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Winn-Dixie files Chapter 11 reorganization to address financial and operational challenges

JACKSONVILLE, FL -- Winn-Dixie Stores Inc. announced Feb. 21 that in order to address the financial and operational challenges that have hampered its performance, the company and 23 of its U.S. subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

The filings were made in the evening of Feb. 21 in the U.S. Bankruptcy Court for the Southern District of New York.

All 920 Winn-Dixie stores in eight states and the Bahamas are open and serving customers. The company's Customer Reward Card is being honored as usual, and all other customer programs and policies, including those pertaining to coupons, gift cards and refunds, remain in effect, according to a company news release.

Winn-Dixie intends to use the reorganization process to take additional action to improve its operations and financial performance and strengthen its business. The company said it is moving forward with new sales and merchandising initiatives to improve its customers' shopping experience and help drive sales growth across its chain.

In addition, as part of its Chapter 11 restructuring, the company will implement further asset rationalization, additional asset sales and expense reduction plans to enhance productivity and take best advantage of its asset base. The company is also taking steps to substantially reduce its lease obligations on previously closed stores.

To fund its continuing operations during the restructuring, Winn-Dixie has secured an $800 million debtor-in-possession financing facility from Wachovia Bank N.A. Subject to court approval, the DIP credit facility, which replaces the company's previous $600 million credit line, will be used to supplement the company's cash flow during the reorganization process.

Following the recent announcement of Winn-Dixie's second-quarter financial results, in which the company reported increased losses and reduced liquidity, coupled with subsequent credit downgrades from the major debt rating agencies, Winn-Dixie experienced a tightening of trade credit from some of its vendors, which further reduced its cash availability. As a result, the company concluded, after consultation with its advisors, that its interests and the interests of its creditors, associates, customers, and the communities in which it operates will be best served by continuing its turnaround by reorganizing under Chapter 11 of the Bankruptcy Code.

Peter Lynch, president and chief executive officer of Winn-Dixie, said in the news release: "We intend to use this reorganization process to take the actions necessary to position Winn-Dixie for future success. This includes achieving significant cost reductions, improving the merchandising and customer service in all locations and generating a sense of excitement in the stores. We deeply regret any adverse impact the Chapter 11 filing may have on our associates, vendors, shareholders and business partners. However, having spent the last two months taking an in-depth look at the company and visiting over 50 stores across our chain, I am convinced that the Chapter 11 process will give us the opportunity we need to restructure our finances, strengthen our business performance and achieve a sustained turnaround at Winn-Dixie."

Mr. Lynch continued, "We will focus on increasing sales quickly and cost-effectively across the chain by improving the execution of merchandising and sales-focused initiatives, reinvigorating the company's store associates, and restoring a sales-driven culture across the organization. These plans include enhancing Winn-Dixie's perishables offerings and other product merchandising as well as implementing store sales competitions and other initiatives to motivate associates to drive sales."

In addition, Mr. Lynch said, Winn-Dixie intends to:

--Evaluate the performance of every store and the terms of every lease in the company's real estate portfolio with the objective of achieving a rationalized store "footprint" that allows the company to operate profitably and increase cash flow and return on invested capital.

--Seek Bankruptcy Court approval to immediately terminate the leases of two warehouses and approximately 150 stores that were closed previously, resulting in an annual cash savings of approximately $60 million.

--Pursue all opportunities to further reduce annual expenses and to sell non-core assets, including all remaining manufacturing operations.

No final decisions regarding any additional store closings or market departures, beyond those previously announced by the company, have been made at this time. The company will announce any such decisions at a later date.

Winn-Dixie Stores Inc. is one of the nation's larger food retailers. Founded in 1925, the company is headquartered in Jacksonville, FL.

Peterson keynotes second annual FPFC Phoenix luncheon

PHOENIX " A gathering of nearly 200 people attended the Fresh Produce & Floral Council?s second annual Arizona luncheon Wednesday, Feb. 16 at the Phoenix Crown Plaza Hotel, here. Kevin Easler of Sprouts Farmers Market, served as the emcee for the event, while Wal-Mart?s Bruce Peterson was the day?s keynote speaker.

Mr. Peterson gave what he called "a Wal-Mart update and a look ahead." He said that the company had "no shortage of press coverage and no shortage of challenges? in the past year. Joking that Wal-Mart seemed to be blamed for everything including the "moon being out of phase," he added, "If you keep throwing enough stuff against the wall, some will stick."

In response to some of the negative publicity, Mr. Peterson said that the company, which he acknowledged usually lets its performance speak for itself, took the unusual step of taking out ads talking about what Wal-Mart accomplishes in the community.

?As Wal-Mart facts get out, people are surprised." He said that last year Wal-Mart donated more than $150 million to charities, and its stores and customers donated another $70 million.

Although a turbulent year, Mr. Peterson said, "With all that activity, we had no shortage of growth. We don?t let outside detractors affect our relationship with customers."

He said that analysts? forecasts show Wal-Mart as the No. 2 company in the world when it comes to retail revenue (second only to Exxon-Mobil). In 2004, Wal-Mart had a 12.1 percent increase in retail revenues, or as Mr. Peterson put it, "a pretty good Wal-Mart year."

The Wal-Mart executive also touched upon subjects including RFID compliance (by Jan. 1, its top 100 suppliers were 100 percent RFID compliant, and this year "we will bring another 200 companies on?) to Wal-Mart?s Stores of the Community (although the company is a worldwide entity, Mr. Peterson said that "we must be as local as we can?).

EASTERN PERSPECTIVE: Frank Weichec's retirement brings flood of memories

PHILADELPHIA Frank Weichec Jr. wasn't around to speak for himself for a story on his retirement. He was with his beautiful wife, Alice, cruising his 41-foot motor yacht off South Florida.

Instead, his son, Chip Weichec, hunkered down in Norm & Lou?s Restaurant, the social center of the Philadelphia Regional Produce Market, here, to discuss his father?s career.

While Frank attended Philadelphia?s Drexel University " first as an engineering student, who switched to business administration " he began dating Patricia Hunter. Ms. Hunter?s father, Robert Hunter, had started the produce company Hunter Bros. Inc. with his brother, Earl. Drexel had a work-study program comprised of six months of work followed by six months of study. Frank was invited to work at Hunter Bros. for the work-study program. At Drexel, he also was part of the Reserve Officers Training Corps program.

Frank eventually married Patricia, went into the army as a lieutenant and was promoted to captain, serving for a year in Vietnam. This included duty at the infamous Checkpoint Charlie.

When Frank returned from Vietnam, he went back to the Philadelphia produce market. His son said that his dad, through his reserve officer status, "kept a lot of guys on the market from going to Vietnam."

Among those was Jimmy Storey, owner of Quaker City Produce, here. "He saved a lot of rears here from going to Vietnam, including mine! Mr. Story confirmed.

?I spent a year on active duty in the army, and seven on inactive, due to Frank Weichec?s support. I was a military policeman for seven years," Mr. Storey recalled. "I was just out of high school and drafted. When I got my orders to dye my underwear green, I called Frank." Instead of going to Vietnam, with Frank?s influence, "I went to MP school and became a military policeman. Then I was a VIP driver and drove generals."

You must have been an imposing driver, huh Jimmy? "No, then I was very skinny. I stopped smoking and gained a person."

Mr. Weichec?s military exploits over, he bought Hunter Bros. from his father-in-law in 1968.

The Hunters? first child, Chip " who is actually named Frank Weichec III " was born in 1961. A second son, Mike, came along in 1963, and Steve was born in 1968. Steve made Hunter Bros. a second career, beginning eight years ago. Chip Weichec bought the business from his father in 1990.

?I remember my dad would say, "The worst thing that ever happened to the produce business was refrigeration," Chip Weichec said. "To a degree, that?s true," because after refrigeration became part of the industry, "people felt they didn?t have to sell something. They could keep it. Before there was refrigeration, you had to sell it or you would smell it by the end of the day. People would hustle and product got sold. The irony was that we were the first company to install refrigeration here? at what is now called the Philadelphia Regional Produce Market.

The market was built in 1959 without refrigeration. "Farmers would ship things here in heavy wooden crates. That was before my time," Chip Weichec added. "Product moved through terminal markets, and chains did not necessarily have warehouses and distribution centers like they do now. They used markets as a source of supply, and did a little direct buying. The reverse is true now."

Chip Weichec continued, "My dad was always progressive and encouraged the use of technology. He converted our whole store to refrigeration and was among the first people to buy electric pallet jacks."

Among the responsibilities assigned to Chip by his father was was installation of computerized sales tickets in the early 1990s. After that was installed, "no one hated it more than he did. If you hit button "B? instead of button "E? you didn?t get the answer you were looking for. But in the long run he was always very progressive and forward thinking."

Mr. Storey confirmed, "Frank was the pioneer in putting together the refrigeration additions to the Philadelphia market in the mid-1990s. He was the market president for five or six years before me. I was his vice president, and he worked very diligently and very hard with the Philadelphia Development Industrial Corporation? to improve the market with refrigeration.

Frank Weichec grew up across the road from the small airport, Wings Field, in Plymouth Meeting, PA. He went on to become a pilot and owned two planes. He sold his second plane last year to focus on his yacht, which is kept outside his Punta Gorda, FL, home.

While Plymouth Meeting is now considered a big Philadelphia suburb, at the time it was rural, and young Frank worked on farms in the area. His father, Frank Weichec Sr., was not a farmer but rather a physical therapist and a trainer for the Philadelphia Eagles and the Philadelphia Phillies from 1949 to 1961. Traveling with the Phillies was part of Frank Sr."s lifestyle, and knowing Philadelphia sports stars was a way of life for Franks I, II and III. (Chip Weichec, perhaps a little tired of family name confusion, named his son Max.)

Chip Weichec said that his father was a believer in industry associations and served on the terminal market division of the United Fresh Fruit & Vegetable Association. He subsequently was invited to join United?s main board.

In the early 1990s, he worked with Joe Procacci of Procacci Bros. Sales Corp., the late Pete Class of W.D. Class & Sons in Jessup, MD, Mr. Storey of Quaker City

and others to create the National Association of Perishable Agricultural Receivers.

Mr. Storey said of Frank Weichec, "He is one of the best guys I ever knew. He is very nice and very honest."

Chip Weichec said that Hunter Bros. has always been "primarily a vegetable house. We would pull vegetables from no farther west than McAllen, Texas, originally. Plus, we bought out of Florida, Georgia, North Carolina and all the way to Ontario and Ohio. We bought potatoes from Maine and PEI, but we did no West Coast business. That changed as the business changed. People used to handle certain areas. Pinto Bros. [in Philadelphia] was all West Coast veg. You had people who were East Coast veg and you had people who were in fruit. They all stayed within their core items. There was not much overlap, but as the business changed " wholesalers are like farmers " if they see someone make a buck, they branch off and try other things. But we are still known principally as an East Coast veg house. But we managed to make inroads into Western vegetables and we?re a respectable fruit house. We?re not the biggest on the street, but we try to be the best. Integrity is first and foremost with my dad, and that?s not easy sometimes. If the truth is ugly, you still have got to tell the truth. One key to success is that no one ever said a bad word about my dad."

Chip Weichec added that his father?s business philosophy was "the first loss is the best loss. It's tough to sell when you?re losing money, but if it's a dog, you get rid of it and make room for something else."

Frank Weichec "always had a life outside of the produce business," his son continued. "There are people in this business who die with their boots on, but he always wanted to fly. When he could afford it, he became a pilot and got a plane."

Frank first flew in 1975, and he flew for business and pleasure from Florida to Canada. As Chip swam on scholarship at Clemson University in South Carolina, Frank would buy season tickets for Clemson football games and fly in for each game. He also flew the short hop across New Jersey to his beach home there. He sold his plane, a Piper Saratoga, two weeks before Hurricane Charley?s 170 mph winds destroyed it and its Punta Gorda airport in August.

Now in Punta Gorda, enjoying his 41-foot Carter christened Seapiper, Frank is commander of his yacht club. The retired Weichecs moved onto the comfort of air conditioned Seapiper when Hurricane Charley knocked out power to their home last summer. Frank and his second wife, Alice, have owned the Florida home for several years.

Looking toward the future of Hunter Bros., Chip Weichec said, "We are getting back to our core things." After an expansion plan spawned in 1999 created some problems, "we decided that instead of being a jack-of-all-trades, we would specialize in what we do well."

Produce industry gets high marks in bioterrorism drill

No contaminants were found on fruits and vegetables tested by the Food & Drug Administration as part of a six-week bioterrorism drill, according to FDA officials.

?This is very good news," said Kathy Means, vice president of the Produce Marketing Association, who added that this just reinforces that levels of contaminants are either extremely low or non-existent on fruits and vegetables.

Last October, FDA started sampling a handful of food commodities " chosen as high-risk foods " for chemical and microbiological contaminants. The agency also began checking the food companies? security procedures in the event FDA had to rely on their information to trace an outbreak.

State and federal inspectors tested fresh leaf and stem vegetables, milk, spring and mineral water, fruit and vegetable juices, and infant formula. None of the hundreds of samples taken tested positive for contaminants, said an FDA official.

In other good news, FDA told members of the produce industry that 88 percent of fruit and vegetable companies could supply regulators with a list of consignees and suppliers. The other 12 percent either refused to do so or could not gather the information. Companies are under no obligation to do so, and currently FDA has no regulatory authority to inspect company records for security reasons, said FDA.

This field assignment was an exercise in preparedness, and not a pass/fail grade for individual companies. FDA was looking at how state and federal authorities communicated in the event of an emergency as well as an opportunity to educate the industry on security issues.

Even so, Ms. Means said, "We?d like to see that number higher."

All businesses covered under the new bioterrorism recordkeeping rule will need to keep records that identify suppliers and the subsequent recipients of foods starting the end of this year. Smaller businesses will have more leeway to keep this information handy as FDA says it needs authority to check records to respond to a food-related emergency.

?Every company should continue to look at their food security and food safety programs to see if there is room for improvement," said Ms. Means. "This latest news doesn?t mean we can sit back and say, "that?s all done." "

FDA plans to release reports on its findings in the near future and may again test the preparedness system. PMA said it welcomes ongoing tests of the surveillance system to further assure the public of the security of the U.S. food supply.

Global Berry expands marketing department

Global Berry Farms, based in Naples, FL, announced the hiring of Janis McIntosh as associate marketing manager, a new position.

She will be located in Salinas, CA, and will be responsible for coordinating packaging, trade show, and consumer and trade marketing efforts.

Prior to joining Global Berry Farms, Ms. McIntosh worked at Coastal Berry in Watsonville, CA, for nine years, where she was responsible for the company?s marketing projects. Among her accomplishments at Coastal were transitioning the company to a new corporate identity and logo, and the planning and development of the Strawberry University program for retailers.

?Janis brings fantastic experience and great enthusiasm for the berry business to Global," said Chris Mayhew, vice president of marketing for Global. "With her knowledge of the industry, Janis will be a great asset to the company as we continue to increase our marketing programs."

?I'm excited to be joining the Global team, and to be part of such a great group of people who are so committed to building the berry business," said Ms. McIntosh.