, 2003:

Lease Liability on
Closed Stores
------------------
Balance at June 26, 2002 $ 264,386
Additions/adjustments 22,263
Utilization (48,594)
----------
Balance at January 8, 2003 $ 238,055
==========

The additions/adjustments amount includes the effect on earnings from the
accretion of the present value of the expected future rental payments,
additional leases added to the accrual and adjustments due to the
settlement of certain existing leases. The utilization amount includes
payments made for rent and related costs and the buyout of seventeen
leases. The lease liability on closed stores includes $115.8 million
related to restructure and $56.7 million related to the discontinued
operations. The additions/adjustments and the utilization for restructure
were $0.6 million and $21.9 million, respectively for the quarter. The
current portion of the accrued balance at January 8, 2003 totals $61.8
million and is included in accrued rent.

(N) Goodwill and Other Intangible Assets: 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 Statement of Financial Accounting Standards No. 142,
"Goodwill and Other Intangible Assets" ("SFAS 142"), the Company determined
it has one reporting unit.

The Company has performed an impairment review during the current fiscal
year, and concluded that there were no necessary adjustments.

9



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(N) Goodwill and Intangible Assets, continued: Other intangible assets consist
of a non-compete fee and the cost of purchasing pharmacy prescription
files. 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 Condensed
Consolidated Balance Sheets, as of January 8, 2003 is as follows:

Other
Intangible
Assets
---------
Other intangible assets $ 7,461
Less: Accumulated amortization 3,199
---------
Other intangible assets, net $ 4,262
=========

Amortization expense for other intangible assets for the quarters ended
January 8, 2003, and January 9, 2002, was $368 and $372, respectively. For
the year, amortization expense was $652 and $642 for January 8, 2003 and
January 9, 2002, respectively. The estimated remaining amortization expense
for each of the fiscal years subsequent to June 26, 2002 is as follows:

Amortization
Expense
------------
Remaining for year ended June 25, 2003 $ 554
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
------------
$ 4,262
============

10



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(O) Guarantor Subsidiaries: During the second quarter of fiscal year 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)

16 Weeks ended January 8, 2003

Guarantor
Parent Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------

Net sales $1,704,967 2,081,518 -- 3,786,485
Cost of sales 1,219,589 1,472,465 -- 2,692,054
---------- --------- ---------- ---------
Gross profit on sales 485,378 609,053 -- 1,094,431
Other operating and administrative expenses 429,108 568,156 -- 997,264
---------- --------- ---------- ---------
Operating income 56,270 40,897 -- 97,167
Equity in earnings of consolidated subsidiaries 26,574 -- (26,574) --
Bank agreement termination income 52,740 -- -- 52,740
Interest expense, net 9,134 -- -- 9,134
---------- --------- ---------- ---------
Earnings before income taxes 126,450 40,897 (26,574) 140,773
Income taxes 35,087 14,323 -- 49,410
---------- --------- ---------- ---------
Net earnings $ 91,363 26,574 (26,574) 91,363
========== ========= ========== =========




28 Weeks ended January 8, 2003

Guarantor
Parent Subsidiaries Eliminations Consolidated
------ ------------ ------------ ------------

Net sales $2,981,503 3,637,747 -- 6,619,250
Cost of sales 2,135,620 2,589,638 -- 4,725,258
---------- --------- ---------- ---------
Gross profit on sales 845,883 1,048,109 -- 1,893,992
Other operating and administrative expenses 738,953 988,144 -- 1,727,097
---------- --------- ---------- ---------
Operating income 106,930 59,965 -- 166,895
Equity in earnings of consolidated subsidiaries 38,682 -- (38,682) --
Bank agreement termination income 52,740 -- -- 52,740
Interest expense, net 24,055 -- -- 24,055
---------- --------- ---------- ---------
Earnings before income taxes 174,297 59,965 (38,682) 195,580
Income taxes 48,132 21,283 -- 69,415
---------- --------- ---------- ---------
Net earnings $ 126,165 38,682 (38,682) 126,165
========== ========= ========== =========


11



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(O) Guarantor Subsidiaries, continued:

WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Amounts in thousands)



16 Weeks ended January 9, 2002

Guarantor
Parent Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------

Net sales $1,715,191 2,053,076 -- 3,768,267
Cost of sales 1,244,761 1,470,438 -- 2,715,199
---------- --------- --------- ---------
Gross profit on sales 470,430 582,638 -- 1,053,068
Other operating and administrative expenses 413,481 534,481 -- 947,962
---------- --------- --------- ---------
Operating income 56,949 48,157 -- 105,106
Equity in earnings of consolidated subsidiaries 19,729 -- (19,729) --
Interest expense, net 20,575 -- -- 20,575
---------- --------- --------- ---------
Earnings from continuing operations before income taxes 56,103 48,157 (19,729) 84,531
Income taxes 14,004 18,541 -- 32,545
---------- --------- --------- ---------
Net earnings from continuing operations 42,099 29,616 (19,729) 51,986
Net loss from discontinued operations -- (9,887) -- (9,887)
---------- --------- --------- ---------
Net earnings $ 42,099 19,729 (19,729) 42,099
========== ========= ========= =========




28 Weeks ended January 9, 2002

Guarantor
Parent Subsidiaries Eliminations Consolidated
--------- ------------ ------------ ------------

Net sales $2,971,416 3,604,607 -- 6,576,023
Cost of sales 2,168,963 2,602,632 -- 4,771,595
---------- --------- --------- ---------
Gross profit on sales 802,453 1,001,975 -- 1,804,428
Other operating and administrative expenses 717,635 916,299 -- 1,633,934
---------- --------- --------- ---------
Operating income 84,818 85,676 -- 170,494
Equity in earnings of consolidated subsidiaries 34,150 -- (34,150) --
Interest expense, net 35,453 -- -- 35,453
---------- --------- --------- ---------
Earnings from continuing operations before income taxes 83,515 85,676 (34,150) 135,041
Income taxes 19,005 32,985 -- 51,990
---------- --------- --------- ---------
Net earnings from continuing operations 64,510 52,691 (34,150) 83,051
Net loss from discontinued operations -- (18,541) -- (18,541)
---------- --------- --------- ---------
Net earnings $ 64,510 34,150 (34,150) 64,510
========== ========= ========= =========


12



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted


(O) Guarantor Subsidiaries, continued:

WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS

(Amounts in thousands)

January 8, 2003



Guarantor
Parent Subsidiaries Eliminations Consolidated
---------- ------------ ------------ ------------

Merchandise inventories $ 334,238 796,373 -- 1,130,611
Other current assets 265,322 165,837 -- 431,159
---------- --------- ----------- ---------
Total current assets 599,560 962,210 -- 1,561,770
Property, plant and equipment, net 400,358 568,212 -- 968,570
Other non-current assets 209,525 118,159 -- 327,684
Investments in and advances to/from subsidiaries 825,226 -- (825,226) --
---------- --------- ----------- ---------
Total assets $2,034,669 1,648,581 (825,226) 2,858,024
========== ========= =========== =========
Accounts payable $ 111,458 400,789 -- 512,247
Other current liabilities 311,903 196,777 -- 508,680
---------- --------- ----------- ---------
Total current liabilities 423,361 597,566 -- 1,020,927
Long-term debt 447,448 -- -- 447,448
Other non-current liabilities 233,971 225,789 -- 459,760
Common stock of $1 par value 140,820 6,237 (6,237) 140,820
Retained earnings and other shareholders' equity 789,069 818,989 (818,989) 789,069
---------- --------- ----------- ---------
Total liabilities and shareholders' equity $2,034,669 1,648,581 (825,226) 2,858,024
========== ========= =========== =========


June 26, 2002



Guarantor
Parent Subsidiaries Eliminations Consolidated
---------- ------------ ------------ ------------

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 and other shareholders' equity 671,792 894,673 (894,673) 671,792
---------- --------- ----------- ---------
Total liabilities and stockholders' equity $2,197,585 1,640,904 (900,911) 2,937,578
========== ========= =========== =========


13



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(O) Guarantor Subsidiaries, continued:

WINN-DIXIE STORES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Amounts in thousands)

28 Weeks ended January 8, 2003



Guarantor
Parent Subsidiaries Eliminations Consolidated
---------- ------------ ------------ ------------

Net cash (used in) provided by operating activities $ (89,807) 156,331 -- 66,524
--------- --------- --------- ---------
Purchases of property, plant and equipment, net (62,087) (30,099) -- (92,186)
Decrease (increase) in other assets 68,473 (866) (75,685) (8,078)
--------- --------- --------- ---------
Net cash provided by (used in) investing activities 6,386 (30,965) (75,685) (100,264)
--------- --------- --------- ---------
Principal payments on long-term debt (103,217) -- -- (103,217)
Dividends paid (14,068) -- -- (14,068)
Other 41,098 (116,713) 75,685 70
--------- --------- --------- ---------
Net cash used in financing activities (76,187) (116,713) 75,685 (117,215)
--------- --------- --------- ---------
(Decrease) increase in cash and cash equivalents (159,608) 8,653 -- (150,955)
Cash and cash equivalents at the beginning of the year 228,981 (1,135) -- 227,846
--------- --------- --------- ---------
Cash and cash equivalents at end of the quarter $ 69,373 7,518 -- 76,891
========= ========= ========= =========


28 Weeks ended January 9, 2002



Guarantor
Parent Subsidiaries Eliminations Consolidated
---------- ------------ ------------ ------------

Net cash (used in) provided by operating activities $(139,320) 236,740 -- 97,420
--------- --------- --------- ---------
Purchases of property, plant and equipment, net (9,628) (24,225) -- (33,853)
Decrease (increase) in other assets 182,278 (384,027) (194,405) (7,344)
Increase in marketable securities (13,333) -- -- (13,333)
--------- --------- --------- ---------
Net cash provided by (used in) investing activities 159,317 (408,252) (194,405) (54,530)
--------- --------- --------- ---------
Dividends paid (35,841) -- -- (35,841)
Other 19,910 171,767 194,405 (2,728)
--------- --------- --------- ---------
Net cash (used in) provided by financing activities (15,931) 171,767 194,405 (38,569)
--------- --------- --------- ---------
Increase in cash and cash equivalents 4,066 255 -- 4,321
Cash and cash equivalents at the beginning of the year 111,136 9,925 -- 121,061
--------- --------- --------- ---------
Cash and cash equivalents at end of the quarter $ 115,202 10,180 -- 125,382
========= ========= ========= =========


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.

14



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

(P) Discontinued Operations: On May 6, 2002, the Company announced a formal
plan to exit the Texas and Oklahoma operations, which consisted of 71 store
locations, a dairy plant and a distribution center in Texas and 5 store
locations in Oklahoma. In addition, seven leases were in effect on stores
that were previously closed. The Company decided to discontinue these
operations as a result of continued operational losses and reductions in
market share. In accordance with Statement of Financial Accounting
Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("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.

There was no revenue from discontinued operations for the quarter ended
January 8, 2003, compared to gross revenue of $194.9 million for the
quarter ended January 9, 2002.

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

Employee
Termination and Lease
Other Location Termination
Closing Costs Costs Total
------------- ----- -----
Balance at June 26, 2002 $ 9,034 72,401 81,435
Utilization (9,034) (15,680) (24,714)
------- ------ ------
Balance at January 8, 2003 $ -- 56,721 56,721
======= ====== ======

The Company has $4.6 million in held for sale assets relating to the
exiting of the Texas and Oklahoma operations. During the quarter, the
Company sold the distribution center in Texas for $9.6 million. The held
for sale assets are reported in the prepaid expenses and other assets
section of the Condensed Consolidated Balance Sheet. The held for sale
assets consist mainly of land, land improvements, building, leasehold
improvements and store and office equipment.

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

15



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Dollar amounts in thousands except per share data, unless otherwise noted

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

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

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

(R) Accounting Pronouncements: 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"), became effective
for the Company in July 2002. The adoption of SFAS 145 requires that losses
on early extinguishment of debt be included in continuing operations rather
than as an extraordinary item. See Note J - Debt.

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. This provision will be
effective for the Company for exit or disposal activities that are
initiated after December 31, 2002.

Statement of Financial Accounting Standards No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure, an Amendment to FASB
Statement No. 123" ("SFAS 148"), provides alternative methods of transition
for a voluntary change in fair value based method of accounting for
stock-based compensation and requires prominent disclosures in both annual
and interim financial statements. Since the Company already follows
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," SFAS 148 will have no impact on the Company's
financial position or results of operations.

(S) Subsequent Event: On January 29, 2003, the Company prepaid the remaining
$143.0 million outstanding on the six-year term loan and unwound the
corresponding interest rate swap due to mature on March 29, 2004.

16



Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations

This analysis should be read in conjunction with the Condensed Consolidated
Financial Statements.

Results of Operations

Continuing Operations. Sales for the 16 weeks ended January 8, 2003 were $3.8
billion, an increase of $18.2 million, or 0.5%, compared with the same quarter
last year. For the 28 weeks ended January 8, 2003, sales were $6.6 billion, an
increase of $43.2 million, or 0.7%, compared with the prior year. Identical
store sales, which include the sales from enlarged stores but exclude the sales
from stores that opened or closed during the period, increased 1.3% for the
quarter and 1.6% for the year. Comparable store sales, which include the sales
from replacement stores, increased 1.3% for the quarter and 1.6% for the year.
The increase in sales was primarily due to the Save Rite Grocery Warehouse
concept and the Company's marketing efforts during the year, including the "real
deal" branding initiative and the Customer Reward Card program.

The Company's Customer Reward Card program allows the customer to receive
certain ongoing benefits, such as merchandise discounts, automatic entry into
various sweepstakes, 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 is part of a major
initiative to focus on superior customer relationship marketing that reinforces
the Company's "real deal" branding initiative. The Customer Reward Card was
introduced to the Company's North Carolina, South Carolina, Virginia, Kentucky,
and Tennessee markets on October 30, 2002. The Customer Reward Card is currently
in use in all of the Company's stores, except for Save Rite and Bahamas
locations.

For the 28 weeks ended January 8, 2003, the Company opened six new stores and
closed four existing stores. A total of 1,075 locations were in operation on
January 8, 2003, compared to 1,150 on January 9, 2002. During the fourth quarter
of fiscal year 2002, the Company closed 76 stores related to discontinued
operations. As of January 8, 2003, retail space totaled 47.6 million square feet
compared to 51.0 million square feet in the prior year. The Company has seven
new stores under construction.

Gross profit increased $41.4 million for the quarter and $89.6 million for the
year. As a percentage of sales, gross profit for the current quarter and the
corresponding quarter of fiscal year 2002 were 28.9% and 27.9%, respectively.
For the year, gross profit, as a percent of sales, was 28.6% for the current
fiscal year compared to 27.4% for the previous fiscal year. The increase in
gross profit dollars is primarily due to lower cost of products through
improvements in centralized procurement and improved sales as a result of the
Save Rite conversions and the Company's marketing initiatives.

17



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

Results of Operations, continued:

Other operating and administrative expenses increased $49.3 million for the
current quarter as compared to the corresponding quarter in fiscal year 2002.
For the year, operating and administrative expenses increased $93.2 million. As
a percentage of sales, other operating and administrative expenses for the
current quarter and the corresponding quarter of the previous year were 26.3%
and 25.1%, respectively. For the year, operating and administrative expenses as
a percent of sales were 26.1% compared to 24.8% for the previous fiscal year.

The increase in other operating and administrative expenses for the current
quarter was due primarily to an increase in professional fees and other related
costs associated with the implementation of various information technology
initiatives, an increase in the accrual for closed store leases, the startup of
the Customer Reward Card program in North and South Carolina, Virginia,
Kentucky, and Tennessee and an increase in the accruals for profit sharing
contributions. In addition to the quarterly increase, the yearly increase was
also impacted by an increase in advertising and retail operating expenses in
connection with the startup of the Customer Reward Card in Alabama, Louisiana
and Mississippi in July 2002. As noted below, the loss of sub-lease income
increased other operating and administrative expense by $2.5 million for the
current quarter and fiscal year.

Rent expense for the quarter on operating leases was $104.7 million, as compared
to $103.9 million in the previous year.

During the second quarter of fiscal 2003, bank agreement termination income
totaled $52.7 million ($34.0 million net of tax, or $0.24 per diluted share).
The Company was paid a $60.0 million termination fee from Canadian Imperial Bank
of Commerce ("CIBC") for terminating its in-store bank agreement. The Company
will be responsible for the costs associated with the de-installation of the
in-store Marketplace Bank locations and other related costs, which are estimated
to be approximately $7.3 million. Sub-lease income, which is a component of
other operating and administrative expenses, for the current quarter decreased
by $2.5 million ($1.6 million net of tax, or $0.01 per diluted share) as
compared to the corresponding quarter of fiscal year 2002 due to the termination
of the bank agreement. The net impact on pretax profit for the quarter was an
increase of $50.2 million ($32.4 million net of tax, or $0.23 per diluted
share). Sub-lease income for fiscal year 2003 will be reduced by a total of $8.4
million ($5.4 million net of tax, or $0.04 per diluted share). The net impact on
pretax profit for fiscal year 2003 is expected to be an increase of $44.3
million ($28.6 million net of tax, or $0.20 per diluted share).

Interest expense totaled $9.1 million for the current quarter and $20.6 million
for the corresponding quarter of the previous year. For the current year,
interest expense was $24.1 million compared to $35.5 million in the previous
fiscal year. Interest expense is primarily interest on long-term and short-term
debt and the interest on capital leases. The current year interest expense
includes $2.6 million of unamortized debt issue cost and a $3.3 million payment
to unwind the swap associated with the early extinguishment of debt.

18



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

Results of Operations, continued:

Earnings from continuing operations before income taxes were $140.8 million for
the current quarter compared to $84.5 million in the corresponding quarter of
fiscal year 2002. For the year, earnings from continuing operations before
income taxes were $195.6 million compared to $135.0 million in the previous
fiscal year. The increase in earnings from continuing operations was primarily
due to the bank agreement termination income of $52.7 million.

The effective tax rates on earnings from continuing operations for fiscal years
2003 and 2002 are 35.5% and 38.5%, respectively. The decline in the current year
effective tax rate is primarily due to the expected utilization of previously
unrecognized tax benefits arising from state net operating loss carry forwards
and the tax credit benefit from scholarship contributions (See Note K - Income
Taxes).

Net earnings from continuing operations for the current quarter amounted to
$91.4 million, or $0.65 per diluted share as compared to $52.0 million, or $0.37
per diluted share, for the corresponding quarter of the previous year. For the
current year, net earnings from continuing operations were $126.2 million, or
$0.90 per diluted share, compared to $83.1 million, or $0.59 per diluted share,
in the previous fiscal year.

For the current year, the LIFO charge reduced net earnings from continuing
operations by $1.9 million, or $0.01 per diluted share, compared to $4.3
million, or $0.03 per diluted share, for the previous year. The LIFO adjustment
charge reduced net earnings from continuing operations by $2.5 million, or $0.02
per diluted share, in the second quarter of fiscal year 2002. No adjustment was
made to the LIFO reserve in the second quarter of fiscal year 2003. (See Note H
- - LIFO).

Discontinued Operations. During the fourth quarter of fiscal year 2002, the
Company exited its Texas and Oklahoma operations, which consisted of 76 stores,
a distribution center and a dairy plant. Net loss from discontinued operations
was $9.9 million, or $0.07 per diluted share, for the quarter ended January 9,
2002. (See Note P - Discontinued Operations).

Liquidity and Capital Resources

Cash and marketable securities amounted to $95.9 million at January 8, 2003
compared to $246.5 million at June 26, 2002. Working capital amounted to $540.8
million at January 8, 2003, compared to $528.4 million at June 26, 2002. Cash
decreased due to a $100.0 million prepayment on the six-year term loan, a
payment of $52.0 million to the Internal Revenue Service, a $20.0 million
contribution to the profit sharing program and an increase of capital
expenditures, which were partially offset by receipt of $60.0 million for the
bank service agreement termination (See Note J - Debt and Note K - Income
Taxes). The prepayment of debt was funded from cash from operating activities.
During the current quarter and year, excess cash was invested in highly liquid
overnight investments with an average interest rate received of approximately
2.5% and 2.2%, respectively.

19



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

Liquidity and Capital Resources, continued:

Net cash provided by operating activities amounted to $66.5 million for the 28
weeks ended January 8, 2003, compared to $97.4 million in the previous year. The
decrease in net cash provided by operations is largely due to an increase of
$67.3 million in merchandise inventory, a payment of $52.0 million to the
Internal Revenue Service, and a $20.0 million contribution to the profit sharing
plan, which was partially offset by a receipt of $60.0 million for the bank
service agreement termination.

Net cash used in investing activities was $100.3 million for the 28 weeks ended
January 8, 2003, compared to $54.5 million in the previous year. The change was
primarily due to an increase in capital expenditures. Capital expenditures for
fiscal year 2003 totaled $92.2 million compared to $33.9 million for fiscal year
2002.

The Company estimates that total capital investment in Company retail and
support facilities, including operating leases, will be $235.0 million in fiscal
year 2003. The Company has no material construction or purchase commitments
outstanding as of January 8, 2003.

Net cash used in financing activities was $117.2 million for the 28 weeks ended
January 8, 2003, compared to $38.6 million in the previous year. In the current
year, the Company prepaid $100.0 million on the six-year term loan and reduced
dividend payments by $21.8 million.

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, which might result from any such proceedings, will not have a
material adverse effect on the Company's consolidated earnings or financial
position.

Impact of Inflation

The Company's primary costs, inventory and labor, increase with inflation.
Recovery of these costs must come from improved operating efficiencies, and to
the extent permitted by our competition, through improved gross profit margins.

Critical Accounting Policies

The Condensed Consolidated Financial Statements and Notes to Condensed
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.

20



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

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, commercial 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.

21



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

Critical Accounting Policies, continued:

Intangible assets and goodwill, continued. 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.

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 sub-lease 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 K - 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.

22



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

Critical Accounting Policies, continued:

COLI litigation, continued. 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.

Cautionary Statement Regarding Forward-Looking Information and Statements

This Form 10-Q 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 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 the Company's ability to achieve the benefits contemplated from the various
operational changes being implemented by management;
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 current state of the economy
generally, the recent stock market decline, the threat of war with Iraq,
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-Q 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.

23



Item 3. Quantitative and Qualitative Disclosures About Market Risk

Cash Flow Hedge: The Company has outstanding a $143.0 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 instrument held on the $143.0 million
six-year term loan is designated as a highly effective cash flow hedge of
interest rate risk on variable rate debt and, accordingly, the change in fair
value of this instrument is recorded as a component of other comprehensive
income.

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

The Company has one interest rate swap agreement with a notional amount of
$100.0 million to hedge the interest rate risk associated with the $143.0
million outstanding in variable rate debt. The notional amount does not
represent a measure of exposure to the Company. The interest rate swap agreement
matures on March 29, 2004. The Company will pay the counterparty interest at a
fixed rate of 5.03% and the counterparty will pay the Company interest at a
variable rate equal to the one-month LIBOR (1.38% as of January 8, 2003).

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 fair value of the Company's interest rate swap is obtained from dealer
quotes. This value represents 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 January 8, 2003, the fair value of the
Company's interest rate swap resulted in an unrealized loss of $4.3 million
($2.7 million after tax). The Company recorded the unrealized loss in
accumulated other comprehensive income in shareholders' equity.

On January 29, 2003, the Company prepaid $143.0 million still outstanding on the
six-year term loan and unwound the corresponding interest rate swap due to
mature on March 29, 2004.

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

24



Quantitative and Qualitative Disclosures About Market Risk

Fair Value Hedge: In addition to the interest rate swap for the six-year term
loan, on August 2, 2002, the Company reentered into interest rate swap
agreements in which the Company effectively exchanged the $300.0 million fixed
rate 8.875% interest on the senior notes for two variable rates in the notional
amount of $200.0 and $100.0 million at six-month LIBOR plus 428 and 424 basis
points, respectively. The Company received $7.4 million on the initial swaps, to
be amortized over the remaining life of the senior notes as an offset to
interest expense. 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 was 1.66% on October 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. On October 1, 2002, the Company increased the
fair value of the 8.875% senior notes by $4.9 million and recorded the
corresponding interest rate swap liability in the other liabilities section of
the Condensed 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 agreements involve receipt of fixed
rate amounts in exchange for floating rate interest payments over the life of
the agreements 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.

25



Quantitative and Qualitative Disclosures About Market Risk

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 January 8, 2003.



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

2003 2004 2005 2006
-------- -------- -------- --------
Liabilities:
Long-term debt

Fixed Rate $ 266 262 260 257
Average interest rate 9.40% 9.40% 9.40% 9.40%
Variable Rate $ 1,430 1,430 1,430 1,430
Average interest rate 4.25% 5.42% 6.55% 7.34%
Interest rate derivatives
Interest rate swaps:
Variable to Fixed $ - 100,000 - -
Average pay rate - 5.03% - -
Average receive rate - 2.67% - -
Fixed to Variable $ - - - -
Average pay rate - - - -
Average receive rate - - - -




2007 Thereafter Total Fair Value
-------- ---------- --------- ----------
Liabilities:
Long-term debt

Fixed Rate 171 300,000 $ 301,216 $ 307,576
Average interest rate 9.40% 8.88% 8.88%
Variable Rate 137,280 - $ 143,000 $ 143,000
Average interest rate 7.94% - 7.86%
Interest rate derivatives
Interest rate swaps:
Variable to Fixed - - $ 100,000 $ (4,312)
Average pay rate - - 5.03%
Average receive rate - - 2.67%
Fixed to Variable - 300,000 $ 300,000 $ 4,928
Average pay rate - 9.64% 9.64%
Average receive rate - 8.88% 8.88%


26



Item 4. Controls and Procedures

As required by Rule 13a-15 under the Exchange Act, within the 90 days prior to
the filing date of this report, the Company carried out an evaluation of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures. This evaluation was carried out under the supervision and with
the participation of the Company's management, including the Company's President
and Chief Executive Officer along with the Company's Chief Financial Officer.
Based upon that evaluation, the Company's President and Chief Executive Officer
along with the Company's Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective. There have been no significant
changes in the Company's internal controls or in other factors, which could
significantly affect internal controls subsequent to the date the Company
carried out its evaluation.

Disclosure controls and procedures are controls and other procedures that are
designed to ensure that information required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in Company reports filed under the Exchange Act is
accumulated and communicated to management, including the Company's Chief
Executive Officer and Chief Financial Officer, as appropriate, to allow timely
decisions regarding required disclosure.

27



WINN-DIXIE STORES, INC. AND SUBSIDIARIES

Part II: Other Information

Item 1. Legal Proceedings

See Note Q - Litigation of the Notes to Condensed Consolidated
Financial Statements, included herein, regarding various claims and
lawsuits pending against the Company.

Item 2. Changes in Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5. Other Information

Edward W. Mehrer, President and Chief Executive Officer of CyDex,
Inc., was elected to the Board of Directors on January 21, 2003.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits

10.5 Management Security Plan as amended and restated May 1, 1992.

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


On November 14, 2002, the Company filed a current report of Form 8-K
under "Item 5. Other Events."

28



WINN-DIXIE STORES, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

WINN-DIXIE STORES, INC.


Date: January 29, 2003 /S/ RICHARD P. MC COOK
-----------------------------------
Richard P. McCook
Senior Vice President and
Chief Financial Officer

Date: January 29, 2003 /S/ D. MICHAEL BYRUM
-------------------------------------
D. Michael Byrum
Vice President, Corporate Controller and
Chief Accounting Officer


29



WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CERTIFICATIONS

I, Allen R. Rowland, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Winn-Dixie Stores,
Inc.;

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

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

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

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

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

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

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:

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

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

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

Date: January 29, 2003
By: /S/ Allen R. Rowland
------------------------------------------
Allen R. Rowland
President and Chief Executive Officer

30



WINN-DIXIE STORES, INC. AND SUBSIDIARIES

CERTIFICATIONS

I, Richard P. McCook, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Winn-Dixie Stores,
Inc.;

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

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

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

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

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

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

5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors:

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

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

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

Date: January 29, 2003
By: /S/ Richard P. McCook
----------------------------------------------------
Richard P. McCook
Senior Vice President and Chief Financial Officer

31