Fleming Companies Inc/OK – ‘10-Q’ for 10/5/02

On:  Tuesday, 11/5/02, at 8:00pm ET   ·   As of:  11/6/02   ·   For:  10/5/02   ·   Accession #:  950134-2-13466   ·   File #:  1-08140

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Quarterly Report   —   Form 10-Q
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      42    184K 
 2: EX-10.66    Letter Agreement With William H Marquard               8     35K 
 3: EX-10.67    Letter Agreement With Thomas Dahlen                    8     34K 
 4: EX-15       Letter Re: Unaudited Interim Financial Information     2     10K 

10-Q   —   Quarterly Report
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 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
 EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 5, 2002

COMMISSION FILE NUMBER: 1-8140

 FLEMING COMPANIES, INC.
(Exact name of registrant as specified in its charter)

OKLAHOMA                            48-0222760  
(State of incorporation)                  (I.R.S. Employer      
                                     Identification No.)

 1945 LAKEPOINTE DRIVE
 LEWISVILLE, TEXAS 75029
(Address of principal executive offices)

(972) 906-8000
(Telephone number)

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                                                                      
---    ---                                                              

On October 31, 2002, 54,501,000 shares of the registrant's common stock, par    
value $2.50 per share, were outstanding.                                        

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 TABLE OF CONTENTS

PART I.  FINANCIAL INFORMATION:                                                 

Item 1.        Financial Statements                                         

                      Condensed Consolidated Statements of Operations - 12 Weeks
          Ended October 5, 2002, and October 6, 2001

                      Condensed Consolidated Statements of Operations - 40 Weeks
          Ended October 5, 2002, and October 6, 2001

   Condensed Consolidated Balance Sheets -
      October 5, 2002, and December 29, 2001

             Condensed Consolidated Statements of Cash Flows -
                   40 Weeks Ended October 5, 2002, and October 6, 2001

                Notes to Condensed Consolidated Financial Statements

  Independent Accountants' Review Report

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

Item 3.        Quantitative and Qualitative Disclosures                     
About Market Risk                   

Item 4.        Controls and Procedures                                      

PART II. OTHER INFORMATION:                                                     

Item 1.        Legal Proceedings                                            

Item 6.        Exhibits and Reports on Form 8-K                             

SIGNATURE                                                                   

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 PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS                                                    

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED                     
FOR THE 12 WEEKS ENDED OCTOBER 5, 2002 AND OCTOBER 6, 2001                      
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                        
--------------------------------------------------------------------------------

                                                                [Download Table]

                                                    2002           2001     
                                                ------------   ------------ 
                                                                            
Net sales                                       $  3,972,649   $  3,531,640 
Costs and expenses:                                                         
    Cost of sales                                  3,832,189      3,375,247 
    Selling and administrative                       114,042        107,614 
    Interest expense                                  34,267         27,110 
    Interest income and other                         (5,451)        (4,795)
    Impairment/restructuring credit                       --           (609)
                                                ------------   ------------ 
        Total costs and expenses                   3,975,047      3,504,567 
                                                ------------   ------------ 

    Income (loss) before income taxes                 (2,398)        27,073 
    Taxes on income (loss)                              (928)        10,565 
                                                ------------   ------------ 
    Income (loss) from continuing operations          (1,470)        16,508 
                                                ------------   ------------ 
Discontinued operations:                                                    
    Income (loss) before income taxes                (31,624)         4,209 
    Taxes on income (loss)                           (12,238)         1,642 
                                                ------------   ------------ 
    Income (loss) from discontinued operations       (19,386)         2,567 
                                                ------------   ------------ 

Net income (loss)                               $    (20,856)  $     19,075 
                                                ============   ============ 

Basic income (loss) per share:                                              
    Continuing operations (net of taxes)        $      (0.03)  $       0.38 
    Discontinued operations (net of taxes)             (0.36)          0.06 
                                                ------------   ------------ 
    Net income (loss)                           $      (0.39)  $       0.44 
                                                ------------   ------------ 

Diluted income (loss) per share:                                            
    Continuing operations (net of taxes)        $      (0.03)  $       0.35 
    Discontinued operations (net of taxes)             (0.36)          0.05 
                                                ------------   ------------ 
    Net income (loss)                           $      (0.39)  $       0.40 
                                                ------------   ------------ 

Dividends paid per share                        $       0.02   $       0.02 

Weighted average shares outstanding:                                        
    Basic                                             53,950         43,728 
    Diluted                                           53,950         51,032 
                                                ============   ============ 

The accompanying notes are an integral part of these condensed consolidated     
financial statements.                                                           

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED                     
FOR THE 40 WEEKS ENDED OCTOBER 5, 2002 AND OCTOBER 6, 2001                      
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)                                        
--------------------------------------------------------------------------------

                                                                [Download Table]

                                                    2002           2001     
                                                ------------   ------------ 
                                                                            
Net sales                                       $ 11,425,643   $  9,767,863 
Costs and expenses:                                                         
    Cost of sales                                 10,939,960      9,301,171 
    Selling and administrative                       312,270        329,937 
    Interest expense                                 110,501         96,893 
    Interest income and other                        (20,254)       (19,768)
    Impairment/restructuring charges                  27,361         10,411 
    Litigation charges                                    --         48,628 
                                                ------------   ------------ 
        Total costs and expenses                  11,369,838      9,767,272 
                                                ------------   ------------ 

    Income before income taxes                        55,805            591 
    Taxes on income                                   21,456            236 
                                                ------------   ------------ 
    Income from continuing operations                 34,349            355 
                                                ------------   ------------ 
Discontinued operations:                                                    
    Income (loss) before income taxes                (33,207)        35,314 
    Taxes on income (loss)                           (12,701)        14,586 
                                                ------------   ------------ 
    Income (loss) from discontinued operations       (20,506)        20,728 
                                                ------------   ------------ 
Income before extraordinary charge                    13,843         21,083 

Extraordinary charge from early retirement                                  
    of debt, net of taxes                             (7,863)        (3,469)
                                                ------------   ------------ 
Net income                                      $      5,980   $     17,614 
                                                ============   ============ 

Basic income (loss) per share:                                              
    Continuing operations (net of taxes)        $       0.71   $       0.01 
    Discontinued operations (net of taxes)             (0.43)          0.49 
                                                ------------   ------------ 
    Income before extraordinary charge                  0.28           0.50 
    Extraordinary charge from early retirement                              
      of debt, net of taxes                            (0.16)         (0.08)
                                                ------------   ------------ 
    Net income                                  $       0.12   $       0.42 
                                                ============   ============ 

Diluted income (loss) per share:                                            
    Continuing operations (net of taxes)        $       0.70   $       0.01 
    Discontinued operations (net of taxes)             (0.42)          0.46 
                                                ------------   ------------ 
    Income before extraordinary charge                  0.28           0.47 
    Extraordinary charge from early retirement                              
      of debt, net of taxes                            (0.16)         (0.08)
                                                ------------   ------------ 
    Net income                                  $       0.12   $       0.39 
                                                ============   ============ 

Dividends paid per share                        $       0.06   $       0.06 

Weighted average shares outstanding:                                        
    Basic                                             48,065         42,177 
    Diluted                                           49,240         44,670 
                                                ============   ============ 

The accompanying notes are an integral part of these condensed consolidated     
financial statements.                                                           

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CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED                               
(IN THOUSANDS)                                                                  
--------------------------------------------------------------------------------

                                                        [Enlarge/Download Table]

                                                              OCTOBER 5,    DECEMBER 29, 
ASSETS                                                           2002           2001     
                                                             ------------   ------------ 
                                                                                         
Current assets:                                                                          
     Cash and cash equivalents                               $     20,694   $     17,325 
     Receivables, net                                             701,247        568,197 
     Inventories                                                1,110,843        902,933 
     Assets held for sale                                         615,782        571,352 
     Other current assets                                          79,681         88,133 
                                                             ------------   ------------ 
         Total current assets                                   2,528,247      2,147,940 
Investments and notes receivable, net                              81,502        105,651 
Investment in direct financing leases                              69,029         83,118 

Property and equipment                                          1,078,555      1,213,188 
Less accumulated depreciation                                                            
     and amortization                                            (490,208)      (559,669)
                                                             ------------   ------------ 
Net property and equipment                                        588,347        653,519 
Deferred income taxes                                              68,528        105,453 
Other assets                                                      187,991        143,240 
Goodwill, net                                                     696,830        415,772 
                                                             ------------   ------------ 

Total assets                                                 $  4,220,474   $  3,654,693 
                                                             ============   ============ 

LIABILITIES AND SHAREHOLDERS' EQUITY                                                     

Current liabilities:                                                                     
     Accounts payable                                        $    985,272   $    952,037 
     Current maturities of long-term debt                           4,326         29,865 
     Current obligations under capital leases                      15,866         15,913 
     Liabilities held for sale                                    146,740        157,001 
     Other current liabilities                                    230,642        228,949 
                                                             ------------   ------------ 
         Total current liabilities                              1,382,846      1,383,765 
Long-term debt                                                  1,839,175      1,427,929 
Long-term obligations under capital leases                        196,173        217,427 
Other liabilities                                                 129,718        127,353 

Commitments and contingencies                                                            

Shareholders' equity:                                                                    
     Common stock, $2.50 par value per share                      136,270        111,095 
     Capital in excess of par value                               711,574        567,720 
     Reinvested earnings (deficit)                               (115,180)      (121,160)
     Accumulated other comprehensive income:                                             
         Additional minimum pension liability                     (59,436)       (59,436)
         Cumulative foreign currency translation adjustment          (666)            -- 
                                                             ------------   ------------ 
         Total shareholders' equity                               672,562        498,219 
                                                             ------------   ------------ 

Total liabilities and shareholders' equity                   $  4,220,474   $  3,654,693 
                                                             ============   ============ 

The accompanying notes are an integral part of these condensed consolidated     
financial statements.                                                           

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED                     
FOR THE 40 WEEKS ENDED OCTOBER 5, 2002, AND OCTOBER 6, 2001                     
(IN THOUSANDS)                                                                  
--------------------------------------------------------------------------------

                                                                [Download Table]

                                                             2002         2001    
                                                          ----------   ---------- 
                                                                                  
Cash flows from operating activities:                                             
     Net income                                           $    5,980   $   17,614 
     Adjustments to reconcile net income to                                       
        net cash provided by operating activities:                                
        Depreciation and amortization                        123,926      126,127 
        Amortization costs in interest expense                 6,598        4,929 
        Credit losses                                          8,797       20,462 
        Impairment/restructuring and related charges,                             
           net of impairment credit (not in other lines)      27,361       14,637 
        Cash payments on impairment/restructuring                                 
           and related charges                               (21,669)     (58,450)
        Cost of early debt retirement                         13,119        5,787 
     Change in assets and liabilities,                                            
       excluding effect of acquisitions:                                          
        Receivables                                           11,000      (63,321)
        Inventories                                          (69,962)    (217,352)
        Accounts payable                                    (104,882)      65,898 
        Other assets and liabilities                        (117,873)     (61,048)
                                                          ----------   ---------- 
Net cash used in operating activities                       (117,605)    (144,717)
                                                          ----------   ---------- 
Cash flows from investing activities:                                             
     Collections on notes receivable                          32,127       24,375 
     Notes receivable funded                                 (14,225)     (20,704)
     Purchases of businesses, net of cash received          (295,058)    (120,670)
     Purchases of property and equipment                    (150,779)    (168,504)
     Proceeds from sale of property and equipment            164,268       13,286 
     Proceeds from sale of businesses                             --      120,947 
     Other investing activities                               18,277       13,597 
                                                          ----------   ---------- 
Net cash used in investing activities                       (245,390)    (137,673)
                                                          ----------   ---------- 
Cash flows from financing activities:                                             
     Change in revolver                                     (140,000)     120,000 
     Proceeds from long-term borrowings                      880,940      500,602 
     Payments on long-term debt                             (489,047)    (342,755)
     Payments on capital issuance and debt retirement        (45,976)     (23,976)
     Principal payments on capital lease obligations         (15,408)     (15,092)
     Proceeds from sale of common stock                      178,703       59,252 
     Dividends paid                                           (2,848)      (2,530)
                                                          ----------   ---------- 
Net cash provided by financing activities                    366,364      295,501 
                                                          ----------   ---------- 

Net change in cash and cash equivalents                        3,369       13,111 
Cash and cash equivalents, beginning of period                17,325       30,380 
                                                          ----------   ---------- 
Cash and cash equivalents, end of period                  $   20,694   $   43,491 
                                                          ==========   ========== 
Supplemental information:                                                         
     Cash paid for interest                               $  139,462   $  122,484 
     Cash refunded for income taxes                       $  (29,448)  $  (17,894)
                                                          ==========   ========== 

The accompanying notes are an integral part of these condensed consolidated     
financial statements.                                                           

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FLEMING COMPANIES, INC.                                                         
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                            
(UNAUDITED)                                                                     

1. BASIS OF PRESENTATION                                                        

The preceding condensed consolidated financial statements of Fleming Companies, 
Inc. have been prepared by us, without audit. In our opinion, all adjustments,  
which consist of normal recurring adjustments, except as disclosed, necessary to
present fairly our financial position, results of operations and cash flows for 
the periods presented have been made. These financial statements should be read 
in conjunction with the audited financial statements and notes thereto included 
in our Fiscal 2001 Annual Report on Form 10-K and Form 10-K/A.                  

The preparation of the condensed consolidated financial statements in conformity
with accounting principles generally accepted in the United States requires us  
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent liabilities at the date of the         
financial statements and the reported amounts of revenues and expenses during   
the reporting period. Actual results could differ from those estimates.         

Certain prior period amounts have been reclassified to conform to the current   
period classifications, including the reclassification of net sales and cost of 
goods due to the adoption of EITF 01-9 in the first quarter of 2002. In 2002 and
2001, the effect of the decrease to both sales and cost of sales on the 12 week 
amounts was less than $21 million and the effect on the 40 week amounts was less
than $63 million. This reclassification had no effect on gross margin or net    
income. Prior period amounts have been reclassified for comparability.          

During the third quarter of 2002, our Board approved a plan to divest our price 
impact retail stores and we have reflected the operating results of the         
component as discontinued operations in accordance with SFAS No. 144 -          
Accounting for the Impairment or Disposal of Long-Lived Assets. As a result, we 
will no longer be reporting multiple segments as our continuing operations are  
all within one reportable segment. Prior period amounts have been reclassified  
for comparability (see Footnote 4). Beginning with the third quarter of 2002,   
our transfer pricing from distribution to retail will be recorded at market;    
historically it has been recorded at cost.                                      

In April 2002, the FASB issued SFAS No. 145 - Rescission of FASB Statements No. 
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. We
had a refinancing transaction in the second quarter of 2002 that resulted in an 
extraordinary charge (see Footnote 8). In 2003, this amount will be reclassified
to selling and administrative expense and taxes on income in accordance with    
SFAS 145.                                                                       

Certain information and footnote disclosures normally included in financial     
statements prepared in accordance with accounting principles generally accepted 
in the United States have been condensed or omitted.                            

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2. INVENTORY VALUATION                                                          

We use the LIFO method of inventory valuation for determining the cost of most  
grocery and certain perishable inventories. The excess of current cost of LIFO  
inventories over their stated value was $49.8 million ($14.8 million of which is
recorded in assets held for sale in current assets on the balance sheet) and    
$46.4 million ($13.1 million of which is recorded in assets held for sale in    
current assets on the balance sheet) at October 5, 2002 and December 29, 2001,  
respectively.                                                                   

3. EARNINGS PER SHARE                                                           

Both basic and diluted income (loss) per share from continuing operations are   
computed based on income (loss) from continuing operations (adjusted for the    
after-tax effect of interest expense relating to the 5 1/4% convertible senior  
subordinated notes, if applicable) divided by weighted average shares as        
appropriate for each calculation. Both basic and diluted income (loss) per share
from discontinued operations are based on income (loss) from discontinued       
operations divided by weighted average shares as appropriate for each           
calculation.                                                                    

                                                        [Enlarge/Download Table]

(IN THOUSANDS, EXCEPT PER SHARE DATA)           12 WEEKS ENDED              40 WEEKS ENDED      
                                          --------------------------  --------------------------
                                          OCTOBER 5,      OCTOBER 6,  OCTOBER 5,      OCTOBER 6,
                                             2002            2001        2002            2001   
                                          ----------      ----------  ----------      ----------
                                                                                                
Numerator:                                                                                      
Basic earnings (loss) from continuing                                                           
  operations before extraordinary charge  $   (1,470)     $   16,508  $   34,349      $      355
Basic earnings (loss) from discontinued                                                         
  operations before extraordinary charge     (19,386)          2,567     (20,506)         20,728
After-tax interest expense related to                                                           
  convertible debt                                --           1,180          --              --
                                          ----------      ----------  ----------      ----------
Diluted earnings (loss) before                                                                  
  extraordinary charge                    $  (20,856)     $   20,255  $   13,843      $   21,083
                                          ==========      ==========  ==========      ==========

Denominator:                                                                                    
Weighted average shares for                                                                     
  basic earnings per share                    53,950          43,728      48,065          42,177
Effect of dilutive securities:                                                                  
  Employee stock options                          --           1,908         882           1,877
  Restricted stock compensation                   --             441         293             616
  Convertible debt securities                     --           4,955          --              --
                                          ----------      ----------  ----------      ----------

    Dilutive potential common shares              --           7,304       1,175           2,493
                                          ----------      ----------  ----------      ----------

Weighted average shares for                                                                     
  diluted earnings per share                  53,950          51,032      49,240          44,670
                                          ==========      ==========  ==========      ==========

For the 12 weeks ended October 5, 2002, we did not reflect 5.0 million of       
weighted average shares or add back after-tax interest expense of $1.2 million  
related to convertible debt due to                                              

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antidilution. We also did not reflect 0.2 million of weighted average shares for
both employee stock options and restricted stock compensation due to            
antidilution. For the 40 weeks ended October 5, 2002 and October 6, 2001, we did
not reflect 5.0 million and 3.6 million, respectively, of weighted average      
shares or add back after-tax interest expense of $4.0 million and $2.3 million, 
respectively, related to convertible debt due to antidilution.                  

4. DISCONTINUED OPERATIONS                                                      

On September 24, 2002, the Board of Directors approved a plan to sell our price 
impact retail grocery stores operating under the Rainbow and Food 4 Less        
banners. The plan is based in part on our decision to focus on our core         
distribution business. Results of operations of these stores represent a        
component of our company and have been previously included in the retail        
segment. The disposition of the retail stores is expected to occur in a series  
of sales to multiple buyers beginning in the fourth quarter of 2002 and         
completed in 2003. Expenses associated with support services that directly      
support the retail operations have been reflected in discontinued operations.   

As a result of the expected disposition, we have presented the associated assets
and liabilities of the component as held for sale in the accompanying           
consolidated condensed balance sheets. We also have reflected the operating     
results of the component as discontinued operations in the accompanying         
consolidated condensed statements of operations.                                

The component's assets and liabilities classified as held for sale related to   
discontinued operations as of October 5, 2002 and December 29, 2001 are as      
follows:                                                                        

                                                                [Download Table]

(In thousands)                                                                   
                                                         October 5,  December 29,
Assets held for sale:                                       2002         2001    
                                                         ----------  ------------
                                                                                 
  Current assets                                         $  150,387  $    133,417
  Property and equipment, net                               288,901       266,136
  Other assets                                              144,307       141,733
                                                         ----------  ------------
  Assets held for sale from discontinued operations         583,595       541,286

  Assets held for sale from impairment/restructuring                             
   charges (see Footnote 12)                                 32,187        30,066

                                                         ----------  ------------
  Total assets held for sale                             $  615,782  $    571,352
                                                         ==========  ============

Liabilities held for sale from discontinued operations:                          
  Current portion of capital lease obligations           $    6,240  $      5,497
  Accounts payable and accrued liabilities                   24,362        37,096
  Capital lease obligations                                 116,138       114,408

                                                         ----------  ------------
  Total liabilities held for sale                        $  146,740  $    157,001
                                                         ==========  ============

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Summary operating results for the component classified as discontinued          
operations for the periods indicated below are as follows:                      

                                                        [Enlarge/Download Table]

(In thousands)                    12 Weeks Ended                   40 Weeks Ended        
                           ------------------------------  ------------------------------
                            October 5,        October 6,    October 5,        October 6, 
                               2002              2001          2002              2001    
                           ------------      ------------  ------------      ------------
                                                                                         
Net sales                  $    458,346      $    475,355  $  1,621,447      $  1,822,222

Income (loss) from                                                                       
  discontinued operations  $    (19,386)     $      2,567  $    (20,506)     $     20,728

5. COMPREHENSIVE INCOME                                                         

Our comprehensive income (loss) for the 12 and 40 weeks ended October 5, 2002,  
totaled a loss of $22.2 million and income of $5.3 million, respectively, and   
was comprised of reported net income (loss) and foreign currency translation    
adjustment. Our comprehensive income for the 12 and 40 weeks ended October 6,   
2001, totaled $19.1 million and $17.6 million, respectively, and was comprised  
only of reported net income.                                                    

6. ACQUISITION OF CORE-MARK INTERNATIONAL, INC.                                 

On June 18, 2002, we acquired Core-Mark International, Inc., a leading          
piece-pick distributor to convenience stores and other retail customers in the  
Western United States and Canada, for $217 million in cash (net of cash         
acquired) and assumed its debt ($77 million of 11 3/8% senior subordinated notes
due 2003 and a $55 million accounts receivable securitization facility).        
Core-Mark's 11 3/8% senior subordinated notes were called for redemption        
immediately upon our acquisition. The $55 million accounts receivable           
securitization facility was paid and terminated on July 18, 2002.               

The acquisition was financed through our credit agreement along with the sale of
$200 million of 9 1/4% senior notes due 2010 and 9.2 million shares of common   
stock (which grossed $178 million at $19.40 per share, and netted approximately 
$170 million after the underwriting discount and other issuance costs). The     
acquisition was accounted for under the purchase method, and the results of     
Core-Mark have been included in our consolidated results from the date of       
acquisition.                                                                    

We have not finalized the allocation of the purchase price as of October 5,     
2002. We have engaged a valuation firm to assist us in this process. Upon       
completion of their work, we will adjust the preliminary purchase price         
allocation in accordance with SFAS No. 141 - Business Combinations. The         
estimation of this allocation, which is included as part of these financial     
statements, is as follows: $31 million to property, plant and equipment, $49    
million to working capital, $269 million to goodwill and other intangible assets
offset by $132 million of debt assumed.                                         

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The unaudited proforma combined historical results, as if Core-Mark had been    
acquired at the beginning of fiscal 2002 and 2001, respectively, are estimated  
in the following table:                                                         

                                                        [Enlarge/Download Table]

(IN MILLIONS, EXCEPT PER SHARE DATA)                12 WEEKS ENDED               40 WEEKS ENDED     
                                              --------------------------  --------------------------
                                              OCTOBER 5,      OCTOBER 6,  OCTOBER 5,      OCTOBER 6,
                                                 2002            2001        2002            2001   
                                              ----------      ----------  ----------      ----------
                                                                                                    
Net sales from continuing operations          $    3,973      $    4,436  $   13,032      $   12,305

Income (loss) from continuing operations      $       (2)     $       19  $       41      $        4
Income (loss) from discontinued operations           (19)              3         (20)             21
                                              ----------      ----------  ----------      ----------
Income (loss) before extraordinary charge     $      (21)     $       22  $       21      $       25
Net income (loss)                             $      (21)     $       22  $       13      $       22

Basic earnings per share:                                                                           
  Income (loss) from continuing operations    $    (0.03)     $     0.45  $     0.86      $     0.10
  Income (loss) from discontinued operations       (0.36)           0.06       (0.43)           0.49
                                              ----------      ----------  ----------      ----------
  Income (loss) before extraordinary charge   $    (0.39)     $     0.51  $     0.43      $     0.59
  Net income (loss)                           $    (0.39)     $     0.51  $     0.27      $     0.51

Diluted earnings per share:                                                                         
  Income (loss) from continuing operations    $    (0.03)     $     0.41  $     0.84      $     0.10
  Income (loss) from discontinued operations       (0.36)           0.05       (0.38)           0.46
                                              ----------      ----------  ----------      ----------
  Income (loss) before extraordinary charge   $    (0.39)     $     0.46  $     0.46      $     0.56
  Net income (loss)                           $    (0.39)     $     0.46  $     0.31      $     0.48

The proforma results include amortization of other intangibles related to the   
purchase for fiscal 2001 amounts and interest expense on debt incurred to       
finance the acquisition. The proforma results are not necessarily indicative of 
what actually would have occurred if the acquisition had been completed as of   
the beginning of each fiscal period presented, nor are they necessarily         
indicative of future consolidated results.                                      

7. CONTINGENCIES                                                                

Since August 29, 2002, several securities lawsuits have been filed against us   
and certain of our officers in the United States District Court for the Eastern 
District of Texas seeking court certification as a class action. In addition,   
one related shareholders' derivative lawsuit has been filed against certain of  
our officers and the members of our Board of Directors in the United States     
District Court for the Eastern District of Texas.                               

We are engaged in other various legal proceedings which have arisen but have not
been fully adjudicated. These proceedings, in the opinion of management, will   
not have a material adverse effect upon our consolidated financial position,    
cash flows or results of operations when ultimately concluded.                  

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8. DEBT                                                                         

Long-term debt consists of the following:                                       

                                                        [Enlarge/Download Table]

                                                         OCTOBER 5,       DECEMBER 29, 
                                                            2002              2001     
                                                        ------------      ------------ 
                                                                (IN THOUSANDS)         
                                                                                       
10 5/8 % senior subordinated notes due 2007             $    400,000      $    400,000 
10 1/8 % senior notes due 2008                               359,029           345,870 
5 1/4 % convertible senior subordinated notes due 2009       150,000           150,000 
9 1/4 % senior notes due 2010                                200,000                -- 
9 7/8 % senior subordinated notes due 2012                   260,000                -- 
10 1/2 % senior subordinated notes due 2004                       --           250,000 
Revolving credit, average interest rates of 3.9%                                       
   for 2002 and 5.5% for 2001, due 2007                       60,000           200,000 
Term loan, due 2002 to 2008, average interest                                          
   rate of 4.1% for 2002 and 6.4% for 2001                   423,938           118,637 
Debt discounts                                                (9,466)           (6,713)
                                                        ------------      ------------ 
                                                           1,843,501         1,457,794 
Less current maturities                                       (4,326)          (29,865)
                                                        ------------      ------------ 

Long-term debt                                          $  1,839,175      $  1,427,929 
                                                        ============      ============ 

Aggregate maturities of long-term debt for the next five years are approximately
as follows: in the remainder of 2002, $0 million; in 2003, $4 million; in 2004, 
$4 million; in 2005, $4 million; and in 2006, $4 million.                       

On April 15, 2002, we issued $260 million of 9 7/8% senior subordinated notes   
that mature on May 1, 2012. The net proceeds from this private placement were   
used to redeem the 10 1/2% senior subordinated notes due 2004. These notes are  
unsecured senior subordinated obligations, ranking the same as all other        
existing and future senior subordinated indebtedness. The notes are effectively 
subordinated to senior secured and senior unsecured indebtedness, including     
loans under our senior secured credit facility. The 9 7/8% notes are guaranteed 
by substantially all of our subsidiaries (see Footnote 9).                      

On June 18, 2002, we entered into a $975 million senior secured credit facility 
to refinance our then existing $850 million senior secured credit facility. The 
credit facility consists of a $550 million revolving facility maturing June 18, 
2007 and a $424 million tranche B term loan maturing June 18, 2008. The new     
credit facility is secured by all of our inventory and receivables, except for  
the portion of receivables related to Core-Mark until the accounts receivable   
securitization was paid on July 18, 2002. As of October 5, 2002, based upon the 
most restrictive covenant, we had $285 million available to borrow under the    
revolving facility. We amended our new credit agreement on October 18, 2002     
primarily to facilitate the sale of our retail price impact stores.             

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In connection with the retirement of the 10 1/2% senior subordinated notes due  
2004 and the refinancing of our $850 million senior secured credit facility, we 
recognized an $8 million after-tax extraordinary charge ($13 million pre-tax and
$5 million of tax benefit) from the early retirement of debt during the second  
quarter of 2002. The charge consisted of debt premium of $6.5 million on our    
2004 notes, $3.4 million of unamortized debt issuance costs on our 2004 notes   
and $3.2 million of unamortized debt issuance costs on our $850 million credit  
agreement.                                                                      

Also, on June 18, 2002, we issued $200 million of 9 1/4% senior notes that      
mature June 15, 2010, ranking equal in right of payment with all other existing 
and future senior unsecured debt. The notes are effectively subordinated to any 
secured debt, including our senior secured credit facility, but rank senior to  
all our existing and future subordinated debt. The notes were issued            
simultaneously with the execution of our senior secured credit facility. The    
9 1/4% notes are guaranteed by substantially all of our subsidiaries (see       
Footnote 9).                                                                    

In June 2002 and July 2002, we entered into two interest rate swap agreements   
with a combined notional amount of $50 million. These swaps were tied to our    
9 1/4% senior notes due 2010. The maturity, call dates, and call premiums       
mirrored those of the notes. The swaps were designed for us to receive a fixed  
rate of 9 1/4% per annum and pay a floating rate based on a spread plus the     
3-month LIBOR. The floating rate reset quarterly beginning September 15, 2002.  
We documented and designated these swaps to qualify as a fair value hedge.      
During the third quarter, we unwound these swap agreements and received and     
recorded $2 million as a deferred gain that is being amortized to reduce        
interest expense over the remaining life of the related senior notes.           

In April 2002, we entered into an interest rate swap agreement with a notional  
amount of $50 million. This swap was tied to our 9 7/8% senior subordinated     
notes due 2012. The maturity, call dates, and call premiums mirrored those of   
the notes. The swap was designed for us to receive a fixed rate of 9 7/8% per   
annum and pay a floating rate based on a spread plus the 3-month LIBOR. The     
floating rate reset quarterly beginning May 1, 2002. We documented and          
designated this swap to qualify as a fair value hedge. During the third quarter,
we unwound this swap agreement and received and recorded $4 million as a        
deferred gain that is being amortized to reduce interest expense over the       
remaining life of the related subordinated notes.                               

In 2001, we entered into interest rate swap agreements with a combined notional 
amount of $210 million. The swaps are tied to our 10 1/8% senior notes due 2008.
The maturity, call dates, and call premiums mirror those of the notes. The swaps
are designed for us to receive a fixed rate of 10 1/8% per annum and pay a      
floating rate based on a spread plus the 3-month LIBOR. The floating rates reset
quarterly. We have documented and designated these swaps to qualify as fair     
value hedges. During the third quarter of 2002, we unwound all but one swap     
agreement and received and recorded $4 million as a deferred gain that is being 
amortized to reduce interest expense over the remaining life of the related     
senior notes. At the end of the third quarter of 2002, in accordance with SFAS  
133, the mark-to-market value of the remaining swap, with a notional value of   
$50 million was recorded on our consolidated balance sheet as a $4 million      
long-term asset offset by a change in fair value to the senior notes due 2008.  

For all qualifying and highly effective fair value hedges, the changes in the   
fair value of a derivative and the loss or gain on the hedged asset or liability
relating to the risk being hedged are                                           

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recorded currently in earnings. These amounts are recorded to interest income   
and provide offset of one another. There was no net earnings impact relating to 
our fair value hedges.                                                          

9. SUBSIDIARY GUARANTEE OF SENIOR NOTES AND SENIOR SUBORDINATED NOTES           

The senior notes, convertible senior subordinated notes, and senior subordinated
notes are guaranteed by substantially all of Fleming's wholly-owned direct and  
indirect subsidiaries. The guarantees are joint and several, full, complete and 
unconditional. There are currently no restrictions on the ability of the        
subsidiary guarantors to transfer funds to Fleming (the parent) in the form of  
cash dividends, loans or advances.                                              

The following condensed consolidating financial information depicts, in separate
columns, the parent company, those subsidiaries which are guarantors, those     
subsidiaries which are non-guarantors, elimination and reclassification         
adjustments and the consolidated total. The financial information may not       
necessarily be indicative of the results of operations or financial position had
the subsidiaries been operated as independent entities.                         

CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION                               

                                                        [Enlarge/Download Table]

                                                                 OCTOBER 5, 2002                                  
                                  --------------------------------------------------------------------------------
                                                                                    ELIMINATIONS                  
                                     PARENT                           NON-          AND RECLASS-                  
                                    COMPANY       GUARANTORS       GUARANTORS        IFICATIONS       CONSOLIDATED
                                  -----------     -----------     ------------      ------------      ------------
                                                                 (IN THOUSANDS)                                   
                                                                                                                  
             ASSETS                                                                                               
Current assets:                                                                                                   
   Cash and cash equivalents      $    13,411     $     7,023     $        260      $         --      $     20,694
   Receivables, net                   458,413         250,700            4,139           (12,005)          701,247
   Inventories                        814,819         433,805               --          (137,781)        1,110,843
   Assets held for sale                    --              --               --           615,782           615,782
   Other current assets                65,975          14,800              566            (1,660)           79,681
                                  -----------     -----------     ------------      ------------      ------------
      Total current assets          1,352,618         706,328            4,965           464,336         2,528,247
Investment in subsidiaries            446,078           5,356               --          (451,434)               --
Intercompany receivables              616,733              --               --          (616,733)               --
Property and equipment, net           536,666         361,894            9,662          (319,875)          588,347
Goodwill,net                          401,941         436,672               --          (141,783)          696,830
Other assets                          377,851          31,877               --            (2,678)          407,050
                                  -----------     -----------     ------------      ------------      ------------
                                  $ 3,731,887     $ 1,542,127     $     14,627      $ (1,068,167)     $  4,220,474
                                  ===========     ===========     ============      ============      ============

LIABILITIES AND EQUITY (DEFICIT)                                                                                  
Current liabilities:                                                                                              
   Accounts payable               $   748,225     $   252,350     $         89      $    (15,392)     $    985,272
   Intercompany payables                   --         596,751           19,982          (616,733)               --
   Liabilities held for sale               --              --               --           146,740           146,740
   Other current liabilities          165,862          98,823              803           (14,654)          250,834
                                  -----------     -----------     ------------      ------------      ------------
      Total current liabilities       914,087         947,924           20,874          (500,039)        1,382,846
Obligations under capital leases      193,638         118,673               --          (116,138)          196,173
Long-term debt and other                                                                                          
   liabilities                      1,951,600          17,849               --              (556)        1,968,893
Equity (deficit)                      672,562         457,681           (6,247)         (451,434)          672,562
                                  -----------     -----------     ------------      ------------      ------------
                                  $ 3,731,887     $ 1,542,127     $     14,627      $ (1,068,167)     $  4,220,474
                                  ===========     ===========     ============      ============      ============

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CONDENSED CONSOLIDATING BALANCE SHEET INFORMATION (CONTINUING)                  

                                                        [Enlarge/Download Table]


                                                            DECEMBER 29, 2001                              
                                  -------------------------------------------------------------------------
                                                                             ELIMINATIONS                  
                                     PARENT                       NON-       AND RECLASS-                  
                                    COMPANY     GUARANTORS     GUARANTORS     IFICATIONS      CONSOLIDATED 
                                  -----------   -----------   -----------    -------------    -------------
                                                            (IN THOUSANDS)                                 
                                                                                                           
             ASSETS                                                                                        
Current assets:                                                                                            
   Cash and cash equivalents      $    10,175   $     6,876   $       274    $          --    $      17,325
   Receivables, net                   483,007       105,250            12          (20,072)         568,197
   Inventories                        817,012       198,386            --         (112,465)         902,933
   Assets held for sale                    --            --            --          571,352          571,352
   Other current assets                84,676         4,950            99           (1,592)          88,133
                                  -----------   -----------   -----------    -------------    -------------
      Total current assets          1,394,870       315,462           385          437,223        2,147,940
Investment in subsidiaries             93,241         5,356            --          (98,597)              --
Intercompany receivables              470,545            --            --         (470,545)              --
Property and equipment, net           651,846       287,826         9,182         (295,335)         653,519
Goodwill,net                          401,180       153,010            --         (138,418)         415,772
Other assets                          379,658        47,861        13,413           (3,470)         437,462
                                  -----------   -----------   -----------    -------------    -------------
                                  $ 3,391,340   $   809,515   $    22,980    $    (569,142)   $   3,654,693
                                  ===========   ===========   ===========    =============    =============

LIABILITIES AND EQUITY (DEFICIT)                                                                           
Current liabilities:                                                                                       
   Accounts payable               $   861,445   $   109,311   $     1,035    $     (19,754)   $     952,037
   Intercompany payables                   --       443,066        27,479         (470,545)              --
   Liabilities held for sale               --            --            --          157,001          157,001
   Other current liabilities          264,744        27,880           713          (18,610)         274,727
                                  -----------   -----------   -----------    -------------    -------------
      Total current liabilities     1,126,189       580,257        29,227         (351,908)       1,383,765
Obligations under capital leases      213,292       118,543            --         (114,408)         217,427
Long-term debt and other                                                                                   
   liabilities                      1,553,640         5,871            --           (4,229)       1,555,282
Equity (deficit)                      498,219       104,844        (6,247)         (98,597)         498,219
                                  -----------   -----------   -----------    -------------    -------------
                                  $ 3,391,340   $   809,515   $    22,980    $    (569,142)   $   3,654,693
                                  ===========   ===========   ===========    =============    =============

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CONDENSED CONSOLIDATING OPERATING STATEMENT INFORMATION                         

                                                        [Enlarge/Download Table]

                                                                            12 WEEKS ENDED OCTOBER 5, 2002                     
                                            ---------------------------------------------------------------------------------- 
                                                                                                ELIMINATIONS                   
                                               PARENT                             NON-          AND RECLASS-                   
                                              COMPANY        GUARANTORS        GUARANTORS        IFICATIONS       CONSOLIDATED 
                                            -----------      -----------      ------------      ------------      ------------ 
                                                                             (IN THOUSANDS)                                    
                                                                                                                               
Net sales                                   $ 3,469,439      $   512,913      $         87      $     (9,790)     $  3,972,649 
Costs and expenses:                                                                                                            
    Cost of sales                             3,341,447          500,532                --            (9,790)        3,832,189 
    Selling and administrative                   97,648           16,177               217                --           114,042 
    Other                                        43,426          (14,449)             (161)               --            28,816 
    Impairment/restructuring charge                  --               --                --                --                -- 
    Equity income from subsidiaries              (6,282)              --                --             6,282                -- 
                                            -----------      -----------      ------------      ------------      ------------ 
       Total costs and expenses               3,476,239          502,260                56            (3,508)        3,975,047 
                                            -----------      -----------      ------------      ------------      ------------ 

Income (loss) before taxes                       (6,800)          10,653                31            (6,282)           (2,398)
Taxes on income (loss)                           (5,330)           4,389                13                --              (928)
                                            -----------      -----------      ------------      ------------      ------------ 
Income (loss) from continuing operations         (1,470)           6,264                18            (6,282)           (1,470)
Discontinued operations:                                                                                                       
Income (loss) before taxes                      (31,624)          10,170                --           (10,170)          (31,624)
Taxes on income (loss)                          (12,238)           4,191                --            (4,191)          (12,238)
                                            -----------      -----------      ------------      ------------      ------------ 
Income (loss) from discontinued operations      (19,386)           5,979                --            (5,979)          (19,386)
                                            -----------      -----------      ------------      ------------      ------------ 

Income (loss) before extraordinary charge   $   (20,856)     $    12,243      $         18      $    (12,261)     $    (20,856)
                                            ===========      ===========      ============      ============      ============ 

                                                        [Enlarge/Download Table]

                                                                      12 WEEKS ENDED OCTOBER 6, 2001                             
                                              ---------------------------------------------------------------------------------- 
                                                                                                  ELIMINATIONS                   
                                                 PARENT                             NON-          AND RECLASS-                   
                                                COMPANY        GUARANTORS        GUARANTORS        IFICATIONS       CONSOLIDATED 
                                              -----------      -----------      ------------      ------------      ------------ 
                                                                               (IN THOUSANDS)                                    
                                                                                                                                 
Net sales                                     $ 3,119,770      $   411,451      $      9,965      $     (9,546)     $  3,531,640 
Costs and expenses:                                                                                                              
    Cost of sales                               2,980,656          397,162             6,975            (9,546)        3,375,247 
    Selling and administrative                     93,116           10,742             3,756                --           107,614 
    Other                                          23,642            3,955            (5,282)               --            22,315 
    Impairment/restructuring charge (credit)         (716)             107                --                --              (609)
    Litigation charges                                 --               --                --                --                -- 
    Equity income from subsidiaries                (2,354)              --                --             2,354                -- 

                                              -----------      -----------      ------------      ------------      ------------ 
       Total costs and expenses                 3,094,344          411,966             5,449            (7,192)        3,504,567 
                                              -----------      -----------      ------------      ------------      ------------ 

Income (loss) before taxes                         25,426             (515)            4,516            (2,354)           27,073 
Taxes on income (loss)                              8,918             (214)            1,861                --            10,565 
                                              -----------      -----------      ------------      ------------      ------------ 
Income (loss) from continuing operations           16,508             (301)            2,655            (2,354)           16,508 
Discontinued operations:                                                                                                         
Income before taxes                                 4,209           11,850                --           (11,850)            4,209 
Taxes on income                                     1,642            4,924                --            (4,924)            1,642 
                                              -----------      -----------      ------------      ------------      ------------ 
Income from discontinued operations                 2,567            6,926                --            (6,926)            2,567 
                                              -----------      -----------      ------------      ------------      ------------ 

Income before extraordinary charge            $    19,075      $     6,625      $      2,655      $     (9,280)     $     19,075 
                                              ===========      ===========      ============      ============      ============ 

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CONDENSED CONSOLIDATING OPERATING STATEMENT INFORMATION                         

                                                        [Enlarge/Download Table]

                                                                      40 WEEKS ENDED OCTOBER 5, 2002                            
                                           ------------------------------------------------------------------------------------ 
                                                                                                 ELIMINATIONS                   
                                              PARENT                              NON-           AND RECLASS-                   
                                             COMPANY          GUARANTORS        GUARANTORS        IFICATIONS       CONSOLIDATED 
                                           ------------      ------------      ------------      ------------      ------------ 
                                                                              (IN THOUSANDS)                                    
                                                                                                                                
Net sales                                  $  9,655,890      $  1,801,654      $        163      $    (32,064)     $ 11,425,643 
Costs and expenses:                                                                                                             
    Cost of sales                             9,234,299         1,737,725                --           (32,064)       10,939,960 
    Selling and administrative                  265,775            46,254               241                --           312,270 
    Other                                        91,172            (1,204)              279                --            90,247 
    Impairment/restructuring charge              27,361                --                --                --            27,361 
    Equity income from subsidiaries             (10,891)               --                --            10,891                -- 

                                           ------------      ------------      ------------      ------------      ------------ 
       Total costs and expenses               9,607,716         1,782,775               520           (21,173)       11,369,838 
                                           ------------      ------------      ------------      ------------      ------------ 

Income (loss) before taxes                       48,174            18,879              (357)          (10,891)           55,805 
Taxes on income (loss)                           13,825             7,778              (147)               --            21,456 
                                           ------------      ------------      ------------      ------------      ------------ 
Income (loss) from continuing operations         34,349            11,101              (210)          (10,891)           34,349 
Discontinued operations:                                                                                                        
Loss before taxes                               (33,207)          (16,334)               --            16,334           (33,207)
Taxes on loss                                   (12,701)           (6,729)               --             6,729           (12,701)
                                           ------------      ------------      ------------      ------------      ------------ 
Loss from continuing operations                 (20,506)           (9,605)               --             9,605           (20,506)
                                           ------------      ------------      ------------      ------------      ------------ 

Income (loss) before extraordinary charge  $     13,843      $      1,496      $       (210)     $     (1,286)     $     13,843 
                                           ============      ============      ============      ============      ============ 

                                                        [Enlarge/Download Table]

                                                                          40 WEEKS ENDED OCTOBER 6, 2001                          
                                              ------------------------------------------------------------------------------------
                                                                                                    ELIMINATIONS                  
                                                 PARENT                              NON-           AND RECLASS-                  
                                                COMPANY          GUARANTORS        GUARANTORS        IFICATIONS       CONSOLIDATED
                                              ------------      ------------      ------------      ------------      ------------
                                                                                 (IN THOUSANDS)                                   
                                                                                                                                  
Net sales                                     $  8,419,264      $  1,319,707      $     48,047      $    (19,155)     $  9,767,863
Costs and expenses:                                                                                                               
    Cost of sales                                8,048,743         1,235,975            35,608           (19,155)        9,301,171
    Selling and administrative                     230,159            86,203            13,575                --           329,937
    Other                                           48,126            31,516            (2,517)               --            77,125
    Impairment/restructuring charge (credit)        46,267           (35,856)               --                --            10,411
    Litigation charges                              48,628                --                --                --            48,628
    Equity income from subsidiaries                 (1,915)               --                --             1,915                --

                                              ------------      ------------      ------------      ------------      ------------
       Total costs and expenses                  8,420,008         1,317,838            46,666           (17,240)        9,767,272
                                              ------------      ------------      ------------      ------------      ------------

Income (loss) before taxes                            (744)            1,869             1,381            (1,915)              591
Taxes on income (loss)                              (1,099)              766               569                --               236
                                              ------------      ------------      ------------      ------------      ------------
Income from continuing operations                      355             1,103               812            (1,915)              355
Discontinued operations:                                                                                                          
Income before taxes                                 35,314            38,926                --           (38,926)           35,314
Taxes on income                                     14,586            15,944                --           (15,944)           14,586
                                              ------------      ------------      ------------      ------------      ------------
Income from continuing operations                   20,728            22,982                --           (22,982)           20,728
                                              ------------      ------------      ------------      ------------      ------------

Income before extraordinary charge            $     21,083      $     24,085      $        812      $    (24,897)     $     21,083
                                              ============      ============      ============      ============      ============

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CONDENSED CONSOLIDATING CASH FLOWS INFORMATION                                  

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                                                                             40 WEEKS ENDED OCTOBER 5, 2002                        
                                                     ----------------------------------------------------------------------------- 
                                                                                                       ELIMINATIONS                
                                                      PARENT                             NON-          AND RECLASS-                
                                                      COMPANY        GUARANTORS       GUARANTORS        IFICATIONS    CONSOLIDATED 
                                                     ----------      ----------      ------------      ------------   ------------ 
                                                                                    (IN THOUSANDS)                                 
                                                                                                                                   
Net cash provided by (used in)                                                                                                     
 operating activities                                $  321,759      $ (447,257)     $      7,893      $         --   $   (117,605)
                                                     ----------      ----------      ------------      ------------   ------------ 

Cash flows from investing activities:                                                                                              
Purchases of property and equipment                     (65,651)        (70,274)          (14,854)               --       (150,779)
Other                                                  (125,752)         16,907            14,234                --        (94,611)
                                                     ----------      ----------      ------------      ------------   ------------ 

Net cash used in investing activites                   (191,403)        (53,367)             (620)               --       (245,390)
                                                     ----------      ----------      ------------      ------------   ------------ 

Cash flows from financing activities:                                                                                              
Repayments on capital lease obligations                 (11,154)         (4,254)               --                --        (15,408)
Advance to (from) parent                               (497,738)        505,025            (7,287)               --             -- 
Other                                                   381,772              --                --                --        381,772 
                                                     ----------      ----------      ------------      ------------   ------------ 

Net cash provided by (used in) financing activities    (127,120)        500,771            (7,287)               --        366,364 
                                                     ----------      ----------      ------------      ------------   ------------ 

Net increase (decrease) in cash & cash equivalents        3,236             147               (14)               --          3,369 

Cash and cash equivalents at beginning of period         10,175           6,876               274                --         17,325 

                                                     ----------      ----------      ------------      ------------   ------------ 
Cash and cash equivalents at end of period           $   13,411      $    7,023      $        260      $         --   $     20,694 
                                                     ==========      ==========      ============      ============   ============ 

                                                        [Enlarge/Download Table]

                                                                        40 WEEKS ENDED OCTOBER 6, 2001                          
                                                  ----------------------------------------------------------------------------- 
                                                                                                    ELIMINATIONS                
                                                   PARENT                             NON-          AND RECLASS-                
                                                   COMPANY        GUARANTORS       GUARANTORS        IFICATIONS    CONSOLIDATED 
                                                  ----------      ----------      ------------      ------------   ------------ 
                                                                                 (IN THOUSANDS)                                 
                                                                                                                                
Net cash used in operating activities             $  (88,061)     $  (56,633)     $        (23)     $         --   $   (144,717)
                                                  ----------      ----------      ------------      ------------   ------------ 

Cash flows from investing activities:                                                                                           
Purchases of property and equipment                 (136,669)        (25,258)           (6,577)               --       (168,504)
Other                                                 24,615           6,136                80                --         30,831 
                                                  ----------      ----------      ------------      ------------   ------------ 

Net cash used in investing activities               (112,054)        (19,122)           (6,497)               --       (137,673)
                                                  ----------      ----------      ------------      ------------   ------------ 

Cash flows from financing activities:                                                                                           
Repayments on capital lease obligations              (10,449)         (4,643)               --                --        (15,092)
Advance to (from) parent                             (82,068)         76,430             5,638                --             -- 
Other                                                310,593              --                --                --        310,593 
                                                  ----------      ----------      ------------      ------------   ------------ 

Net cash provided by financing activities            218,076          71,787             5,638                --        295,501 
                                                  ----------      ----------      ------------      ------------   ------------ 

Net increase (decrease) in cash and                                                                                             
   cash equivalents                                   17,961          (3,968)             (882)               --         13,111 

Cash and cash equivalents at beginning of period      22,487           6,753             1,140                --         30,380 

                                                  ----------      ----------      ------------      ------------   ------------ 
Cash and cash equivalents at end of period        $   40,448      $    2,785      $        258      $         --   $     43,491 
                                                  ==========      ==========      ============      ============   ============ 

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10. SALE-LEASEBACK OF REAL PROPERTY                                             

During the second and third quarters of 2002, gross proceeds from sale-leaseback
transactions totaled $144 million and are included in the proceeds from sale of 
property and equipment on the condensed consolidated statemets of cash flows.   
These transactions resulted in a gain of $24 million that is being deferred over
the remaining life of the operating leases which range from 10 to 15 years.     
Future minimum lease payments required from these sale-leaseback transactions   
that have noncancelable lease terms exceeding one year are presented in the     
following table:                                                                

                                                                [Download Table]

FISCAL YEAR                                      AMOUNT    
---------------------------                  --------------
                                             (In thousands)
                                                           
Remaining in 2002                               $   3,772  
2003                                               15,087  
2004                                               15,087  
2005                                               15,087  
2006                                               15,087  

11. SECOND QUARTER CHARGE                                                       

In the second quarter of 2002, we recorded a $27 million pre-tax charge related 
to the closure of distribution facilities in Oklahoma City and Dallas and       
certain integration costs related to recent acquisitions. The after-tax effect  
was a charge of $16 million, or $0.34 per share. Certain other costs associated 
with the closures will be expensed in the future as incurred.                   

The charge is comprised primarily of long-lived asset impairments, lease        
obligations and severance related expenses for the closed distribution          
facilities. The entire charge is reflected on the impairment/restructuring      
charge (credit) line on the consolidated statement of operations and affects    
continuing operations. The assets related to these closures are included in     
assets held for sale.                                                           

The portion of the charge relating to workforce reductions totaled approximately
$4 million with a headcount of 410 and was fully paid during the third quarter. 

Additionally, $5 million of the charge related to lease obligations which will  
be reduced over the remaining lease terms as the facilities are no longer       
operating. The charges and utilization have been recorded to-date as follows:   

                                                                [Download Table]

                                             AMOUNT     
                                         -------------- 
                                         (In thousands) 
                                                        
2002 Quarter 2 charge                    $        5,022 

2002 Quarter 3 terminations                        (508)
                                         -------------- 

   Ending liability                      $        4,514 
                                         ============== 

The remainder of the charge relates to asset impairments.                       

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12. HISTORICAL STRATEGIC PLAN CHARGES                                           

In December 1998, we announced the implementation of a strategic plan designed  
to improve the competitiveness of the retailers we serve and improve our        
performance by building stronger operations that can better support long-term   
growth. The four major initiatives of the strategic plan were to consolidate    
distribution operations, grow distribution sales, improve retail performance,   
and reduce overhead and operating expenses, in part by centralizing procurement 
and other functions. Additionally, in 2000, we decided to reposition certain    
retail operations into our price impact format and sell or close the remaining  
conventional retail chains. By mid-2001, we had sold or closed all of our       
conventional retail stores, and the plan was completed by the end of 2001.      

The activity related to workforce reductions is as follows:                     

                                                                [Download Table]

                                  AMOUNT     
                              -------------- 
                              (In thousands) 
                                             
2001 Ending liability         $       18,091 

2002 Quarter 1 terminations           (4,008)

2002 Quarter 2 terminations           (2,567)

2002 Quarter 3 terminations             (682)
                              -------------- 
   Ending liability           $       10,834 
                              ============== 

The ending liability of approximately $11 million is primarily comprised of     
estimated union pension withdrawal liabilities, but also includes accruals for  
payments over time to associates whose employment is already severed. The       
headcount related to severance was approximately 80 at the end of 2001. By the  
end of the second quarter of 2002, essentially all impacted employees'          
employment had been severed. All of the employee reductions in 2002 related to  
this plan were from distribution operating units.                               

Additionally, the strategic plan included charges related to lease obligations. 
Stores with remaining lease obligations as of year-end 2001 of approximately    
$2.3 million were closed during the first quarter of 2002.                      

Assets held for sale related to our restructuring and included in current assets
at the end of the third quarter of 2002 were approximately $32 million (not     
including amounts related to discontinued operations, see Footnote 4 for more   
details), consisting of $26 million of distribution operating units and $6      
million of retail stores. Included in the $32 million are amounts related to the
2002 closure of the distribution facilities in Oklahoma City and Dallas (see    
Footnote 11) and divisions that have closed related to the strategic plan but   
are not yet sold.                                                               

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The net effect of the strategic plan in the third quarter of 2001 was a pre-tax 
charge of $6 million. The after-tax effect was a charge of $4 million, or $0.07 
per share. The third quarter of 2001 pre-tax charge consisted of the following  
components:                                                                     

o    Net impairment recovery of $2 million through sales of operations against  
which we had previously recorded long-lived asset impairments. This   
    recovery is included in the impairment/restructuring line on our Condensed
Consolidated Statement of Operations. Of the $2 million impairment    
    recovery, $3 million of recovery related to continuing operations and a $1
million charge related to discontinued operations.                    

o    Restructuring charges of $3 million. The restructuring charges consisted   
primarily of severance related expenses for the divested or closed    
    operating units. The restructuring charges also included professional fees
    expensed as incurred related to the restructuring process. These costs are
     included in the impairment/restructuring line on our Condensed Consolidated
 Statement of Operations. Of the $3 million in restructuring charges, $2
million related to continuing operations and $1 million related to    
discontinued operations.                                              

o    Other disposition and related costs of $5 million. These costs are included
   on several lines of the Condensed Consolidated Statement of Operations as
    follows: $1 million of charges was included in net sales related primarily
to adjust previously recorded gains on the sale of conventional retail
stores; $1 million of charges was included in cost of sales and was   
primarily related to inventory markdowns for clearance for closed     
operations; $3 million of charges was included in selling and         
    administrative expense as disposition related costs which were expensed as
incurred. Of the $5 million in other disposition and related costs, $3
million related to continuing operations and $2 million related to    
discontinued operations.                                              

The net effect of the strategic plan for the first three quarters of 2001 was a 
pre-tax charge of $19 million. The after-tax effect was a charge of $11 million,
or $0.23 per share. The charge for the first three quarters of 2001 consisted of
the following components:                                                       

o    Net impairment recovery of $42 million. The components included recovering,
through sales of the related operations, previously recorded goodwill 
   impairment of $15 million and long-lived asset impairment of $34 million.
Also included was impairment of $7 million related to other long-lived
  assets. These costs are included in the impairment/restructuring line on
  our Condensed Consolidated Statement of Operations. Substantially all of
 the $42 million impairment recovery related to discontinued operations.

o    Restructuring charges of $16 million. The restructuring charges consisted  
primarily of severance related expenses for the divested or closed    
    operating units. The restructuring charges also included professional fees
    expensed as incurred related to the restructuring process. These costs are
     included in the impairment/restructuring line on our Condensed Consolidated
Statement of Operations. Of the $16 million restructuring charges, $10
million related to continuing operations and $6 million related to    
discontinued operations.                                              

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o    Other disposition and related costs of $45 million. These costs are        
included on several lines of the Condensed Consolidated Statement of  
   Operations as follows: less than $1 million of income was included in net
     sales related primarily to gains on the sale of conventional retail stores;
$31 million of charges was included in cost of sales and was primarily
 related to inventory markdowns for clearance for closed operations; $14
  million of charges was included in selling and administrative expense as
disposition related costs which were expensed as incurred. Of the $45 
million of other disposition and related costs, $14 million related to
   continuing operations and $31 million related to discontinued operations.

13. GOODWILL AND OTHER INTANGIBLE ASSETS                                        

Effective January 1, 2002, we adopted SFAS No. 142 - Goodwill and Other         
Intangible Assets. This standard requires a non-amortization approach to account
for purchased goodwill and other indefinite life intangibles. Under that        
approach, goodwill and intangible assets with indefinite lives are not amortized
to earnings over a period of time. Instead, these amounts are reviewed for      
impairment and expensed against earnings only in the periods in which the       
recorded values are more than implied fair value.                               

SFAS 142 prescribes a two-phase process for impairment testing of goodwill. The 
first phase screens for impairment and was completed prior to June 30, 2002. As 
no impairment was detected, the second phase, which measures the impairment, was
not necessary. As required, we will perform subsequent evaluations annually     
during the second quarter of each year, or more frequently if circumstances     
indicate a possible impairment. Unamortized goodwill of $697 million relates to 
continuing operations and $142 million relates to discontinued operations.      

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In accordance with SFAS 142, the effect of this accounting change is reflected  
prospectively. Supplemental comparative disclosure, as if the change had been   
retroactively applied to the 12 and 40 weeks ended October 6, 2001, is as       
follows (in thousands, except per share amounts):                               

                                                        [Enlarge/Download Table]

                                                   12 WEEKS ENDED              40 WEEKS ENDED      
                                                2002            2001        2002            2001   
                                             ----------      ----------  ----------      ----------
                                                                                                   
INCOME (LOSS) FROM CONTINUING OPERATIONS:                                                          
  Reported income (loss)                     $   (1,470)     $   16,508  $   34,349      $      355
  Goodwill amortization, net of tax                  --           3,088          --          10,026
                                             ----------      ----------  ----------      ----------
  Adjusted income (loss)                     $   (1,470)     $   19,596  $   34,349      $   10,381
                                             ==========      ==========  ==========      ==========

INCOME (LOSS) FROM DISCONTINUED OPERATIONS:                                                        
  Reported income (loss)                     $  (19,386)     $    2,567  $  (20,506)     $   20,728
  Goodwill amortization, net of tax                  --           1,420          --           4,550
                                             ----------      ----------  ----------      ----------
  Adjusted income (loss)                     $  (19,386)     $    3,987  $  (20,506)     $   25,278
                                             ==========      ==========  ==========      ==========

BASIC INCOME (LOSS) PER SHARE:                                                                     
  Reported income (loss) from                                                                      
    continuing operations                    $    (0.03)     $     0.38  $     0.71      $     0.01
  Goodwill amortization, net of tax                  --            0.07          --            0.24
                                             ----------      ----------  ----------      ----------
  Adjusted income (loss) from                                                                      
    continuing operations                    $    (0.03)     $     0.45  $     0.71      $     0.25
                                             ==========      ==========  ==========      ==========

  Reported income (loss) from                                                                      
    discontinued operations                  $    (0.36)     $     0.06  $    (0.43)     $     0.49
  Goodwill amortization, net of tax                  --            0.03          --            0.11
                                             ----------      ----------  ----------      ----------
  Adjusted income (loss) from                                                                      
    discontinued operations                  $    (0.36)     $     0.09  $    (0.43)     $     0.60
                                             ==========      ==========  ==========      ==========

DILUTED NET INCOME (LOSS) PER SHARE:                                                               
  Reported income (loss) from                                                                      
    continuing operations                    $    (0.03)     $     0.35  $     0.70      $     0.01
  Goodwill amortization, net of tax                  --            0.06          --            0.21
                                             ----------      ----------  ----------      ----------
  Adjusted income (loss) from                                                                      
    continuing operations                    $    (0.03)     $     0.41  $     0.70      $     0.22
                                             ==========      ==========  ==========      ==========

  Reported income (loss) from                                                                      
    discontinued operations                  $    (0.36)     $     0.05  $    (0.42)     $     0.46
  Goodwill amortization, net of tax                  --            0.03          --            0.10
                                             ----------      ----------  ----------      ----------
  Adjusted income (loss) from                                                                      
    discontinued operations                  $    (0.36)     $     0.08  $    (0.42)     $     0.56
                                             ==========      ==========  ==========      ==========

Supplemental comparative disclosure for net income (loss) for the 12 and 40     
weeks ended October 6, 2001, would be affected by the same adjustments as those 
reflected above.                                                                

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For the 12 and 40 weeks ended October 5, 2002, we recorded additional goodwill  
and other intangible assets of $283 million, primarily related to the           
acquisition of Core-Mark (see Footnote 6). Other intangibles, excluding debt    
issuance costs, included in other assets on our consolidated balance sheet      
consisted of the following:                                                     

                                                        [Enlarge/Download Table]

(In thousands)                 OCTOBER 5, 2002                         DECEMBER 29, 2001         
                     -------------------------------------  -------------------------------------
                       GROSS                     OTHER       GROSS                      OTHER    
                     CARRYING   ACCUMULATED   INTANGIBLES,  CARRYING   ACCUMULATED   INTANGIBLES,
                      AMOUNT   AMORTIZATION       NET        AMOUNT   AMORTIZATION       NET     
                     --------  ------------   ------------  --------  ------------   ------------
                                                                                                 
Customer incentives  $122,963  $    (39,781)  $     83,182  $111,605  $    (33,463)  $     78,142
Tradenames              5,800        (3,926)         1,874     5,800        (3,480)         2,320
Other                   8,106        (5,595)         2,511     6,390        (3,455)         2,935
                     --------  ------------   ------------  --------  ------------   ------------

Other intangibles    $136,869  $    (49,302)  $     87,567  $123,795  $    (40,398)  $     83,397
                     ========  ============   ============  ========  ============   ============

Amortization expense of other intangibles disclosed above for the 12 and 40     
weeks ended October 5, 2002 was $10.7 million and $23.0 million, respectively.  
Estimated amortization expense, excluding any future acquisitions, for each of  
the next five fiscal years is as follows:                                       

                                                                [Download Table]

FISCAL YEAR                AMOUNT     
--------------------    --------------
                        (In thousands)
                                      
           2002              $ 29,075 
           2003                23,412 
           2004                20,117 
           2005                15,285 
           2006                 8,144 

14. RECENT DEVELOPMENTS                                                         

In 2003, we will begin recording expense for stock options in accordance with   
the fair value model under SFAS No. 123 - Accounting for Stock-Based            
Compensation. The Financial Accounting Standards Board is currently addressing  
the transition rules related to SFAS No. 123. The current rules provide that    
recognition of expense would apply to grants of stock-based awards made after   
adopting the fair value method.                                                 

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INDEPENDENT ACCOUNTANTS' REVIEW REPORT                                          

TO THE BOARD OF DIRECTORS AND SHAREHOLDERS                                      
FLEMING COMPANIES, INC.                                                         

We have reviewed the accompanying condensed consolidated balance sheet of       
Fleming Companies, Inc. and subsidiaries as of October 5, 2002, and the related 
condensed consolidated statements of operations for the 12 and 40 weeks ended   
October 5, 2002 and October 6, 2001 and condensed consolidated statements of    
cash flows for the 40 weeks ended October 5, 2002 and October 6, 2001. These    
financial statements are the responsibility of the company's management.        

We conducted our reviews in accordance with standards established by the        
American Institute of Certified Public Accountants. A review of interim         
financial information consists principally of applying analytical procedures to 
financial data and of making inquiries of persons responsible for financial and 
accounting matters. It is substantially less in scope than an audit conducted in
accordance with auditing standards generally accepted in the United States of   
America, the objective of which is the expression of an opinion regarding the   
financial statements taken as a whole. Accordingly, we do not express such an   
opinion.                                                                        

Based on our reviews, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in   
conformity with accounting principles generally accepted in the United States of
America.                                                                        

We have previously audited, in accordance with auditing standards generally     
accepted in the United States of America, the consolidated balance sheet of     
Fleming Companies Inc. and subsidiaries as of December 29, 2001, and the related
consolidated statements of operations, shareholders' equity, and cash flows for 
the year then ended (not presented herein); and in our report dated February 13,
2002, we expressed an unqualified opinion on those consolidated financial       
statements. In our opinion, the information set forth in the accompanying       
condensed consolidated balance sheet as of December 29, 2001 is fairly stated,  
in all material respects, in relation to the consolidated balance sheet from    
which it has been derived.                                                      

DELOITTE & TOUCHE LLP                                                           

Dallas, Texas                                                                   
October 23, 2002                                                                

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS 
OF OPERATIONS                                                                   

GENERAL                                                                         

After we purchased Core-Mark International, Inc. in June 2002, we began an      
evaluation of strategic alternatives related to our price impact retail stores. 
After completing this strategic evaluation, we announced in September of 2002   
our decision to divest all 110 of our price impact supermarkets, which we       
operate under the Food 4 Less and Rainbow Foods banners and focus on our core   
distribution business. We have begun negotiations with potential buyers for     
substantially all of these stores, including self-distributing chains and       
regional and independent supermarket operators. We believe that the disposition 
of these retail assets will occur through a series of sales to multiple buyers, 
beginning in the fourth quarter of 2002 and be completed in 2003. The divested  
stores have been presented as discontinued operations in accordance with SFAS   
144.                                                                            

Concurrently with the completion of the Core-Mark acquisition on June 18, 2002, 
we entered into a $975 million credit agreement consisting of a $425 million    
tranche B term loan and a $550 million revolving credit facility. We also sold  
$200 million aggregate principal amount of 9 1/4% senior notes due 2010 and 9.2 
million shares of common stock at $19.40 per share. In connection with the      
consummation of these transactions, we repaid all borrowings outstanding under  
our previously existing $850 million credit agreement. On October 18, 2002, we  
amended our credit agreement primarily to facilitate the sale of our price      
impact retail stores. Our results of operations include the results of Core-Mark
from the date of acquisition.                                                   

In April 2002, we acquired Head Distributing Company, an Atlanta, Georgia based 
piece-pick distributor. Our results of operations included the results of Head  
Distributing from the date of acquisition. Also, in June 2002, we purchased     
inventory and other personal property from Albertson's Inc. located at its      
Tulsa, Oklahoma distribution center and entered into an operating lease of this 
distribution center.                                                            

We recorded net income (loss) from continuing operations for the 12 and 40 weeks
ended October 5, 2002 of a $2 million loss and a $34 million income,            
respectively. Losses from discontinued operations for the 12 and 40 weeks ended 
October 5, 2002 were $19 million and $21 million, respectively. EBITDAL from    
continuing operations for the 12 and 40 weeks ended October 5, 2002 was $65     
million and $250 million, respectively. EBITDAL from discontinued operations for
the 12 and 40 weeks ended October 5, 2002 was a loss of $12 million and income  
of $34 million, respectively.                                                   

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The following table sets forth the calculation of EBITDAL from continuing and   
discontinued operations (in millions):                                          

                                                        [Enlarge/Download Table]

                                                 12 WEEKS ENDED            40 WEEKS ENDED      
                                          OCTOBER 5,      OCTOBER 6,  OCTOBER 5,     OCTOBER 6,
                                             2002            2001        2002           2001   
                                          ----------      ----------  ----------     ----------
                                                                                               
Income (loss) from continuing operations                                                       
    before extraordinary charge           $       (2)     $       17  $       34     $        1
Add back:                                                                                      
    Taxes on income (loss)                        (1)             11          21             --
    Depreciation/amortization                     31              26          82             83
    Interest expense                              34              27         110             97
    LIFO adjustments                               3              --           3             --
                                          ----------      ----------  ----------     ----------
       EBITDAL - continuing operations    $       65      $       81  $      250     $      181
                                          ==========      ==========  ==========     ==========

                                                        [Enlarge/Download Table]

                                                   12 WEEKS ENDED             40 WEEKS ENDED       
                                            OCTOBER 5,      OCTOBER 6,   OCTOBER 5,     OCTOBER 6, 
                                               2002            2001         2002           2001    
                                            ----------      ----------   ----------     ---------- 
                                                                                                   
Income (loss) from discontinued operations                                                         
    before extraordinary charge             $      (19)     $        3   $      (21)    $       21 
Add back:                                                                                          
    Taxes on income (loss)                         (12)              2          (12)            15 
    Depreciation/amortization                       11              12           42             43 
    Interest expense                                 7               8           24             31 
    LIFO adjustments                                 1              (2)           1             (3)
                                            ----------      ----------   ----------     ---------- 
       EBITDAL - discontinued operations    $      (12)     $       23   $       34     $      107 
                                            ==========      ==========   ==========     ========== 

EBITDAL is earnings before extraordinary items, interest expense, income taxes, 
depreciation and amortization, equity investment results and LIFO provision. We 
present EBITDAL to help us describe our ability to generate cash flows that can 
be used to service our debt; however, conditions may require conservation of    
funds for other uses. EBITDAL is a non-GAAP liquidity measure commonly used in  
our industry and should not be considered as an alternative measure of our net  
income or cash flows from operations as computed in accordance with GAAP.       
Amounts presented may not be comparable to similar measures disclosed by other  
companies.                                                                      

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RESULTS OF CONTINUING OPERATIONS                                                

Set forth in the following table is information regarding our continuing net    
sales and certain components of income (loss) from continuing operations        
expressed as a percent of sales which are referred to in the accompanying       
discussion:                                                                     

                                                                [Download Table]

                                             OCTOBER 5,       OCTOBER 6, 
FOR THE 12 WEEKS ENDED                          2002             2001    
                                             ----------       ---------- 
                                                                         
Net sales                                        100.00%          100.00%

Gross margin                                       3.54             4.43 
Less:                                                                    
Selling and administrative                         2.87             3.05 
Interest expense                                   0.86             0.77 
Interest income and other                         (0.13)           (0.14)
Impairment/restructuring credit                      --            (0.02)
                                             ----------       ---------- 

Total expenses                                     3.60             3.66 
                                             ----------       ---------- 

Income (loss) before taxes                        (0.06)            0.77 
Taxes on income (loss)                            (0.02)            0.30 
                                             ----------       ---------- 
Income (loss) from continuing operations          (0.04)%           0.47%

                                                                [Download Table]

                                         OCTOBER 5,       OCTOBER 6, 
FOR THE 40 WEEKS ENDED                      2002             2001    
                                         ----------       ---------- 
                                                                     
Net sales                                    100.00%          100.00%

Gross margin                                   4.25             4.78 
Less:                                                                
Selling and administrative                     2.73             3.38 
Interest expense                               0.97             0.99 
Interest income and other                     (0.18)           (0.20)
Impairment/restructuring charges               0.24             0.11 
Litigation charges                               --             0.50 
                                         ----------       ---------- 

Total expenses                                 3.76             4.78 
                                         ----------       ---------- 

Income before taxes                            0.49               -- 
Taxes on income                                0.19               -- 
                                         ----------       ---------- 
Income from continuing operations              0.30%              --%

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NET SALES.                                                                      
Net sales from continuing operations for the 12 weeks ended October 5, 2002,    
increased by $441 million, or 12.5%, to $4.0 billion from the same period in    
2001. Year to date, net sales increased by $1.66 billion, or 17.0% (34% of this 
increase was attributable to growth in Kmart sales), to $11.4 billion from the  
same period in 2001. Net growth for the 12-week period was mainly a result of   
Core-Mark sales for the full 12 weeks (16 weeks year to date) along with        
increased activity from our Albertson's agreement offset by decreased activity  
with Kmart, our largest customer. The decline in sales to Kmart for the 12 weeks
ended October 5, 2002 compared to the same period in the prior year was due to  
the closing of Kmart stores in 2002 related to its bankruptcy reorganization    
compared to increased sales in the last half of 2001 due to the startup of the  
Kmart contract. Kmart accounted for 20% and 31% of our net sales during the     
third quarter of 2002 and 2001, respectively, and 23% and 21% for the first     
three quarters of 2002 and 2001, respectively.                                  

GROSS MARGIN.                                                                   
Gross margin from continuing operations for the 12 and 40 weeks ended October 5,
2002 decreased as a percentage of net sales to 3.54% and 4.25%, respectively,   
from 4.43% and 4.78%, respectively, for the same periods in 2001. The decrease  
in gross margin rate was due, in part, to a change in the mix of product sales  
resulting from a greater concentration on high growth, lower margin piece-pick  
sales. These sales increased as a result of the Core-Mark and Head Distributing 
acquisitions. In addition, a $3.0 million provision for LIFO is included in     
continuing operations for the 12 and 40 weeks ended October 5, 2002. There was  
no LIFO provision recorded in continuing operations in the prior year comparable
periods.                                                                        

SELLING AND ADMINISTRATIVE EXPENSES.                                            
Selling and administrative expenses from continuing operations for the 12 and 40
weeks ended October 5, 2002 decreased as a percentage of net sales to 2.87% and 
2.73%, respectively, for 2002 from 3.05% and 3.38%, respectively, in 2001. The  
improvement is a result of sales growth without a corresponding increase in     
fixed operating costs and company-wide cost savings initiatives.                

OPERATING EARNINGS.                                                             
We measure operating earnings as sales less cost of sales less selling and      
administrative expenses. Operating earnings from continuing operations as a     
percentage of net sales for the 12 and 40 weeks ended October 5, 2002 were 0.67%
and 1.52%, respectively, compared to 1.38% and 1.40%, respectively, for the same
periods in 2001. The change in operating earnings is a combination of the       
explanations included in net sales, gross margin and selling and administrative 
expenses described above.                                                       

INTEREST EXPENSE.                                                               
Interest expense from continuing operations for the third quarter of 2002       
increased $7 million to $34 million compared to the same period in 2001 and     
increased $14 million year to date compared to the same period in 2001. The     
increase in the third quarter was a result of higher debt balances compared to  
the prior year quarter. Year to date also increased due to higher debt balances 
but was partially offset by lower average interest rates for the same time      
period. The second quarter of 2002 and the first quarter of 2001 each included  
$3 million of interest expense incurred on debt during the call period for the  
early retirement of debt.                                                       

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INTEREST INCOME AND OTHER.                                                      
Interest income from continuing operations of $5 million for the third quarter  
of 2002 and $20 million for the first three quarters of 2002 was relatively flat
for the same periods of 2001. Interest income in the second quarter of 2002 and 
the first quarter of 2001 each included approximately $1 million of interest    
income from cash deposited with a trustee during the call period for the early  
retirement of debt.                                                             

IMPAIRMENT/RESTRUCTURING CHARGE.                                                
In the second quarter of 2002, we incurred a $27 million pre-tax charge in      
continuing operations related to the closure of two distribution facilities and 
certain integration costs related to recent acquisitions. See Note 11 in the    
notes to the condensed consolidated financial statements for further discussion 
of the charge.                                                                  

The strategic plan was fully implemented by the end of 2001 and thus there has  
been no charge in 2002. See Note 12 in the notes to the condensed consolidated  
financial statements for further discussion regarding the strategic plan.       

DISCONTINUED OPERATIONS.                                                        
On September 24, 2002, the Board of Directors approved a plan to sell our price 
impact retail grocery stores operating under the Rainbow and Food 4 Less        
banners. The plan is based in part on our decision to focus on our core         
distribution business. Results of operations of these stores represent a        
component of our company and have been previously included in the retail        
segment. The disposition of the retail stores is expected to occur in a series  
of sales to multiple buyers beginning in the fourth quarter of 2002 and         
completed in 2003. Expenses associated with support services that directly      
support the retail operations have been reflected in discontinued operations.   
For the 12 and 40 weeks ended October 5, 2002, losses from discontinued         
operations were $19.4 million and $20.5 million, respectively, compared to      
income from discontinued operations of $2.6 million and $20.7, respectively, for
the same time periods in 2001. We expect to apply the proceeds from the sale of 
these stores to reduce outstanding debt under our credit facility.              

TAXES ON INCOME.                                                                
The effective tax rates for the total company for the 40 weeks of 2002 and 2001 
were 38.7% and 41.3% (before extraordinary charges), respectively. These were   
both blended rates taking into account operations activity as well as various   
permanent and timing differences. The effective tax rate for 2002 was favorably 
impacted as a result of a refund generated through a change in treatment by the 
IRS of a closed statute relating to an earlier return year. The 2001 effective  
tax rate also took into account write-offs of non-deductible goodwill. The tax  
amount for the third quarter of both years was derived using the 40 week tax    
amount with that year's estimated effective tax rate compared to the tax amount 
recorded for the first 28 weeks of the year.                                    

EXTRAORDINARY CHARGE.                                                           
We reflected extraordinary after-tax charges of $8 million ($13 million pre-tax)
in the second quarter of 2002 and $3 million ($6 million pre-tax) in the first  
quarter of 2001, due to the early retirement of debt. See Footnote 8 in the     
notes to the condensed consolidated financial statements for further discussion.
In 2003, these amounts will be reclassified to selling and administrative       
expense and taxes on income in accordance with SFAS 145.                        

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KMART DEVELOPMENTS.                                                             
On January 22, 2002, Kmart and certain of its U.S. subsidiaries filed voluntary 
petitions for relief under Chapter 11 of the U.S. Bankruptcy Code. Kmart, our   
largest customer, accounted for 23% of our net sales from continuing operations 
for both the 40 weeks ended October 5, 2002 and the year ended December 29,     
2001. We have a 10-year written distribution agreement with Kmart. Pursuant to  
this bankruptcy, Kmart may, however, assume or reject our distribution agreement
at any time. Kmart named us as a "critical vendor" in the bankruptcy proceeding 
and granted to us a second priority lien on its inventory to secure the payment 
of weekly receivables to us arising after the date of the bankruptcy filing.    

The impact of Kmart's bankruptcy filing on our future financial results will    
depend greatly upon whether Kmart assumes or rejects our distribution agreement 
and upon the success of Kmart's reorganization. If, for example, Kmart assumes  
our distribution agreement and obtains bankruptcy court approval of its plan of 
reorganization (which Kmart has not yet filed), then it is likely that our      
future financial results will not be adversely impacted. If, however, Kmart     
rejects our distribution agreement or, to the contrary, assumes our distribution
agreement but fails to obtain bankruptcy court approval of a plan of            
reorganization, then we may lose our sales to Kmart, may choose to close or     
consolidate certain distribution facilities, may eliminate excess inventory, and
may suffer other damages, including the loss of a portion of our pre-petition   
receivable. If certain of these circumstances occur, we could assert a claim    
against Kmart for damages in addition to the claim we have already filed.       

CERTAIN ACCOUNTING MATTERS.                                                     
The FASB issued SFAS No. 143 - Accounting for Asset Retirement Obligations. We  
are studying the impact that SFAS 143 has on our financial statements and       
planning to implement it in fiscal year 2003, as required. The FASB issued SFAS 
No. 144 - Accounting for the Impairment or Disposal of Long-Lived Assets. We    
implemented SFAS 144 as of the beginning of fiscal year 2002, as required. It   
had no significant impact on our financial statements. In April 2002, the FASB  
issued SFAS No. 145 - Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections. We had a refinancing       
transaction in 2002 that has resulted in an extraordinary charge. In 2003 these 
amounts will be reclassified to selling and administrative expense in accordance
with SFAS 145. In August 2002, the FASB issued SFAS No. 146 - Accounting for    
Costs Associated with Exit or Disposal Activities. The standard currently has no
impact on our financial statements, and we will implement it in fiscal year     
2003, as required. In December 2001, the AICPA's Accounting Standards Executive 
Committee issued Statement of Position (SOP) 01-6, Accounting by Certain        
Entities (Including Entities With Trade Receivables) That Lend to or Finance the
Activities of Others. We implemented SOP 01-6 as of the beginning of fiscal year
2002, as required, with no impact on our financial statements. This SOP provides
guidance on the accounting for and disclosure of amounts due to us from         
customers included in our accounts and notes receivable.                        

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES.                                     
There have been no significant changes to critical accounting policies and      
estimates since the issuance of our 2001 Form 10-K other than the following. We 
have estimated the proceeds we expect to receive upon completing the sales of   
our price impact retail operations. Our estimates were based on our current     
negotiations and other potential outcomes. We have not yet reached final        
agreements on these sales. There could be changes in the final sales agreements 
that might differ from our estimates.                                           

LIQUIDITY AND CAPITAL RESOURCES                                                 

For the year-to-date period ended October 5, 2002, our principal source of      
liquidity was borrowings under our credit facility. Our principal sources of    
capital were the issuance of common stock, the issuance of long-term senior debt
and the sale-leaseback of six case-pick distribution centers.                   

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES.                            
Net cash used in operating activities was $118 million for the three quarters   
ended October 5, 2002 compared to a $145 million use of cash for the same period
in 2001. The primary use of cash was for working capital. During the third      
quarter of 2002, cash provided by operations of $8 million was primarily driven 
by improvements in working capital, specifically accounts payable and inventory 
in continuing operations. This compares to a use of cash of $81 million for the 
12 weeks ended October 6, 2001, which was primarily driven by a build in        
inventory.                                                                      

NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES.                            
Total investment-related activity resulted in a $245 million use of cash for the
three quarters ended October 5, 2002 compared to a $138 million use of cash in  
the same period of 2001.                                                        

Cash expended for businesses acquired was $295 million for the three quarters   
ended October 5, 2002 (primarily as a result of our acquisition of Core-Mark and
Head Distributing), compared to $121 million cash expended for businesses       
acquired during the same period in 2001.                                        

Cash expended for the purchase of property and equipment totaled $151 million   
for the three quarters ended October 5, 2002 compared to $169 million for the   
same period in 2001. We intend to spend a total of approximately $185 million on
our capital programs in 2002 compared to $238 million spent in 2001. We estimate
capital expenditures of $135 million in 2003. The planned reduction is primarily
related to our decision to divest our price impact retail stores.               

Cash proceeds from the sale of property and equipment was $164 million,         
primarily related to the sale-leaseback of six case-pick distribution centers   
located in Phoenix, Massillon, Salt Lake City, Miami, Sacramento and Memphis    
(see Footnote 10 for sale-leaseback details) for the three quarters ended       
October 5, 2002 compared to $13 million from the sale of property and equipment 
during the same period in 2001.                                                 

NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES.                            
Net cash generated by financing activities was $366 million for the three       
quarters ended October 5, 2002 compared to $296 million for the same period last
year.                                                                           

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On April 15, 2002, we sold $260 million of 9 7/8% senior subordinated notes due 
2012. The net proceeds were used to redeem the 10 1/2% senior subordinated notes
due 2004.                                                                       

At the end of the third quarter of 2002, outstanding borrowings under the credit
facility totaled $424 million of term loans and $60 million of revolver loans.  
The credit facility also supports $77 million of letters of credit.             

On June 18, 2002, we purchased Core-Mark International, Inc. In conjunction with
the acquisition, we refinanced our $850 million senior secured credit facility  
with a $975 million senior secured credit facility, sold $200 million of 9 1/4% 
senior notes due June 15, 2010 and sold 9.2 million shares of common stock at   
$19.40 per share, raising $178 million of gross proceeds ($170 million net of   
underwriting discount and other issuance costs).                                

As part of our acquisition of Core-Mark, we assumed $132 million of additional  
debt, consisting of $77 million of 11 3/8% senior subordinated notes and a $55  
million accounts receivable securitization. On June 18, we deposited $80 million
in a trust to be used to redeem the 11 3/8% senior subordinated notes, including
an amount to cover accrued interest and the redemption premium and received a   
satisfaction and discharge to release us from this debt. Simultaneously, on June
18, we deposited $55 million in a trust which was used to redeem the accounts   
receivable securitization, including an amount to cover accrued interest. The   
redemption of the accounts receivable securitization took place during the third
quarter of 2002.                                                                

Our principal sources of liquidity and capital are expected to be cash flows    
from operating activities and our ability to borrow under our credit facility,  
in addition, lease financing may be employed for our distribution facilities and
equipment. We believe these sources will be adequate to meet working capital    
needs in the normal course of business for the next 12 months.                  

CONTINGENCIES                                                                   

See Footnote 7 in our notes to the consolidated financial statements and Item 1,
Part II of this report.                                                         

FORWARD-LOOKING INFORMATION                                                     

This report includes forward-looking statements regarding future events and our 
future financial performance. These forward-looking statements and our business 
are subject to a number of factors that could cause actual results to differ    
materially from those stated in this report, including without limitation:      
unanticipated problems with product procurement; adverse effects of the changing
industry and increased competition; sales declines and loss of customers;       
exposure to litigation and other contingent losses; elimination of sales to     
Kmart due to their rejection of our distribution agreement; the ability of Kmart
to continue as a going concern, to operate pursuant to the terms of its         
debtor-in-possession financing, or to complete its reorganization according to  
its plan; the inability to integrate acquired companies and to achieve operating
improvements at those companies; increases in labor costs and disruptions in    
labor relations with union bargaining units representing our associates; our    
ability to successfully sell our retail price-impact stores; and negative       
effects of our substantial indebtedness and the limitations imposed by          
restrictive covenants contained in our debt instruments. These and other risk   
factors are described in our Securities and Exchange Commission reports,        
including but not limited to the 10-K Report for the 2001 fiscal year. The      

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forward-looking statements speak only as of the date made as we undertake no    
obligation to update forward-looking statements to reflect developments or      
information obtained after the date of this report.                             

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK             

In order to help maintain liquidity and finance business operations, we obtain  
long-term credit commitments from banks and other financial institution lenders 
under which term loans and revolving loans are made. Such loans carry variable  
interest rates based on the London interbank offered interest rate ("LIBOR")    
plus a borrowing margin for different interest periods, such as one week, one   
month, and other periods up to one year. To assist in managing our debt         
maturities and diversify our sources of debt capital, we also use long-term debt
which carries fixed interest rates. Additionally, we use interest rate swap     
agreements to manage our ratio of fixed-to-floating rate debt in a              
cost-effective manner. See Footnote 8 in the notes to the condensed consolidated
financial statements for a further discussion.                                  

With our acquisition of Core-Mark, we now conduct business in western Canada.   
However, changes in the U.S./Canadian rate of currency exchange historically    
have had no material impact on the overall results of the Canadian operation, as
virtually all revenues and expenses of such operations are Canadian dollars.    

SUMMARY OF FINANCIAL INSTRUMENTS                                                
(In millions, except rates)                                                     

                                                        [Enlarge/Download Table]

                                                                      MATURITIES OF PRINCIPAL BY FISCAL YEAR          
                                                               -----------------------------------------------------  
                                   FAIR VALUE    FAIR VALUE                                                   THERE-  
                                   AT 12/29/01   AT 10/05/02    2002     2003      2004     2005      2006    AFTER   
                                   -----------   -----------   ------   ------    ------   ------    ------   ------  
                                                                                                                      
DEBT WITH VARIABLE INTEREST RATES                                                                                     
Principal payable                  $       318           476       --        4         4        4         4      467  
Average variable rate payable              4.0%          4.1%  Based on Libor plus a margin                           

DEBT WITH FIXED INTEREST RATES                                                                                        
Principal payable                  $     1,124           815        -       --        --       --        --     1,365 
Average fixed rate payable                 9.7%          9.6%     5.7%     5.1%      0.0%     0.0%      0.0%      9.6%

ITEM 4.  CONTROLS AND PROCEDURES                                                

We maintain disclosure controls and procedures that are designed to ensure that 
information required to be disclosed in our Exchange Act reports is recorded,   
processed, summarized and reported within the time periods specified in the     
SEC's rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial    
Officer, as appropriate, to allow timely decisions regarding required           
disclosure. In designing and evaluating our disclosure controls and procedures, 
our management recognized that any controls and procedures, no matter how well  
designed and operated, can provide only                                         

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reasonable assurance of achieving the desired control objectives, and our       
management necessarily was required to apply its judgment in evaluating the     
cost-benefit relationship of possible controls and procedures. We also have     
investments in certain unconsolidated entities. As we do not control or manage  
these entities, our disclosure controls and procedures with respect to these    
entities are necessarily substantially more limited than those we maintain with 
respect to our consolidated subsidiaries.                                       

Within 90 days prior to the date of this report, we carried out an evaluation,  
under the supervision and with the participation of our management, including   
our Chief Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures. Based on the
foregoing, our Chief Executive Officer and Chief Financial Officer concluded    
that our disclosure controls and procedures were effective.                     

There have been no significant changes in our internal controls or in other     
factors that could significantly affect our internal controls subsequent to the 
date we completed our evaluation.                                               

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS                                                      

We are a party to or threatened with various litigation and contingent loss     
situations arising in the ordinary course of our business including disputes    
with customers and vendors, owners or creditors of financially troubled or      
failed customers, suppliers, landlords and lessees, employees, insurance        
carriers and tax authorities. In this regard, we have arbitration claims pending
from and against one of our former convenience store customers, Clark Retail    
Enterprises, Inc., regarding the required mix of annual minimum purchases under 
a supply agreement and related product service charges. We believe that Clark   
failed to purchase the required mix of products as it said it would, making the 
supply agreement subject to rescission and making Clark liable to us for        
damages. Clark contends that we breached the supply agreement in several        
respects, making us liable to Clark for damages. Clark has not yet specified in 
the arbitration the amount of damages it is seeking from us. An unfavorable     
outcome for us in this arbitration could impact our financial results, but we do
not expect that such an impact would be material to our financial position.     

Since August 29, 2002, several securities lawsuits have been filed against us   
and certain of our officers in the United States District Court for the Eastern 
District of Texas seeking court certification as a class action. To date, these 
complaints collectively raise various categories of claims: (a) we allegedly    
issued false and misleading positive statements, including statements about our 
price impact retail supermarkets; (b) we allegedly issued financial results     
which improperly included certain income from vendor deductions; and (c) other  
alleged accounting irregularities. In addition, one related derivative lawsuit  
has been filed on behalf of Fleming against certain of our officers and the     
members of our Board of Directors in the United States District Court for the   
Eastern District of Texas. This complaint alleges a breach of fiduciary duty in 
connection with the claims described in clause (a) above.                       

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Distributors of cigarettes and other tobacco products are facing a number of    
significant issues that could impact the business environment. These issues     
include new government regulation that could increase our cost of business,     
litigation affecting tobacco manufacturers and new or additional taxes on       
cigarettes and other tobacco products that could result in a material reduction 
in the consumption of such products in the United States.                       

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                       

(a) Exhibits:                                                                   

EXHIBIT NUMBER                                                              

     3.1      Certificate of Incorporation, incorporated by reference to
             Exhibit 3.1 to Form 10-Q for quarter ended April 17, 1999

         3.2      By-Laws, incorporated by reference to Exhibit 3.2 to Form 10-Q
for quarter ended April 17, 1999            

   4.29     First Amendment, dated October 18, 2002, to that certain
                Credit Agreement, dated as of June 18, 2002, incorporated by
                reference to Exhibit 10.1 to Form 8-K filed October 23, 2002

         10.66*   Letter Agreement with William H. Marquard, dated September 13,
2002                                        

   10.67*   Letter Agreement with Thomas Dahlen, dated July 12, 2002

      15       Letter from Independent Accountants as to Unaudited Interim
Financial Information, filed herewith       

*  Management contract, compensatory plan or arrangement.                   

(b) Reports on Form 8-K:                                                      

On August 6, 2002, we filed a Current Report on Form 8-K pursuant to Item 9 -   
Registration FD Disclosure announcing that a slide presentation made to         
investors and analysts was publicly available.                                  

On August 12, 2002, we filed a Current Report on Form 8-K pursuant to Item 9 -  
Regulation FD Disclosure, attaching the written statements under oath of our    
Principal Executive Officer and our Principal Financial Officer that we filed   
with the SEC in accordance with the SEC's June 27, 2002 Order (File No. 4-460). 

On September 25, 2002, we filed a Current Report on Form 8-K pursuant to Item 9 
- Regulation FD Disclosure, announcing that we plan to divest our retail        
operations and provide updated financial guidance, as well as a slide           
presentation that was made available to investors.                              

None of these Current Reports on Form 8-K are incorporated into this report or  
into any other filing of Fleming, regardless of any general incorporation       
language in such filing.                                                        

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 SIGNATURE

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.                                          

                     FLEMING COMPANIES, INC.

November 5, 2002                       /s/ MARK D. SHAPIRO                      
                                     ---------------------------------------
             Mark D. Shapiro
                   Senior Vice President
                            Finance and Operations Control
                                    (Duly Authorized Officer of Registrant
                               and Principal Accounting Officer)

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CERTIFICATIONS

I, Mark S. Hansen, certify that:                                                

1. I have reviewed this quarterly report on Form 10-Q of Fleming Companies,     
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 officers 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 
the registrant's board of directors (or persons performing the equivalent       
function):                                                                      

        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 officers 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.        

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Date: November 5, 2002                                                          

/s/ MARK S. HANSEN                                                              
---------------------------------------------                                   
Mark S. Hansen                                                                  
Chairman of the Board and Chief Executive Officer                               

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I, Neal J. Rider, certify that:                                                 

1. I have reviewed this quarterly report on Form 10-Q of Fleming Companies,     
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 
the registrant's board of directors (or persons performing the equivalent       
function):                                                                      

        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.        

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Date: November 5, 2002                                                          

/s/ NEAL J. RIDER                                                               
---------------------------------------------------                             
Neal J. Rider                                                                   
Executive Vice President and Chief Financial Officer                            

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EXHIBIT INDEX 

                                                                [Download Table]

EXHIBIT                                                                  
NUMBER                          DESCRIPTION                              
-------                         -----------                              
                                                                         
  3.1      Certificate of Incorporation, incorporated by reference to    
           Exhibit 3.1 to Form 10-Q for quarter ended April 17, 1999     

  3.2      By-Laws, incorporated by reference to Exhibit 3.2 to Form 10-Q
           for quarter ended April 17, 1999                              

  4.29     First Amendment, dated October 18, 2002, to that certain      
           Credit Agreement, dated as of June 18, 2002, incorporated by  
           reference to Exhibit 10.1 to Form 8-K filed October 23, 2002  

  10.66*   Letter Agreement with William H. Marquard, dated September 13,
           2002                                                          

  10.67*   Letter Agreement with Thomas Dahlen, dated July 12, 2002      

  15       Letter from Independent Accountants as to Unaudited Interim   
           Financial Information, filed herewith                         

*  Management contract, compensatory plan or arrangement.                   

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-Q’ Filing		Date		First		Last			Other Filings
		5/1/12		12
		6/15/10		13		33
		6/18/08		12
		6/18/07		12
Filed as of:		11/6/02
Filed on:		11/5/02		37		41			3,  3/A,  4,  4/A
		10/31/02		1
		10/23/02		25		42			8-K
		10/18/02		12		42			424B3,  8-K
For Period End:		10/5/02		1		32
		9/25/02		36					8-K
		9/24/02		9		30			4,  8-K
		9/15/02		13
		9/13/02		36		42
		8/29/02		11		35
		8/12/02		36					4,  8-K
		8/6/02		36					8-K
		7/18/02		10		12
		7/12/02		36		42
		6/30/02		22
		6/27/02		36
		6/18/02		10		42			8-K
		5/1/02		13
		4/15/02		12		33			8-K
		2/13/02		25					SC 13G/A
		1/22/02		31
		1/1/02		22
		12/29/01		2		31			10-K,  10-K/A
		10/6/01		2		32			10-Q
		4/17/99		36		42			10-Q,  10-Q/A
									List all Filings