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Winn-Dixie Gets Upgrade from Moody's

NEW YORK - Moody's Investors Service revised its rating of Winn-Dixie Stores to stable from negative yesterday. The change was prompted by Moody's expectation that the company will continue to modestly improve its financial and operational profile.

Moody's noted that, in 2002, the company reduced debt through prepayment of $250 million of bank debt and improved store revenue and margins. Its stable rating also reflects improvement in leverage and our opinion that the company has stabilized operating performance. The company said it anticipates that the revolving credit facility will only fund temporary cash flow timing differences and that capital for investment will come from free cash flow.

Moody's noted that the rating could drop again should Winn-Dixie lose market share to supermarket or supercenter operators, the initiative to increase store count does not prove profitable, or the dividend payout ratio substantially increases. The ratings recognize the company's No. 1 or No. 2 grocery share of most of its markets, its good liquidity position, and our expectation that Winn-Dixie will finance a meaningful capital expansion program from internally generated cash flow.
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