winn-dixie stores 1998_annual_report

Winn-DixieStores, Inc.

1998Annual Report

Earnings per diluted share $1.33Taxes per diluted share $2.03

See page one

8396 WmCook SIGS [mod] 8/31/98 5:09 PM

BUSINESS DESCRIPTIONWinn-Dixie is one of the nation’s largestretail food chains, with more than 139,000associates, dedicated to providing ourcustomers with the best quality, varietyand service at competitive prices. As ofJune 24, 1998, the Company operated1,168 supermarkets in 14 states and in theBahama Islands. The Company also oper-ated a network of distribution facilities,processing and manufacturing plants and afleet of trucks, providing a comprehensivesupport system.

ABOUT THE COVERDepicted on our cover is a sample of someof the delicious food that today’s busyshoppers can find at their local Winn-DixieMarketplace. We offer customers what-ever suits their plans — from carry-outdinners ready to serve or simply put in theoven or microwave, to the fresh foods andextra ingredients that go into preparing adelicious, home-cooked meal.

TABLE OF CONTENTSHighlights ............................................... 1Message to Our Shareholders............... 2Isn’t Life Delicious ................................ 5Financial Review.................................... 8Winn-Dixie at a Glance ........................ 11Management........................................... 12Shareholder Information....................... 13

8396 WmCook SIGS [mod] 8/31/98 5:10 PM

1

•At June 24, 1998, we operated 1,168 stores, of which 215 were less than 35,000 square feet, 479 were 35,000 to 45,000 square feet and 474 were more than 45,000 square feet.

•82 percent of our stores now have at least 35,000 square feet, compared with 53 percent in 1994.

•Our average square footage per store increased to 42,400 this year, compared to 35,100 in 1994.

HIGHLIGHTS

LARGER STORES SERVE TODAY’S CUSTOMERS

PercentageFor the Fiscal Year June 24, 1998 June 25, 1997 Change June 26, 1996 June 28, 1995 June 29, 1994

Dollars in thousands except per share data

SALES $13,617,485 13,218,715 + 3.0 12,955,488 11,787,843 11,082,169Per diluted share $ 91 88 + 3.4 85 79 74

GROSS PROFIT $ 3,623,917 3,315,853 + 9.3 3,093,244 2,723,307 2,534,488Percent of sales 26.6 25.1 23.9 23.1 22.9

OPERATING AND ADMINISTRATIVEEXPENSES $ 3,374,905 3,093,767 + 9.1 2,802,712 2,461,883 2,269,803Percent of sales 24.8 23.4 21.6 20.9 20.5

TAXESFederal, state and local $ 302,274 284,737 + 6.2 287,758 260,885 261,319Per diluted share $ 2.03 1.90 1.89 1.74 1.75

NET EARNINGS $ 198,620 204,443 - 2.8 255,634 232,187 216,117Per diluted share $ 1.33 1.36 - 2.2 1.68 1.55 1.45Percent of sales 1.5 1.5 2.0 2.0 2.0

EBITDA $ 676,735 632,757 + 7.0 656,857 569,256 520,162EBITDAR $ 1,089,181 1,015,587 + 7.2 1,009,703 890,720 809,235

DIVIDENDS PAID ON COMMON STOCK $ 150,923 144,165 + 4.7 134,042 116,506 107,384Per share (present annual rate $1.02) $ 1.02 .96 + 6.3 .885 .78 .72

NET CAPITAL EXPENDITURES $ 369,636 423,105 - 12.6 361,961 371,563 277,657DEPRECIATION AND AMORTIZATION $ 330,408 291,236 + 13.5 248,287 200,931 157,392

At Year End

Working capital $ 228,581 195,358 + 17.0 388,712 414,923 486,242Current ratio 1.2 to 1 1.1 to 1 1.4 to 1 1.4 to 1 1.6 to 1

Shareholders’ equity $ 1,368,883 1,337,494 + 2.3 1,342,296 1,230,592 1,055,685Percent of equity to total capitalization 96.6 96.1 95.7 94.1 92.5

Total shares outstanding (000’s) 148,531 148,876 - 0.2 151,685 151,122 148,352

Stores in operation 1,168 1,174 - 0.5 1,178 1,175 1,159

Return on average equity (%) 14.7 15.3 19.9 20.3 21.2

1,200

1,000

800

600

400

2001994 1995 1996 1997 1998

Stores less than35,000 square feet

Stores 35,000 to45,000 square feet

1,1591,175 1,178

1,174

Stores more than45,000 square feet

1,168

8396 WmCook SIGS [mod] 8/31/98 5:10 PM Page 1

ast year, our annual message to you began

with these words: “1997 was a year ofpositioning Winn-Dixie for the future. As we approachthe millennium, we are better prepared than ever forthe years ahead.”

When I signed those words along with JamesKufeldt and Charles McKellar, we had our eyes on animportant milestone. In the year 2000, our Companywill celebrate its 75th year in business. We remainexcited about the Winn-Dixie we are building for the next century.

Am I satisfied with our earnings for the yearjust completed? Of course not. We had hoped forbetter results sooner, but we are absolutely confidentof our strategy. It would be a mistake for us not tocomplete the investment and operating improvementswe have been making to create the Winn-Dixie of the21st century.

Giving customers the finest one-stop shoppingexperience in the supermarket industry has required usto defer temporarily what could have been larger short-term sales and earnings increases. Our philosophy isto accomplish our objectives without long-term debt.This places all of us in a stronger financial position —shareholders, associates and customers.

We accomplished a lot in 1998. Our averagestore size increased to 42,400 square feet. More than84% of our business was being done in our largerlocations by year’s end. We added more new customerservices than ever before in our history. Our sales werea record $13.6 billion. And our net earnings were$198.6 million.

As we finished the year, our identical store salesfor the fourth quarter were up 3.1 percent comparedwith the fourth quarter of the previous year. That is

one of the indicators we will continue to watch in themonths ahead as more shoppers visit our Winn-DixieMarketplace stores.

In business, as in life, success comes to thosewho prepare. That is the strategy we are pursuing. It iswhy, for example, we are concentrating on associatetraining to ensure that Exceptional Customer Servicewill truly be away of life in ourstores. Winn-Dixietoday is withoutquestion in abetter position forthe future than wewould have beenwithout thecapital investmentand operatingimprovements wehave made.

We alsowant to expressour gratitude to T.E. (Tommy) McDonald, Senior VicePresident and Regional Director of our Charlotte andRaleigh Divisions, who retired in December after 43years of service. Upon his retirement, we realignedregional responsibilities (see page 12). We also want toextend our appreciation to Bob B. Tripp, President ofour Charlotte Division, who retired in March aftermore than 43 years of service.

We thank all of you for your support. And weinvite you to come see us and enjoy the Winn-DixieMarketplace experience!

2

L

A. Dano Davis, Chairman,Principal Executive Officer

MESSAGE TOOUR SHAREHOLDERS


n 1998, more than twomillion customers visitedour stores every day, seeing firsthand the

continuing improvements we are making to stay at theforefront of the supermarket industry. Even as totalindustry retail space in the United States grew duringthe year, we maintained our strong leadership positionamong the major chains.

As one sign of our com-mitment to one-stop shoppingconvenience, we opened our639th pharmacy, making us thefastest-growing retail drug storeoperator in the country. Weopened 84 new Winn-DixieMarketplace stores during theyear, enlarged or remodeledanother 136 stores and closed 90smaller stores. Our facilities today are truly the mostup-to-date in the business.

By the end of the year, we had 1,168 stores withretail space of more than 49.6 million square feet, anincrease of 3.7 percent over 1997. We are excited aboutthe quality of our new Winn-Dixie Marketplace stores,including the variety of products and services they offerto today’s busy shoppers. Indeed, in 1998, we added arecord total of 676 departments. To increase publicawareness of this fact and to invite even morecustomers to shop with us, we have been promotingthe theme “While You’re At The Marketplace” in ourcommunications to emphasize how much we offerunder one roof.

To help make sure we achieve our objectives,we have made a significant investment in technologyand training. Shoppers at many Winn-DixieMarketplace locations were given the option of self-checkout, just one of the technological advances weare making to continue offering a fast and pleasantshopping experience. And we are providing ourassociates with advanced training to ensure that they

can continue to operate our new Winn-DixieMarketplace stores in a way that enables our customersto have the best possible shopping experience whenthey visit us.

At our corporate headquarters in Jacksonville,Florida, we are taking additional steps to consolidateour office facilities into one building with the latestinformation and communications systems. We alsomoved to address Year 2000 computer issues well inadvance, instead of waiting for the eve of themillennium.

All of these milestones reflect our commitmentto making sure that Winn-Dixie remains a premiersupermarket of choice in the face of competition andchanges in consumer preferences. In 1999, as part ofthat commitment, we plan to open 85 new stores andenlarge or remodel 90 existing stores.

We want to thank our associates for theircommunity involvement. Winn-Dixie in 1998 gave$12.8 million to support customer and associate effortsto improve their communities. This total includedmatching grants which doubled our associates’ owndonations of more than $2.0 million to civic andcharitable organizations of their choice.

With the dedication this year of the newWinn-Dixie Hope Lodge in Atlanta, Georgia, we nowhave three Hope Lodges (including Miami andGainesville, Florida) giving cancer outpatients and afamily member a home-like place to stay at no chargeduring treatment.

We remain confident in our business approach,grateful for the customers we have the privilege ofserving and are more enthusiastic than ever about thedays ahead.

3

James KufeldtPresident

I


4

e took manysignificant practical

steps in 1998 to enhance ouroperations and to give those who shop with us alot of positive reasons to keep coming back.

We moved ahead with a majorrestructuring of our facilities in the Carolinas,for example. We opened a new retail supportcenter (warehouse) in Clayton, North Carolina,with more than one million square feet,replacing our smaller facility in Raleigh, NorthCarolina; and we closed the retail support centerin Greenville, South Carolina. We moved stores

between our Raleigh andCharlotte divisions tobalance the volume. TheGreenville retail supportfacility is being renovated,enlarging the capacity ofour general merchandisecenter there. Our plansalso include an enlargementof our Charlotte, NorthCarolina, retail supportcenter.

We also opened a retail support center forperishable goods in Montgomery, Alabama. Andwe are planning a new, larger retail supportcenter in Jacksonville, Florida. In conjunctionwith these improvements, we have increased theefficiency of our inventory system, which willhelp ensure that customers visiting our storescan always find what they want at any time.

Our store interiors are better than ever,with more departments, additional emphasis oncustomer assistance and special products andservices tailored to the needs and lifestyles of thepeople who walk through our doors. Ournumber of pharmacies, for example, rose 17.5percent last year. By the end of the year, we alsohad a 19.3 percent increase in the number ofbakeries and a 41.2 percent increase in thenumber of stores with banks. More departments

mean that more customer needs can be metconveniently in one place during one visit. Atmost of our locations, there are customer servicemanagers at the front of the store whose job is tomake sure that our customers can check outwith fast, friendly service.

We are proud of our 139,000 associateswho keep our stores running well. Today’sWinn-Dixie associates receive pay and benefitsamong the best in the industry, plus theopportunity for additional training andadvancement. We are grateful for their dedicatedservice to our customers and for the supportthey voluntarily provide to worthwhile causesincluding youth mentoring, health and educationprograms and disaster relief in the communitieswhere they live and work.

From their individual acts of kindness totheir involvement in organized programs like theSpecial Olympics and inner city recreation, ourassociates make a positive difference in the livesof many people from all walks of life. We thankall of them for their commitment to theircustomers and their communities.

Charles H. McKellarExecutive Vice President

We extend a special salute to our associates whoreceived annual Founders Awards as AssociateGood Citizens of the Year in their divisions as partof our Good Citizenship program: Elease Nicely,Atlanta; Nancy Lowery and William “Sonny”Boroughs, Charlotte; Dwayne Thomas,Jacksonville; Joshua Swink, Ft. Worth; KatherineStagg, New Orleans; Carolyn and Bill Marshall,Miami; Joseph Pack, Raleigh; Tom Martin,Montgomery; Jennifer Wilson and Edward Papin,Midwest; Lynn McLendon, Orlando; and BruceLaRocca, Tampa.

A SPECIAL SALUTE

W

8396 WmCook SIGS [mod] 9/1/98 9:30 AM Page 4

hile you’re at theWinn-Dixie Marketplace

these days, you can enjoy an expandingvariety of convenient services and quality products, allprovided by friendly associates whose goal is to give

you the best one-stop shopping experiencethat the supermarket industry offers.

Our promiseremains 100 percentcustomer satisfaction.To deliver on thispromise, we stockthousands of differentfood and nonfood itemsand offer dozens ofpersonal services. Westrive to make sure everycustomer receives value,which means bothquality and competitiveprices, as well ascourteous, individualattention.

Walk into aWinn-Dixie

Marketplace today and have a look around. You willnotice Harvest Fresh produce that includes the season’sbest garden variety selections, along with more exoticroots and herbs, plus a colorful fruit and vegetable barwith an assortment of fresh-cut items. You will alsosee an oven fresh bakery featuring breads and pastriesto suit every taste, where you can choose from more

than 100 cake designs for special occasions andour farm fresh dairy products, often includingan international cheese shop.

If you visit Fisherman’s Wharf, you canselect from a catch of fresh seafood that we will

steam and season upon request at no additionalcharge. Our Prestige Meatshop features the WD BrandU.S. Choice aged beef thatmade us The Beef People,along with pork, lamb andpoultry. Our meat selectionsinclude oven-ready entrees,marinated meats and anycustom, thin or other specialcut you like.

For your convenience,the Winn-DixieMarketplace offers

meals and servingsprepared to any stage thatfits your plans — from

completely cooked carry-out

ISN’T LIFE DELICIOUS

5

W

50

48

46

44

42

40

1994 1995 1996 1997 1998

TOTAL RETAIL STORE SQUARE FOOTAGE(in millions)

44

42

40

38

36

34

1994 1995 1996 1997 1998

AVERAGE SQ. FOOTAGE PER STORE(in thousands)


dinners to items you can simply put in the oven ormicrowave yourself when you get home. You mightdecide to stop by our Deli-Cafe and enjoy a snack rightthere, near the soup and salad bar, and perhaps pick up acooking tip from one of our in-store chefs while you sitdown and take a break. We have hot andcold deli offerings from sliced meatsand cheeses, sandwiches and subs, tochef-prepared hot entrees with yourfavorite sidesand a varietyof festiveparty platters.Many of ourlocationstoday areopen 24 hoursa day, sevendays a week.

Onour shelvesthroughoutthe Winn-Dixie Marketplace are thousands of nationalbrand and private label products from which to choose.When you walk through the aisles, you will notice not

700

600

500

400

300

200

1994 1995 1996 1997 1998

PHARMACIES

Our pharmacy coordinators help manage our growing number of pharmacies,where customers can have their prescriptions filled while they shop.

600

500

400

300

200

100

01994 1995 1996 1997 1998

ONE-HOUR PHOTO LABS

700

600

500

400

300

200

1994 1995 1996 1997 1998

BAKERY DEPARTMENTS

250

200

150

100

50

0

1994 1995 1996 1997 1998

IN-STORE BANKS

6


only the abundance of fooditems, but expanded specialtysections and departmentsincluding health and beautyaids, greeting cards, books andmagazines and householdsupplies — more variety underone roof than ever before.

You also will find morein-store services than youmight expect. A floral shopwith gifts and fresh-cut flowersfor Mother’s Day, weddings,Valentine’s Day or just to showsomeone you care. A one-hourphoto lab where you can getquality prints, enlargementsand slides, as well as film, cameras, batteries, framesand albums. And at many Winn-Dixie Marketplacelocations, convenient dry cleaning services areavailable.

Today’s Winn-Dixie Marketplace is alsodesigned with financial services in mind. When youenter the store, you will find an ATM inside for yoursafety and convenience. At an increasing number oflocations, we have full-service in-store bank branchesfor our customers. Other features available at our storesinclude money orders and cash transfers along withsuch extras as UPS shipping, postage stamps and pre-paid phone cards.

Our in-store pharmacy makes it convenient foryou to have your prescriptions filled while you shop.We offer brand-name prescription medicines, plus a fullline of generic drugs. Our pharmacist on duty is avail-able for personal counseling about your prescriptionsand our stores are adding new Mayo Clinic HealthInformation Centers where you can obtain health tips.

We are committed to giving our Winn-DixieMarketplace customers real value, which means qualityproducts and services at the low prices people expect atWinn-Dixie.

Since our founding 73years ago, the corner grocerystore has evolved into a mod-ern supermarket from whichtoday’s shoppers and their fami-lies demand much more. Wehave operated successfully allthese years by keeping focusedon what our customers wantand delivering it.

Putting our customersfirst remains our philosophytoday — to make sure thatour customers can count onthe quality products andservices they want every timethey visit us.

While you’re at the Winn-Dixie Marketplace,we are determined to give you the best one-stop shop-ping experience in the business. Come see for yourselfand enjoy!

7

Our district managers regularly visit our stores to ensure ongoingexcellence in serving our customers.


8

Results of OperationsDuring fiscal year 1998, we continued our focus

on preparing our retail stores, not only for today’scustomer, but for our customers in the comingmillennium. While we had hoped that our currentyear’s results would have been better, we are committedto stay the course and reach for our longer-termobjectives.

Sales for 1998 totaled $13.6 billion, a 3.0%increase over 1997. The Company experienced a 0.3%decrease in identical store sales in 1998, as compared toa decrease of 0.9% in 1997. Sales for the fourth quarterwere $3.3 billion, a $188.4 million increase, or 6.2%over the comparable quarter last year. The fourthquarter sales increase was produced by aggressivepricing and increased promotional activity.

During 1998, our Company opened and acquired84 additional stores averaging 50,000 square feet andclosed 90 smaller and older stores averaging 30,500square feet. We also enlarged or remodeled 136 storelocations. On June 24, 1998, we operated 1,168 storesaveraging 42,400 square feet, as compared to 1,174stores averaging 40,700 square feet in 1997 and 1,178stores averaging 38,800 square feet in 1996. Total retailstore square footage has increased from 45.7 million in1996, to 47.8 million in 1997 and to 49.6 million in1998.

Our marketing strategy is designed to provideour customers with the best quality, variety and serviceat competitive prices. During 1998, our gross profitdollars increased $308.1 million and our gross profitmargin increased from 25.1% in 1997 to 26.6% in 1998.Operating margins improved with an increase in thenumber of larger stores, added service departments andimproved pricing.

Approximately 88% of our inventories arevalued under the LIFO (Last-In, First-Out) method. OurLIFO valuations of inventories resulted in an increase ingross profit of $12.1 million in 1998, as compared to adecrease of $2.7 million in 1997. In 1998, our Companyexperienced deflation in product costs.

Increases in depreciation expense, occupancycosts, a higher payroll percentage in our larger storesand training costs associated with our emphasis towardincreased customer service were the major contributingfactors of our increase in operating and administrativeexpenses in 1998. Operating and administrativeexpenses, as a percent of sales, were 24.8% in 1998, ascompared to 23.4% in 1997 and 21.6% in 1996.

During 1998, the Company began itsconsolidation of our accounting departments tocorporate headquarters. The opening of our newdistribution facility in Raleigh, North Carolina, resultedin the closing and the sale of the older Raleighdistribution facility; the closing of the Greenville, SouthCarolina distribution facility which will be convertedinto a general merchandise facility; and thereorganization of our Raleigh and Charlotte divisions.The Company experienced a nonrecurringadministrative charge totaling $18.1 million (after tax,$11.0 million or $0.07 per diluted share) due to theseactivities.

Cash discounts and other income totaled $115.4million in 1998 and $119.4 million in 1997.

Interest expense, which consists primarily of acomputation of interest on capital lease obligations andfrom short-term borrowings, totaled $28.5 million in1998, as compared to $22.1 million in 1997. Theincrease in interest expense reflects the increase inshort-term borrowings.

Earnings before income taxes decreased from$319.4 million in 1997 to $317.8 million in 1998. Thedecrease in pretax earnings is primarily a result of theincrease in operating expenses as previously mentioned.

Income tax expense increased from $115.0million in 1997 to $119.2 million in 1998, due to theeffective income tax rate increasing from 36.0% in 1997to 37.5% in 1998. The effective tax rate reflects achange made by the Health Insurance Portability andAccountability Act of 1996, whereby certain deductionsfor interest relating to indebtedness with respect tocertain corporate owned life insurance (COLI) policiesare being phased out over a three-year period.

Net income for 1998 totaled $198.6 million, ascompared to $204.4 million in 1997, a 2.8% decrease.Earnings per diluted share totaled $1.33 in 1998, ascompared to $1.36 in 1997, a decrease of $0.03 pershare.

In 1998, our Company experienced deflation inour LIFO computation. The computation resulted in anincrease in net earnings of $7.4 million, or $0.05 perdiluted share in 1998, as compared to a decrease in netearnings of $1.6 million, or $0.01 per diluted share in1997.

The Company’s goal of a 20.0% return onaverage equity was not attained in 1998 or 1997. Ourreturn on average equity was 14.7% in 1998 and 15.3%in 1997. For the past 5 years, our return on averageequity has averaged 18.3%.

FINANCIAL REVIEW


9

25%

Goal20

15

10

5

1994 1995 1996 1997 1998

12.0

11.5

11.0

10.5

10.0

9.5

9.01994 1995 1996 1997 1998

$2.00

1.50

1.00

.50

1994 1995 1996 1997 1998

Earnings per diluted share

Present Dividend Rate $1.02 per share

Dividends per share

9.6

10.0

11.3

1.551.45

1.68

19.915.3

20.3

11.0

1.36

14.7

Liquidity and Capital ResourcesThe Company’s financial condition remains

sound and strong at year end. Excluding obligationsunder capital leases, we have no financial long-termdebt. Shareholders’ equity increased $31.4 million andour equity to total capitalization ratio increased from96.1% in 1997 to 96.6% in 1998.

Cash and cash equivalents increased from $14.1million in 1997 to $23.6 million in 1998. Cashprovided by operating activities amounted to $464.5million in 1998 and $413.9 million in 1997.

Capital expenditures in 1998 totaled $369.6million, a $53.5 million decrease from 1997. Thisdecrease is attributable to a decline in asset purchasesand an increase in sales of assets. When considering thecapital investment of our landlords for leased premises,the capital investment in 1998 relating to facilitiesoperated by our Company is estimated to be $850.0million. Total capital investment for 1999 is estimatedto be $800.0 million. There are no materialconstruction or purchase commitments outstanding asof June 24, 1998.

Since the timing of cash inflows and outflows isnot always the same, the Company has authorized a$500.0 million Commercial Paper Program. In supportof this program, or as an independent source of short-term funds, the Company also has available $495.0million in short-term bank lines of credit, which arerenewable on an annual basis. These immediatelyavailable financing programs can be used for any generalcorporate purpose. On June 24, 1998, $420.0 million

was outstanding under these facilities, as compared to$380.0 million on June 25, 1997.

The Company believes that both its short-termand long-term capital needs will be sufficiently providedthrough the cash flow generated by its normal businessoperations and its available financing programs.

Cautionary Statement RegardingForward-Looking Information andStatements

This Annual Report contains certaininformation that constitutes “forward-lookingstatements” within the meaning of the PrivateSecurities Litigation Reform Act, which involves risksand uncertainties. Actual results may differ materiallyfrom the results described in the forward-lookingstatements. When used in this document, the words,“estimate,” “project,” “intend,” “believe,” and othersimilar expressions, as they relate to the Company, areintended to identify such forward-looking statements.Such statements reflect the current views of theCompany and are subject to certain risks anduncertainties that include, but are not limited to,growth, competition, inflation, pricing and marginpressures, law and taxes. Please refer to discussions ofthese and other factors in this Annual Report and otherCompany filings with the Securities and ExchangeCommission. The Company disclaims any intent orobligation to update publicly these forward-lookingstatements, whether as a result of new information,future events or otherwise.

11.7

AVERAGE ANNUAL SALES PERSTORE IN MILLIONS OF DOLLARS

EARNINGS AND DIVIDENDS PER SHARE

1.33

RETURN ON EQUITY

21.2

0.720.78

0.885 0.961.02


10

CONSOLIDATED STATEMENTS OF EARNINGSYears Ended June 24, 1998 and June 25, 1997 1998 1997

Amounts in thousands except per share dataNet sales $ 13,617,485 13,218,715Cost of sales, including warehousing and delivery expenses 9,993,568 9,902,862

Gross profit on sales 3,623,917 3,315,853Operating and administrative expenses 3,374,905 3,093,767Consolidation and distribution facility closing charge 18,080 —

Operating income 230,932 222,086Cash discounts and other income, net 115,395 119,435

346,327 341,521Interest expense 28,535 22,079

Earnings before income taxes 317,792 319,442Income taxes 119,172 114,999

Net earnings $ 198,620 204,443

Basic earnings per share $ 1.34 1.36

Diluted earnings per share $ 1.33 1.36

CONSOLIDATED BALANCE SHEETSJune 24, 1998 and June 25, 1997

Assets 1998 1997

Amounts in thousandsCurrent assets:

Cash and cash equivalents $ 23,566 14,116Trade and other receivables, net 146,166 175,679 Merchandise inventories at lower of cost or market

less LIFO reserve of $212,869,000 ($224,999,000 in 1997) 1,404,917 1,249,215Prepaid expenses 161,141 148,961

Total current assets 1,735,790 1,587,971

Investments and other assets 140,450 182,628Deferred income taxes 22,626 22,129Net property, plant and equipment 1,169,848 1,128,681

$ 3,068,714 2,921,409

Liabilities and Shareholders’ Equity

Current liabilities $ 1,507,209 1,392,613

Obligations under capital leases 48,580 54,026Defined benefit plan 37,102 33,452Reserve for insurance claims and self-insurance 93,514 94,783Other liabilities 13,426 9,041Shareholders’ equity 1,368,883 1,337,494

$ 3,068,714 2,921,409


▲ New York Stock Exchange Listing(2/18/52) WIN

▲ Year Founded — 1925

▲ Sales — $13.6 Billion■ 64 consecutive years of sales

increases■ Average annual sales per store —

$11.7 million■ Federal, state and local taxes —

$302.3 million■ Taxes per diluted share — $2.03■ Earnings per diluted share — $1.33■ Dividends per share — $1.02

(Present annual rate — $1.02)

▲ Number of Associates — 139,000

▲ Number of Stores — 1,168■ Total square footage — 49.6 million■ Average square footage per store —

42,400■ Number of communities served —

over 700

▲ Real Estate DevelopmentEnlarged/

New Remodeled

■ 1998 84 136■ 1999 (Projected) 85 90

▲ 22 Manufacturing Facilities■ Ice cream and milk bottling■ Coffee, tea and spices■ Detergents■ Meat processing■ Jams, jellies, peanut butter and

condiments■ Canned and bottled carbonated

beverages■ Egg processing■ Cheese products■ Crackers, cookies and snacks■ Oleomargarine■ Frozen pizza■ Cottage cheese and yogurt■ Paper bags

▲ 17 Warehouse and DistributionCenters■ Items stocked — 34,800■ Tonnage — 5,987,000

▲ Transportation■ Number of tractors — 1,100■ Number of trailers — 2,100■ Number of drivers — 1,300■ Miles traveled — 71 million■ Amount of merchandise

delivered — 6.1 million tons

▲ Retail Automation■ Mini computers are in all retail

locations■ Labor scheduling■ Check verification■ Computer-assisted ordering■ Time and attendance■ Work planning■ Interviewing■ Electronic mail■ Electronic scale monitoring■ Direct-delivery receiving■ In-store accounting■ Electronic payment system

▲ Environmental Statement■ Recycling is important to our envi-

ronment and to our Company.Last year, we supplied more than196,000 tons of paper and card-board to recycling companies. TheCompany also collects plastic andpaper bags from our customers forrecycling.

▲ Major Contributions to OurCommunity

■ Winn-Dixie presented GoodCitizenship Awards, along withmore than $ 6.3 million, to hun-dreds of civic, youth, service andeducational organizations.

■ Winn-Dixie Stores Foundationcontributed over $4.4 million tocommunity organizations, includ-ing $2.0 million in associatematching grants.Individual storesgave another $2.1million infinancialand in-kindcontributions.

■ Winn-Dixie Atlantamade possible the newWinn-Dixie Hope Lodgein Atlanta, Georgia, for cancerpatients and their visiting familymembers.

■ Winn-Dixie Charlotte honoredteachers at the ninth annualWinn-Dixie Golden Apple Awardssponsored with WYFF-TV.

■ Winn-Dixie Jacksonville sponsored“Drive for Meals,” a golf tourna-ment held to support the Meals onWheels program.

■ Winn-Dixie Miami associates paidfor and built a Habitat forHumanity home in Ft. Lauderdale,completing construction in just sixweeks.

■ Winn-Dixie Montgomery provideddisaster relief to the American RedCross for victims of theBirmingham area tornadoes.

■ Winn-Dixie Midwest raised moneyfor the American Cancer Societywith Celebrity Baggers Day atWinn-Dixie and Thriftway stores.

■ Winn-Dixie New Orleans helpedrevitalize New Orleans area play-grounds through its Diamond ofDreams program.

■ Winn-Dixie Orlando made a five-year pledge to the Central FloridaBoy Scouts Council to makeimprovements in a former huntinglodge turned Scout camp.

■ Winn-Dixie Raleigh collected arecord 226,000 pounds of cannedgoods for the needy on Winn-DixieDay at the North Carolina StateFair.

■ Winn-Dixie Tampa raised moneyto fight muscular dystrophy at thefifth annual MDA GolfTournament.

■ Winn-Dixie Texas again supportedthe Texas Speedway Children’sCharities, helping needy childrenin Texas and Oklahoma.

11

WINN-DIXIE AT A GLANCE

OHIO20

BAHAMAS13

FLORIDA427

GEORGIA119

SOUTH CAROLINA77

NORTH CAROLINA126

VIRGINIA35

TENNESSEE23

ALABAMA101

MISSISSIPPI15

LOUISIANA77

OKLAHOMA5

TEXAS67

KENTUCKY61

INDIANA2

▲ Total Stores – 1,168

New York StockExchangeListing (2/18/52) WIN

MajorContributionsto OurCommunity


MANAGEMENT

Board of DirectorsA. Dano DavisChairman and Principal Executive Officer +

Robert D. DavisChairman, DDI, Inc. +

Armando M. CodinaChairman, Codina Group, Inc. ∆ ••T. Wayne DavisChairman, Transit Group, Inc. +

James KufeldtPresident

Radford D. LovettChairman, Commodores Point TerminalCorporation + ∆ ••Charles H. McKellarExecutive Vice President

David F. MillerPrivate Investor ∆

Julia B. NorthPresident and Chief Executive Officer of VSIEnterprises, Inc. ∆ ••Carleton T. RiderContinuous Improvement Officer, Mayo Foundation ∆ ••Charles P. StephensVice President, Norman W. Paschall Co., Inc. + ∆

Executive CommitteeA. Dano Davis, 53, 30 Chairman and Principal Executive Officer

James Kufeldt, 59, 37 President and Chairman of Executive Committee

Charles H. McKellar, 60, 41Executive Vice President

H. E. Hess, 58, 40 Senior Vice President, Regional Director of Atlanta, Orlando, Montgomery and New Orleans Divisions

R. A. Sevin, 55, 37 Senior Vice President, Regional Director of Tampa, Miami, Fort Worth and Midwest Divisions

C. E. Winge, 53, 35 Senior Vice President, Regional Director of Jacksonville, Charlotte, Raleigh and Bahama Divisions

L. H. May, 53, 33 Vice PresidentDirector of Associate Relations/Human Resources

R. P. McCook, 45, 14 Financial Vice President andPrincipal Financial Officer

E. E. Zahra, Jr., 51, 4Vice PresidentGeneral Counsel

Division Presidents andCorporate Vice PresidentsR. J. Brocato, 54, 34President, Atlanta Division97 Stores

W. C. Calkins, 59, 39President, Jacksonville Division99 Stores

J. W. Critchlow, 51, 30President, Raleigh Division121 Stores

R. J. Ehster, 57, 40President, Miami Division116 Stores

J. D. Fitzgerald, 48, 27President, Charlotte Division138 Stores

D. G. Lafever, 49, 31President, Orlando Division105 Stores

R. C. Lunn, 46, 29President, New Orleans Division86 Stores

H. E. Miller, 66, 42President, Montgomery Division126 Stores

L. J. Sadlowski, 57, 41President, Fort Worth Division72 Stores

J. A. Schlosser, 49, 31President, Midwest Division85 Stores

M. A. Sellers, 44, 25President, Tampa Division110 Stores

Corporate OfficersB. C. Baxter, 52, 32Vice PresidentDirector of Marketing

D. H. Bragin, 54, 37Treasurer and Principal Accounting Officer

W. F. Brim, 62, 45Vice PresidentDirector of Seafood Merchandising

J. H. Childers, 59, 42Vice PresidentDirector of Grocery Merchandising

G. E. Clerc, Jr., 63, 37Vice PresidentDirector of Public Relations

J. L. Cooper, 64, 45Vice PresidentDirector of Manufacturing

J. W. Dixon, 56, 34Secretary

R. L. Hutton, 46, 31Vice PresidentDirector of Government Relations

D. J. Ledford, 62, 45Vice PresidentDirector of Meat Merchandising

T. M. Moon, 48, 30Vice PresidentDirector of Deli/Bakery Merchandising

C. R. Raulerson, 55, 38Vice PresidentDirector of Information Systems

D. J. Richardson, 48 ,32 Vice PresidentDirector of Produce and Floral Operations

W. H. Sutton, 51, 27Vice PresidentDirector of General Merchandise

A. C. Webb, 57, 38Vice PresidentDirector of Services

Management, their ages and years of service:

12

∆ - Audit Committee+ - Nominating Committee•• - Compensation Committee


Shareholder CommunicationsPlease address any inquiries or comments to:

First Chicago Trust Company of New YorkTransfer Agent and RegistrarWinn-Dixie Stores, Inc.P. O. Box 2500Jersey City, New Jersey 07303-2500

Toll-Free Number: 1-888-U-CALL-WD(1-888-822-5593)

For Hearing Impaired: 1-201-222-4955

E-mail Address: [email protected]

Internet Address: http://www.fctc.com

or

Shareholder RelationsWinn-Dixie Stores, Inc.P. O. Box B Jacksonville, Florida 32203-0297

The Company’s annual report to the Securities andExchange Commission on Form 10-K may be obtainedby any shareholder, free of charge, upon written requestto the Company.

Stock Market ListingNew York Stock ExchangeSymbol: WIN

Annual Shareholders’ MeetingYou are cordially invited to attend the meeting to beheld Wednesday, October 7, 1998, 9:00 a.m., at thePrime Osborn Convention Center, Room 102,1000 West Water Street, Jacksonville, Florida.

Formal notice of the meeting, a proxy and proxystatement are being mailed to shareholders of record asof the close of business on July 31, 1998.

Corporate HeadquartersWinn-Dixie Stores, Inc.P. O. Box BJacksonville, Florida 32203-0297

Internet Address: http://www.winndixie.com

Transfer Agent and RegistrarFirst Chicago Trust Company of New YorkP. O. Box 2500Jersey City, New Jersey 07303-2500

Dividend ReinvestmentThe Company’s Dividend Reinvestment Plan allowsour shareholders who own at least 10 shares incertificate form to reinvest dividends on Winn-Dixiecommon stock automatically, without service chargesor brokerage fees. Participating shareholders may alsosupplement the amount invested with voluntary cashinvestments on the same cost-free basis. Approximately61% of the Company’s shareholders participate in theDividend Reinvestment Plan. More information maybe obtained by contacting First Chicago Trust Companyof New York.

Direct DepositThe Company offers direct deposit of dividends to our shareholders. More information may be obtained by contacting First Chicago Trust Company of New York.

SHAREHOLDER INFORMATION

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winn-dixie stores 1998_annual_report

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