UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended ~~December~~July 312, ~~2003~~2004.

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 333-74589

NATIONAL WINE & SPIRITS, INC.

(Exact name of registrant as specified in its charter)

Indiana		35-2064429
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
700 West Morris Street, P.O. Box 1602 Indianapolis, Indiana (Address of principal executive offices)		46206 (Zip Code)
700 West Morris Street, P.O. Box 1602 Indianapolis, Indiana		46206
(Address of principal executive offices)		(Zip Code)

(317) 636-6092

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: None

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 ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The number of shares of Common Stock, $.01 par value, of National Wine & Spirits, Inc. outstanding as of ~~February~~July 42, ~~2003~~2004 was 5,330,521, of which 104,520 were voting stock.

NATIONAL WINE & SPIRITS, INC.

Quarterly Report

For the period ended ~~December~~July 312, ~~2003~~2004

INDEX

		Page Number
PART I.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance SheetsDecember 31, 2003 (unaudited) and March 31, 2003	2
	Condensed Consolidated Balance Sheets July 2, 2004 (unaudited) and March 31, 2004	3
	Condensed Consolidated Statements of Operations (unaudited) Three Months Ended December 31, 2003 and 2002; Nine MonthsEnded December 31, 2003 and 2002	3
	Condensed Consolidated Statements of Operations (unaudited) Three Months Ended July 2, 2004 and June 27, 2003	4
	Condensed Consolidated Statements of Cash Flows (unaudited) Nine Months Ended December 31, 2003 and 2002	4
	Condensed Consolidated Statements of Cash Flows (unaudited) Three Months Ended July 2, 2004 and June 27, 2003	5
	Notes to Condensed Consolidated Financial Statements	56
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2722
Item 4.	Controls and Procedures	2722
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	2723
Item 5.	Other Events	28
Item 4.	Submission of Matters to a Vote of Security Holders	23
Item 6.	Exhibits and Reports on Form 8-K	28
Item 5.	Other Events	23
	Signature	29
Item 6.	Exhibits and Reports on Form 8-K	23
	Signatures	24

Part I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

NATIONAL WINE & SPIRITS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share data)


	July 2, 2004			March 31, 2004
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	2,737,000		$	1,466,000
Accounts receivable:
Trade, less allowance for doubtful accounts of $1,010,000 and $1,081,000		35,332,000			25,427,000
Vendor, less allowance for doubtful accounts of $125,000 and $125,000		5,028,000			3,745,000
Inventory		78,572,000			80,196,000
Prepaid expenses and other current assets		5,196,000			4,493,000

Total current assets		126,865,000			115,327,000

Property and equipment, net		30,415,000			31,484,000
Other assets:
Notes receivable, less reserve of $221,000 and $221,000		197,000			197,000
Cash surrender value of life insurance		4,367,000			4,366,000
Investment in Commonwealth Wine & Spirits, LLC		5,275,000			5,593,000
Intangible assets, net of amortization		25,977,000			27,646,000
Goodwill		1,246,000			1,246,000
Deferred pension costs		642,000			642,000
Deposits and other		599,000			599,000

Total other assets		38,303,000			40,289,000

Total assets	$	195,583,000		$	187,100,000

Liabilities And Stockholders’ Equity
Current liabilities:
Accounts payable	$	40,906,000		$	40,503,000
Outstanding checks in excess of bank balance		4,685,000			91,000
Accrued payroll and payroll taxes		5,205,000			7,018,000
Excise taxes payable		3,823,000			4,813,000
Current portion of distribution rights obligations		3,902,000			4,115,000
Other accrued expenses		14,303,000			9,492,000

Total current liabilities		72,824,000			66,032,000

Deferred pension liability		3,061,000			3,061,000
Distribution rights obligations		18,149,000			19,057,000
Long-term debt		88,857,000			86,357,000

Total liabilities		182,891,000			174,507,000

Stockholders’ equity:
Voting common stock, $.01 par value. 200,000 shares authorized, 104,520 shares issued and outstanding		1,000			1,000
Nonvoting common stock, $.01 par value. 20,000,000 shares authorized, 5,226,001 shares issued and outstanding		53,000			53,000
Additional paid-in capital		25,009,000			25,009,000
Accumulated deficit		(9,952,000	)		(10,051,000	)
Accumulated other comprehensive loss-unrealized net pension loss		(2,419,000	)		(2,419,000	)

Total stockholders’ equity		12,692,000			12,593,000

Total liabilities and stockholders’ equity	$	195,583,000		$	187,100,000

	December 31,2003			March 31,2003
	(unaudited)			(Note 1)
Assets
Current assets:
Cash and cash equivalents	$	4,290		$	5,820
Accounts receivable:
Trade, less allowance for doubtful accounts		34,939			31,888
Vendor, less allowance for doubtful accounts		6,042			11,369
Inventory		83,161			82,982
Prepaid expenses		4,291			4,301
Total current assets		132,723			136,360
Property and equipment, net		32,688			36,498
Other assets:
Intangible assets, net of amortization		29,298			18,328
Investment in Commonwealth Wine & Spirits, LLC		5,612			5,637
Cash surrender value of life insurance		4,190			3,815
Goodwill		1,246			1,246
Deferred pension costs		715			715
Deposits and other		601			596
Notes receivable		418			513
Total other assets		42,080			30,850
Total assets	$	207,491		$	203,708
Liabilities And Stockholders’ Equity
Current liabilities:
Accounts payable	$	40,952		$	39,550
Accrued payroll and payroll taxes		6,682			7,486
Excise taxes payable		4,514			4,503
Current portion of distribution rights obligations		4,061			1,697
Other accrued expenses		12,147			11,941
Total current liabilities		68,356			65,177
Deferred pension liability		3,005			3,005
Distribution rights obligations		19,972			9,369
Long-term debt		97,857			98,303
Total liabilities		189,190			175,854
Stockholders’ equity:
Voting common stock, $.01 par value. 200,000 shares authorized, 104,520 shares issued and outstanding		1			1
Nonvoting common stock, $.01 par value 20,000,000 shares authorized, 5,226,001 shares issued and outstanding shares		53			53
Additional paid-in capital		25,009			25,009
Accumulated earnings (deficit)		(4,472	)		5,081
Accumulated other comprehensive loss-unrecognized net pension loss		(2,290	)		(2,290	)
Total stockholders’ equity		18,301			27,854
Total liabilities and stockholders’ equity	$	207,491		$	203,708

See accompanying notes

NATIONAL WINE & SPIRITS, INC.

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in thousands)

(unaudited)

	Three Months Ended						~~Nine Months Ended~~
	December 31,2003			December 31,2002			December 31,2003			December 31,2002
	July 2, 2004			June 27, 2003
Net product sales	$	~~148~~137,~~995~~387,000		$	~~208~~137,~~278~~910,000		$	~~408,335~~		$	~~555,091~~
Distribution fees		7,~~535~~274,000			6,~~594~~124,000			~~20,935~~			~~18,049~~
Total revenue		~~156~~144,~~530~~661,000			~~214~~144,~~872~~034,000			~~429,270~~			~~573,140~~
Cost of products sold		~~124~~111,~~239~~456,000			~~169~~109,~~955~~149,000			~~333,049~~			~~445,616~~
Gross profit		3233,~~291~~205,000			4434,~~917~~885,000			~~96,221~~			~~127,524~~
Selling, general and administrative expenses:
Warehouse and delivery		9,~~769~~420,000			109,~~241~~254,000			~~28,190~~			~~29,949~~
Selling		1213,~~114~~818,000			14,~~299~~898,000			~~38,560~~			~~43,676~~
Administrative		911,~~566~~024,000			1211,~~170~~705,000			~~27,160~~			~~35,314~~
		31,449			36,710			93,910			108,939
Management fees		(3,731,000	)		(2,529,000	)
Income from operations		842			8,207			2,311			18,585
		30,531,000			33,328,000
Interest expense:
Income from operations		2,674,000			1,557,000
Related parties		(52	)		(50	)		(139	)		(151	)
Interest expense:
Third parties		(2,411	)		(2,795	)		(6,887	)		(8,341	)
Related parties		(44,000	)		(44,000	)
Gain from repurchase of long term debt		—			—			700			—
Third parties		(2,360,000	)		(2,386,000	)
		(2,463	)		(2,845	)		(6,326	)		(8,492	)
Gain from repurchase of long term debt		—			700,000
Other income (expense):
		(2,404,000	)		(1,730,000	)
Interest income		3			35			18			146
Other income (expense):
Rental and other income (expense)		(10	)		(31	)		33			140
Interest income		1,000			11,000
Equity in income of Commonwealth Wine & Spirits, LLC		389			196			420			368
Rental and other income		15,000			26,000
Equity in losses of eSkye Solutions, Inc.		—			—			—			(160	)
Equity in income (losses) of Commonwealth Wine & Spirits, LLC		(187,000	)		97,000
Total other income		382			200			471			494
		(171,000	)		134,000
Net income (loss)	$	(199,~~239~~000	)	$	5(39,~~562~~000	)	$	~~(3,544~~	)	$	~~10,587~~

See accompanying notes.

NATIONAL WINE & SPIRITS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(unaudited)

	Nine Months Ended
	Three Months Ended
	December 31,2003			December 31,2002
	July 2, 2004			June 27, 2003
Operating activities:
Operating Activities:
Net income (loss)	$	(399,~~544~~000	)	$	10(39,~~587~~000	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation of property and equipment		41,~~599~~352,000			41,~~897~~595,000
Amortization of intangible assets		41,~~368~~638,000			1781,~~562~~000
Equity in losses of eSkye Solutions, Inc.		—			160
Equity in earnings of Commonwealth Wine & Spirits, LLC		187,000			(97,000	)
Equity in earnings of Commonwealth Wine & Spirits, LLC		(420	)		(368	)
Provision for bad debt expense		12,000			129,000
Provision for bad debt expense		340			449
Gain on repurchase of long term debt		—			(700,000	)
Gain on repurchase of long term debt		(700	)		—
Gain on sales of assets		(41,000	)		(273,000	)
Gain on sales of assets		(263	)		(35	)
Increase in cash surrender value of life insurance		(1,000	)		(63,000	)
Increase in cash surrender value of life insurance		(375	)		(389	)
Changes in operating assets and liabilities
Accounts receivable		2(11,~~083~~200,000	)		~~(14~~969,~~894~~000	)
Inventories		~~(179~~1,624,000	)		(38,~~894~~705,000	)
Prepaid expenses		10			(510	)
Prepaid expenses and other current assets		(703,000	)		(1,546,000	)
Deposits and other		(3—	)		~~(370~~3,000	)
Accounts payable		1312,~~402~~000			(3117,~~798~~000	)
Accrued expenses and taxes		~~(916~~2,008,000	)		3(483,~~946~~000	)
Net cash and cash equivalents provided (used) by operating activities		6(4,~~402~~713,000	)		(29,~~657~~098,000	)
Investing activities:
Purchases of property and equipment		(~~844~~293,000	)		(2384,~~035~~000	)
Purchases of intangible assets		(1969,000	)		(156,~~600~~000	)
Proceeds from sale of property and equipment		~~171~~50,000			9382,000
Distributions from Commonwealth Wine & Spirits, LLC		445			797
Proceeds from sale of intangible assets		100,000			—
Collections on notes receivable		95			260
Distributions from Commonwealth Wine & Spirits, LLC		131,000			60,000
Net cash and cash equivalents used by investing activities		(152	)		(2,485	)
Collections on notes receivable		—			95,000
Net cash and cash equivalents used by investing activities		(81,000	)		(203,000	)
Financing activities:
Proceeds from line of credit borrowings		101,300			24,000
Cash provided by outstanding checks in excess of bank balance		4,685,000			—
Principal payments on line of credit borrowings		(92,100	)		(21,500	)
Proceeds from line of credit borrowings		49,000,000			18,200,000
Principal payments on long-term debt, including purchases of senior notes		(8,681	)		—
Principal payments on line of credit borrowings		(46,500,000	)		(20,200,000	)
Proceeds of borrowings from stockholder		—			1
Principal payments on long-term debt, including purchases of senior notes		—			(8,681,000	)
Payments of distribution rights obligations		(21,~~290~~120,000	)		—(436,000	)
Receipts on notes receivable from stockholders and others		—			2,628
Distributions to stockholders		—			(2,810,000	)
Distributions to stockholders		(6,009	)		(9,416	)
Net cash and cash equivalents provided (used) by financing activities		6,065,000			(13,927,000	)
Net cash and cash equivalents used by financing activities		(7,780	)		(4,287	)
Net increase (decrease) in cash and cash equivalents		1,271,000			(5,032,000	)
Net decrease in cash and cash equivalents		(1,530	)		(9,429	)
Cash and cash equivalents, beginning of year		1,466,000			5,820,000
Cash and cash equivalents, beginning of period		5,820			11,735
Cash and cash equivalents, end of year	$	2,737,000		$	788,000
Cash and cash equivalents, end of period	$	4,290		$	2,306

See accompanying notes.

National Wine & Spirits, Inc.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

1. Nature of Business and Summary of Significant Accounting Policies

Nature of Business and Principles of Consolidation

National Wine & Spirits, Inc. (“NWS” or the “Company”), an S-Corporation, is a holding company, which operates primarily in the wine and liquor wholesale distribution business. Based in Indianapolis, National Wine & Spirits Corporation (“NWSC”) is a wholesale distributor of liquor and wines throughout Indiana and also operates a division for the distribution of cigars and accessories. Based in Chicago, NWS-Illinois, LLC (“NWS-LLC”) is a wholesale distributor of liquor, wines, and beer throughout Illinois. NWS Michigan, Inc. (“NWSM”) and National Wine & Spirits, LLC (“NWSM-LLC”) are distributors of liquor and non-alcoholic products throughout Michigan. NWSM distributes products as an Authorized Distribution Agent (“ADA”) for the State of Michigan and derives revenue from distribution fees. Accordingly, NWSM’s results represent the entire “All Other” segment as described in Note 78. Based in Connecticut, U.S. Beverage, LLC (“USB”) distributes and markets import and craft beer along with malt based products throughout the United States.

The consolidated financial statements include the accounts of NWS, NWSC, NWS-LLC, NWSM, NWSM-LLC, and USB, all of which NWS wholly owns or owns 100% of the voting stock. All significant intercompany accounts and transactions have been eliminated from the consolidated financial statements. Substantially all revenues result from the sale of liquor, beer and wine or distribution fees there from. NWS performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month ~~and~~period ~~nine-month periods~~ ended ~~December~~July ~~2003~~2, 2004 are not necessarily indicative of the results that may be expected for the year ending March 31, ~~2004~~2005.

There were no amounts included in comprehensive income (loss) for the ~~nine~~three-month period ended ~~December~~July 312, ~~2003~~2004 other than net income (loss).

The balance sheet at March 31, ~~2003~~2004 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

National Wine & Spirits, Inc.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

Use of Estimates and Assumptions

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and 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.

InFiscal ~~January~~Year 2003, the FASB issued FASB Interpretation No. 46 (FIN 46): Consolidation of Variable Interest Entities and during December 2003 issued Interpretation 46 (FIN 46R), Consolidation of Variable Interest Entities, and Interpretation of ARB 51. The term “variable interest” is defined in FIN 46 as “contractual, ownership or other pecuniary interest in an entity that change with changes in the entity’s net asset value.” Variable interests are investments or other interest that will absorb a portion of an entity’s expected losses if they occur or receive portions of the entity’s expected residual returns if they occur. FIN 46R defers the effective date of FIN 46 for certain entities and makes several other changes to FIN 46. The Company does not expect the recognition provisions of FIN 46 or FIN 46R to have a material impact on the Company’s financial position or results of operations.

InThe ~~May~~Company’s ~~2003,~~fiscal ~~the~~year ~~FASB~~begins ~~issued~~on ~~SFAS No.~~April ~~150~~1 ~~(SFAS~~and ~~150):~~ends ~~Accounting~~on ~~for~~March ~~Certain~~31 ~~Financial~~of ~~Instruments~~the ~~with~~year ~~Characteristics~~stated. ofThe ~~Both~~Company ~~Liabilities~~reports ~~and~~results ~~Equity.~~using ~~SFAS~~a ~~150~~fiscal ~~establishes~~quarter ~~standards~~method onwhereby ~~the~~each ~~classification~~quarter ~~and~~is ~~measurement~~reported as of ~~certain~~the ~~financial~~last ~~instruments~~Friday ~~with~~of ~~characteristics~~the ofthirteen ~~both~~week ~~liabilities and equity~~period. The ~~provisions~~results ~~of SFAS 150 are effective~~ for ~~financial~~the ~~instruments~~quarter ~~entered~~ended ~~into~~July or2, ~~modified~~2004 ~~after~~include ~~May~~thirteen ~~31,~~weeks ~~2003~~ and totwo ~~all~~days. ~~instruments~~The ~~that~~results ~~exist~~for ~~as of~~ the ~~beginning~~quarter ofended ~~the first interim financial reporting period beginning after~~ June 1527, 2003. ~~The~~include ~~adoption~~twelve ofweeks ~~SFAS~~and ~~150~~four ~~did not have a material impact on the Company’s results of operations or financial position~~days.

Recent Accounting Pronouncements

None applicable to the Company.

Reclassifications

Certain amounts from prior year’s ~~balance~~financial ~~sheet~~statement have been ~~reclassed~~reclassified to conform to the current ~~year~~period presentation. ~~The balance sheet has been reclassified to include additional disclosure relating to distribution rights obligations.~~

2. Inventory

Inventory is comprised of the following:

	December 31,2003			March 31,2003
	July 2, 2004				March 31, 2004
Inventory at FIFO	$	9389,~~532~~642,000		$	~~93,895,000~~$	91,070,000
Less: LIFO reserve		10(11,~~371~~070,000	)		~~10,913,000~~	(10,874,000	)
	$	8378,~~161~~572,000		$	~~82,982,000~~$	80,196,000

During the nine months ended December 31, 2003, certain inventory quantities were reduced, which resulted in a partial liquidation of a LIFO inventory layer carried at a cost which prevailed in a prior year. For the nine months ended December 31, 2003, the effect of the liquidation of inventory was a decrease in the cost of products sold and a decrease in the net loss by $1,143,000.

3. Supplemental Cash Flow Information

Cash paid for interest during the ~~nine~~three-month period ended July ~~December 31~~2, ~~2003~~2004 and ~~December~~June 3127, ~~2002~~2003 was $5431,~~401,~~000 and $5519,~~902,~~000, respectively. As further discussed in note 9, non-cash additions of distributions rights of approximately $17,500,000, discounted to $15,587,000 were added to the Company’s intangibles and long-term obligation sections of the balance sheet.

National Wine & Spirits, Inc.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

4. Debt

Long-term debt is comprised of the following:

	December 31,2003		March 31,2003
	July 2, 2004		March 31, 2004
Senior notes payable (A)	$	8079,~~329~~029,000	$	8979,~~975~~029,000
Bank revolving line of credit (B)		135,~~200~~500,000		43,000,000
Notes payable to stockholders		4,328,000		4,328,000
		97,857,000		98,303,000
		88,857,000		86,357,000
Less: current maturities		—		—
	$	9788,857,000	$	9886,~~303~~357,000

(A) On January 25, 1999, the Company issued $110,000,000 of unsecured senior notes with a maturity of January 15, 2009. Interest on the senior notes is 10.125% and is payable semiannually. These senior notes are guaranteed by the Company’s subsidiaries. The guarantors are either wholly owned or the Company owns 100% of the voting stock and there are no non-guarantor subsidiaries. The guarantees are full, unconditional and joint and several. ~~NWS is a holding company and has no independent assets or operations.~~

The bond indenture restricts the ability of the Company and its subsidiaries to incur additional indebtedness, pay dividends, engage in mergers or consolidations, make capital expenditures and otherwise restricts corporate activities.

On or after January 15, 2004, the Company may redeem some or all of the senior notes at any time at stated redemption prices plus accrued interest and liquidated damages.

~~The~~(B) ~~Company~~On ~~purchased~~March $931,~~646~~ 2003,~~000~~ ofNWS ~~its~~entered ~~senior~~into ~~notes~~a oncredit ~~the~~agreement ~~open~~with ~~market~~LaSalle inBank ~~the~~National ~~quarter~~Association, ~~ended~~as ~~June~~lender 30and agent, ~~2003.~~and ~~The~~National ~~notes~~City ~~were~~Bank ~~purchased~~of Indiana, that provides a revolving line of credit for borrowings of up to $840 million,~~681,000~~ ~~plus~~including ~~accrued~~standby ~~interest~~or commercial letters of credit of up to $~~305~~5 million,~~000.~~ ~~Related~~through ~~unamortized~~April ~~issuance~~1, ~~costs~~2008. Line of ~~$265~~credit borrowings are collateralized by and based upon eligible accounts receivable and inventories,~~000~~ ~~were~~as ~~written~~defined, ~~off~~and ~~due~~are toguaranteed by NWS’ subsidiaries. Interest is payable monthly at the ~~purchase~~LIBOR rate or the higher of the ~~senior~~prime ~~notes~~lending rate or the federal funds rate, plus a margin percentage. ~~The~~As ~~net~~of ~~gain~~July 2, 2004, total advances on the ~~purchase~~revolving line of credit were $~~700~~5,500,000, iswhich ~~included~~bore in interest ~~expense~~at 5.00% based upon prime rate pricing. Commercial letters of credit of $3.7 million were issued for the self-insured portion of NWS’ casualty insurance policies.

~~(B)~~In ~~On March 31~~addition, ~~2003,~~the ~~NWS~~agreement ~~entered~~places ~~into~~restrictions aon ~~credit~~the ~~agreement~~Company ~~with~~and ~~LaSalle~~its subsidiaries ~~Bank~~regarding ~~National~~additional ~~Association~~indebtedness, asdividends, ~~lender~~mergers ~~and~~or ~~agent,~~consolidations and ~~National~~capital ~~City~~expenditures. ~~Bank of Indiana~~Further, ~~that~~the ~~provides~~Company amust ~~revolving~~maintain ~~line~~certain ofinterest ~~credit~~coverage ~~for~~and ~~borrowings~~funded ofdebt upcoverage ~~to $40 million~~ratios, ~~including~~with ~~standby~~which orthe ~~commercial~~Company ~~letters~~was ofin ~~credit~~compliance ofat July ~~up to $5 million~~2, ~~through April 1, 2008~~2004. ~~Line of credit~~

National Wine & Spirits, Inc.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

~~borrowings~~On ~~are~~June ~~collateralized by and based upon eligible accounts receivable and inventories~~30, ~~as defined~~2004, ~~and are guaranteed by NWS’ subsidiaries. Interest is payable monthly at~~ the ~~LIBOR~~Company ~~rate~~amended orits ~~the~~$40 ~~higher of the prime lending rate or the federal funds rate, plus a margin percentage. As of December 31, 2003, total advances on the~~ million revolving ~~line of~~ credit ~~were $13,200,000; of which $6,200,000 bore interest at 4~~facility.~~00%~~ ~~based~~The ~~upon~~amendment ~~prime~~permits ~~rate~~the ~~pricing~~Company ~~and~~to ~~$7,000,000~~repurchase ~~bore~~up ~~interest~~to ~~at 2.92% based upon LIBOR pricing. Commercial letters of credit of~~ $310.70 million ~~were~~of ~~issued~~its ~~for~~senior ~~the~~notes ~~self-insured~~subject ~~portion~~to ofcertain ~~NWS’~~availability ~~casualty insurance policies~~levels.

In addition, the agreement places restrictions on the Company and its subsidiaries regarding additional indebtedness, dividends, mergers or consolidations and capital expenditures. Further, the Company must maintain certain interest coverage and funded debt coverage ratios, with which the Company was in compliance at December 31, 2003.

5. Commitments

~~The~~During the three month period ended July 2, 2004, the Company ~~expects~~agreed to ~~enter~~pay ~~into~~ a ~~firm~~supplier ~~purchase~~approximately ~~contract~~$950,000 orin tosettlement of purchase ~~certain~~commitments. ~~inventory~~No ~~subsequent~~additional topayments ~~December~~are ~~31,~~expected ~~2003.~~to ~~The~~be ~~estimated~~paid ~~loss~~or ~~resulting~~losses ~~from~~incurred ~~the~~in ~~purchase~~conjunction ofwith this ~~inventory~~commitment. As this amount is ~~approximately~~not ~~$1,100,000~~expected ~~and~~to nobe ~~amounts~~recovered ~~have~~through ~~been~~the profit of future sales, the Company recorded asa charge to cost of ~~December~~products 31sold for the three-month period ended July 2, ~~2003~~2004.

6. Intangible Assets

Intangible assets consist of the following:

December 31, 2003

March 31, 2003

July 2, 2004

March 31, 2004

Intangible Assets Subject to Amortization

~~Weighted~~WeightedAverage ~~Average~~ Life

~~Gross Carrying Amount~~GrossCarryingAmount

~~Accumulated Amortization~~AccumulatedAmortization

~~Gross Carrying Amount~~GrossCarryingAmount

~~Accumulated Amortization~~AccumulatedAmortization

Distribution rights

3130,~~262~~720,000

57,~~047~~662,000

1530,~~676~~820,000

16,~~683~~170,000

Loan acquisition costs

4,~~188~~124,000

12,~~976~~129,000

4,~~716~~076,000

12,~~890~~011,000

Non-compete agreements

200,000

~~183~~200,000

200,000

~~153~~193,000

Total

35,~~650~~044,000

79,~~206~~991,000

2035,~~592~~096,000

38,~~726~~374,000

Intangible Assets Not Subject to Amortization		~~Carrying Amount~~CarryingAmount			~~Carrying Amount~~CarryingAmount
Distribution rights		$	~~854~~924,000		$	1924,~~462,~~000

National Wine & Spirits, Inc.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

As a result of the declining demand and lower than expected sales performance for a product line in the Company’s product sales segment, management performed an impairment analysis of the related distribution rights that are not subject to amortization7. ~~Management~~Employee ~~determined~~Benefit ~~that~~Plans the related distribution rights were impaired and recorded a charge of $593,000 to amortization expense during the three month period ended December 31, 2003 to write the intangible asset down to fair value. Fair value was calculated based on the discounted future cash flows of the product line’s expected contribution margin.

7The Company funds a noncontributory defined benefit pension plan covering substantially all of its warehousemen and drivers. ~~Segment~~Eligible ~~Reporting~~employees can participate after one year of service and the attainment of age 21 with entry on January 1 and July 1. Benefits are based on length of eligible service, form of payment, and vest after 5 years of employment. The Company makes quarterly contributions to the plan based on amounts permitted by law as well as voluntary contributions to maintain or increase the funded percentage of the plan. The Company uses a December 31 measurement date. Components of Net Periodic Benefit Cost for the three months ended July 2, 2004 and June 27, 2003 are as follows:

The Company’s reportable segments are business units that engage in product sales and all other activities. The majority of the all other activities relate to distribution fee operations. The Company evaluates performance and allocates resources based on these segments. The accounting policies of the reportable segments are the same as those described in the summary of significant accounting policies in Note 1 in the financial statements included in form 10-K as of March 31, 2003.


	Pension Benefits
	July 2, 2004			June 27, 2003
Service cost-benefits earned during the year	$	122,000		$	100,000
Interest cost on projected benefit obligation		107,000			96,000
Expected return on plan assets		(96,000	)		(81,000	)
Prior service cost and other amortization (net)		44,000			44,000

Net amount charged to income	$	177,000		$	159,000

	Three Months Ended					Nine Months Ended
	December 31, 2003			December 31, 2002		December 31, 2003			December 31, 2002
Revenue from external customers
Product sales	$	148,995,000		$	208,278,000	$	408,335,000		$	555,091,000
All other		7,535,000			6,594,000		20,935,000			18,049,000
Segment income (loss)
Product sales		(1,438,000	)		5,010,000		(4,699,000	)		10,762,000
All other		199,000			552,000		1,155,000			(175,000	)
Segment assets
Product sales		195,648,000			198,315,000		195,648,000			198,315,000
All other		11,843,000			10,852,000		11,843,000			10,852,000

During the three months ended July 2, 2004, $301,000 has been contributed to the company sponsored defined benefit pension plan. The Company presently anticipates contributing an additional $621,000 to fund the plan during the fiscal year for a total of $922,000.

8. ~~Litigation~~Segment Reporting

The Company’s isreportable asegments ~~party~~are tobusiness ~~various~~units ~~lawsuits~~that ~~and~~engage ~~claims~~in ~~arising~~product insales ~~the~~and ~~normal~~all ~~course~~other ~~of business~~activities. ~~While~~The majority of the ~~ultimate~~all other ~~resolution~~activities ofrelate ~~lawsuits~~to ordistribution ~~claims~~fee ~~against~~operations. ~~the~~The Company ~~cannot~~evaluates beperformance ~~predicted~~and ~~with~~allocates ~~certainty,~~resources ~~management~~based ison ~~vigorously~~these ~~defending~~segments. ~~all~~The ~~claims~~accounting ~~and~~policies ~~does~~of ~~not~~the ~~expect~~reportable ~~that~~segments ~~these~~are ~~matters~~the ~~will~~same ~~have~~as athose ~~material~~described ~~adverse~~in ~~effect~~the onsummary ~~the~~of ~~financial~~significant ~~position~~accounting orpolicies ~~results~~in ofNote ~~operations~~1 ofto the ~~Company~~financial statements.


	Three Months Ended
	July 2, 2004			June 27, 2003
Revenue from external customers
Product sales	$	137,387,000		$	137,910,000
All other		7,274,000			6,124,000
Segment income (loss)
Product sales		243,000			(85,000	)
All other		(144,000	)		46,000
Segment assets
Product sales		187,082,000			177,242,000
All other		8,501,000			11,169,000

National Wine & Spirits, Inc.

Notes to Condensed Consolidated Financial Statements (continued)

(Unaudited)

9. ~~Vendor~~Litigation ~~Distribution Agreements~~

~~NWSC~~The ~~entered~~Company ~~into~~is a ~~contract~~party ~~for~~to ~~distributing~~various ~~certain~~lawsuits ~~products~~and ~~during~~claims arising in the ~~nine~~normal ~~months~~course ~~ended~~of ~~December~~business. ~~31,~~While ~~2003,~~the ~~which~~ultimate ~~will~~resolution beof onlawsuits anor ~~exclusive~~claims ~~basis~~against ~~beginning~~the ~~January~~Company 1,cannot ~~2004.~~be ~~Required~~predicted ~~payments for this agreement, combined~~ with ~~incremental payments triggered from a previous distribution agreement total $17~~certainty,~~500,000,~~ ofmanagement ~~which $16,167,000~~ is ~~unpaid~~ asvigorously ofdefending ~~December~~all ~~31,~~claims ~~2003. Payments are required quarterly through July 2009~~ and ~~June~~does ~~2011,~~not ~~respectively.~~expect ~~NWSC~~that ~~has~~these ~~imputed~~matters ~~interest~~will ~~for~~have ~~this~~a ~~obligation~~material atadverse ~~4.0%~~effect ~~and recorded a discount~~ on the ~~obligation, which reduced the related intangible~~ ~~asset~~financial byposition ~~$1,913,000.~~or ~~These~~results ~~assets~~of ~~will~~operations beof ~~amortized over~~ the ~~life of their respective contracts~~Company.

10The Company received notification on July 21, 2004 of an award in favor of the Company, in connection with a certain lawsuit, subject to rights of appeal by both parties. ~~Management~~The ~~Services~~settlement ~~Agreement~~is for approximately $2.3 million and is to be received by the Company within thirty days of the notification.

NWS-LLC entered into a management services agreement with a nationwide wholesaler of wine and spirits during the year ended March 31, 2003 and, effective December 1, 2003, NWS modified certain terms of the agreement related to NWS’s operations in the State of Illinois10. ~~NWS~~Management ~~formerly~~Fees shared profits and losses of NWS-LLC equally with the other wholesaler. Under the new terms of the agreement, effective December 1, 2003, the other wholesaler has committed to fund eighty percent (80%) of operating losses and receive eighty percent (80%) of operating profits. NWS will fund twenty percent (20%) of any such losses and receive twenty percent (20%) of any such profits. Ownership of NWS-LLC or the NWS-LLC’s operating assets has not changed and neither party has the present right to buy or cause the sale of the other party’s interest. However, at any time after July 31, 2004, if certain conditions are met, the other wholesaler may purchase NWS-LLC’s assets for a purchase price based upon 80% of the then current net assets of NWS-LLC and a 20% equity interest in the successor Illinois organization, as defined in the agreement. As part of the agreement, NWS-LLC recorded approximately $2,441,000 and $7,634,000 as a reduction of operating expenses during the three months and nine months ended December 31, 2003, respectively.

NWS-LLC entered into a management services agreement with a nationwide wholesaler of wine and spirits during the year ended March 31, 2003 and, effective December 1, 2003, NWS modified certain terms of the agreement related to NWS’s operations in the State of Illinois. NWS formerly shared profits and losses of NWS-LLC equally with the other wholesaler. Under the new terms of the agreement, effective December 1, 2003, the other wholesaler committed to fund eighty percent (80%) of operating losses and receive eighty percent (80%) of operating profits. NWS funds twenty percent (20%) of any such losses and receives twenty percent (20%) of any such profits. Ownership of NWS-LLC or the NWS-LLC’s operating assets has not changed and neither party has the present right to buy or cause the sale of the other party’s interest. However, at any time after July 31, 2004, if certain conditions are met, the other wholesaler may purchase NWS-LLC’s assets for a purchase price based upon 80% of the then current net assets of NWS-LLC and a 20% equity interest in the successor Illinois organization, as defined in the agreement. As part of the agreement, NWS-LLC recorded approximately $3,731,000 and $2,529,000 as a reduction of operating expenses during the three months ended July 2, 2004 and June 27, 2003, respectively.

Item 2. Management’s Discussion And Analysis Of Financial Condition And Results Of Operations

~~This~~You ~~Form~~should ~~10-Q,~~read ~~including,~~the ~~but~~following ~~not~~discussion ~~limited~~in toconjunction ~~the~~with “~~Management’s~~Selected ~~Discussion~~Consolidated ~~and Analysis of~~ Financial ~~Condition~~Data” and ~~Results~~NWS’ ofhistorical consolidated ~~Operations”~~financial ~~section, contains “forward-looking~~ statements” ~~within~~and the ~~meaning~~accompanying ofnotes ~~the~~included ~~Private~~elsewhere ~~Securities~~in ~~Litigation~~this ~~Reform~~Form ~~Act of 1995, which can be identified by the use of forward~~10-looking terminology, such as “may,” “intend,” “will,” “expect,” “anticipate,” “should,” “plans to,” “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminologyQ. In ~~particular,~~Unless ~~any~~otherwise ~~statement~~indicated, ~~express~~all orreferences ~~implied, concerning future operating results or the ability~~ to ~~generate~~years ~~revenues,~~are ~~income or cash flow~~ to ~~service the Company~~NWS’s ~~debt~~fiscal ~~are~~year ~~forward-looking~~ended ~~statements.~~March Although the Company believes that the expectations will prove to have been correct, all forward-looking statements are expressly qualified by such cautionary statements, and the Company undertakes no obligation to update such forward-looking statements31.

Disclosure Regarding Forward-Looking Statements

This Form 10-Q, including, but not limited to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” sections, contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which can be identified by the use of forward-looking terminology, such as “may,” “intend,” “will,” “expect,” “anticipate,” “should,” “plans to,” “estimate” or “continue” or the negative thereof or other variations thereon or comparable terminology. In particular, any statement, express or implied, concerning future operating results or the ability to generate revenues, income or cash flow to service the Company’s debt are forward-looking statements. Although the Company believes that the expectations will prove to have been correct, all forward-looking statements are expressly qualified by such cautionary statements, and the Company undertakes no obligation to update such forward-looking statements.

Overview

National Wine & Spirits, Inc. (the “Company”) is one of the largest distributors of wine and spirits in the United States. Substantially all of the Company’s current operations are in Illinois, Indiana, Michigan, Kentucky, and from ~~U.S.~~United States Beverage, L.L.C. (USB), the Company’s national import, craft and specialty beer marketing and distribution business. The Company’s reported revenues include net product sales in Illinois, Indiana, Michigan, and from USB, with distribution fees from the Michigan distribution operation.

~~EBITDA~~The isCompany ~~used~~evaluates ~~throughout~~its ~~this~~operations ~~Item~~and asliquidity aupon ~~financial~~two reportable ~~indicator.~~segments, ~~Each~~which ~~reference~~are tobusiness ~~EBITDA~~units ~~herein~~that isengage ~~qualified~~in byproduct ~~reference~~sales ~~to,~~ and ~~should~~all beother ~~read~~activities. inProduct ~~conjunction~~sales ~~with~~operations ~~this~~are ~~paragraph,~~conducted ~~the~~in ~~following two paragraphs and the reconciliation below. EBITDA~~Indiana, ~~as used herein~~Illinois, ~~is defined as net income plus interest expense~~Michigan, ~~depreciation~~ and ~~amortization. EBITDA should not be construed as an alternative to income or net cash flow~~ from ~~operating~~the ~~activities~~USB ~~and~~distribution ~~should~~business. ~~not~~The bemajority ~~construed as an indication~~ of ~~operating~~other ~~performance~~activities relate orto asdistribution afee ~~measure~~operations ofin ~~liquidity~~Michigan.

~~Furthermore,~~ EBITDA is used athroughout ~~non-GAAP~~this ~~financial~~Item ~~measure~~as ~~within~~a ~~the~~financial ~~meaning~~indicator. ofEach ~~Regulation~~reference G.to EBITDA herein is aqualified ~~widely~~by ~~accepted financial~~reference ~~indicator~~to, ~~used~~and byshould ~~investors~~be ~~and~~read ~~analysts~~in toconjunction ~~analyze~~with ~~and~~this ~~compare~~paragraph ~~companies~~and on the ~~basis~~following oftwo ~~debt~~paragraphs ~~service~~and ~~capability~~the reconciliation below. EBITDA, as used herein, is ~~presented~~defined ~~because~~as ~~management~~net ~~uses~~income itor toloss ~~set~~plus ~~targets~~interest ~~and~~expense, ~~monitor~~depreciation and ~~assess financial performance~~amortization. EBITDA isshould not ~~intended~~ tobe ~~represent~~construed ~~cash flows for the periods presented, nor has it been presented~~ as an alternative to ~~net~~ income asor annet ~~indicator~~cash offlow from operating ~~performance~~activities and should not be ~~considered~~construed ~~in isolation or~~ as aan ~~substitute~~indication ~~for measures~~ of operating performance ~~and~~ ~~cash~~or ~~flow~~as ~~prepared~~a inmeasure ~~accordance~~of ~~with generally accepted accounting principles~~liquidity.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

~~The~~EBITDA ~~most~~is ~~comparable~~a non-GAAP financial measure ~~for~~within ~~EBITDA~~the ismeaning ~~net~~of ~~income (loss). Net~~Regulation ~~income declined from $5~~G.6 ~~million~~EBITDA ~~from~~is ~~the~~presented ~~prior~~because ~~year’s~~it ~~comparable~~is ~~quarter~~a towidely aaccepted ~~net~~financial ~~loss~~indicator ofused ~~$1.2~~by ~~million~~investors ~~for~~and ~~the~~analysts ~~three~~to ~~months~~analyze ~~ended~~and ~~December~~compare ~~31,~~companies ~~2003.~~on ~~Net~~the ~~income~~basis ~~declined~~of ~~from~~debt ~~$10~~service capability.6 ~~million~~Management ~~during~~uses ~~the~~EBITDA ~~prior~~to ~~year’s~~set ~~nine~~targets ~~month~~and ~~period~~monitor toand aassess ~~net~~financial ~~loss of $3~~performance.5 ~~million~~EBITDA ~~for~~is ~~the~~not ~~nine~~intended ~~months~~to ~~ended~~represent ~~December~~cash ~~31,~~flows ~~2003.~~for ~~Net losses at~~ the ~~Company’s~~periods ~~Illinois~~presented, ~~and~~nor ~~USB~~has ~~operations~~it ~~were~~been ~~primarily~~presented ~~responsible~~as ~~for~~an ~~the~~alternative ~~drop~~to in net income ~~during~~or ~~the~~loss ~~three and nine month periods ended December 31, 2003,~~ as ~~compared~~an toindicator ~~the~~of ~~prior~~operating ~~year’s~~performance ~~comparable~~and ~~periods.~~should ~~Following~~not isbe ~~reconciliation~~considered ~~between~~in ~~net~~isolation ~~income~~or as ~~(loss)~~a ~~and~~substitute ~~EBITDA~~ for ~~the~~measures ~~three~~of ~~months~~performance and ~~nine~~cash ~~months~~flow ~~ended~~prepared ~~December~~in ~~31,~~accordance ~~2003~~with ~~and~~generally ~~2002,~~accepted ~~respectively~~accounting principles.

	Three Months Ended					Nine Months Ended
	December 31, 2003			December 31,2002		December 31,2003			December 31,2002
	(in thousands)					(in thousands)
Net Income (loss)	$	(1,239	)	$	5,562	$	(3,544	)	$	10,587
Interest expense		2,463			2,845		6,326			8,492
Depreciation		1,391			1,572		4,599			4,897
Amortization		2,157			439		4,368			1,562
EBITDA	$	4,772		$	10,418	$	11,749		$	25,538

The most comparable GAAP measure for EBITDA is net income or loss. Following is a reconciliation between net income or loss and EBITDA for the three months ended July 2, 2004 and June 27, 2003:


	Three Months Ended
	July 2, 2004		June 27, 2003
	(in thousands)
Net Income (loss)	$	99	$	(39	)
Interest expense		2,404		1,730
Depreciation		1,352		1,595
Amortization		1,638		781

EBITDA	$	5,493	$	4,067

The EBITDA information reflected herein may not be comparable to similarly titled measures used by other companies.

~~For~~Executive ~~the~~Summary three months ended December 31, 2003, the Company’s EBITDA was $4.8 million, as compared to $10.4 million for the prior year’s comparable quarter. Net loss was $1.2 million for the three months ended December 31, 2003, versus net income of $5.6 million for the prior year’s comparable quarter, primarily resulting from the decline in the Company’s Illinois sales volume and lower than expected sales from the Company’s USB division. The Company’s case volume and revenue from its Indiana and Michigan operations improved for the three months ended December 31, 2003, as compared to the prior year’s comparable quarter through organic growth and additional brands. During October 2003, Future Brands named the Company as its sole broker for the state of Michigan effective January 2004, a move which will strengthen ties with this important supplier.

The Company’s ~~Illinois~~net income ~~division~~and ~~experienced~~EBITDA ~~reduced~~showed ~~sales~~increases ~~volume,~~from ~~as compared to~~ the prior year’s ~~comparable~~ quarter, ~~resulting~~due ~~from~~to volume growth in the ~~loss~~wine, ofspirits ~~certain~~and distribution ~~rights~~fees ~~that~~categories. ~~occurred~~Expense ~~during~~reductions in the ~~last~~product ~~fiscal~~sales segment, along with the increased revenue, resulted in a $1.1 million increase in operating income for the quarter ofended July 2, 2004 as compared to the prior year’s quarter. Net income was $0.1 million for the three months ended ~~March~~July 312, ~~2003~~2004 as compared to a net loss of $0.04 ~~The~~million ~~Company~~during isthe ~~pursuing~~same quarter ~~additional~~last ~~volume~~year. ~~and~~EBITDA ~~brand~~of ~~representation~~$5.5 million for ~~its~~the ~~Illinois~~quarter ~~division~~ended July 2, ~~and~~2004 was $1.4 million above the ~~Company~~ ~~believes~~prior ~~its~~year’s ~~Illinois~~quarter. ~~operations~~The ~~present~~Company ahad ~~viable~~$30.8 ~~and~~million ~~attractive~~available ~~alternative~~under toits ~~suppliers~~$40.0 inmillion ~~the~~revolving ~~Illinois~~credit ~~market~~facility at July 2, 2004.

Total revenue increased by $0.6 million primarily due to the increased brand representation in the distribution fees segment. The product sales segment experienced a decline in revenue for the quarter ended July 2, 2004 as compared to the prior year’s quarter, due to product introductions that occurred in the prior year’s quarter that were not entirely offset by increased sales of existing brands during the current year.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

~~The~~Results Company and Glazer’s Wholesale Distributors (“Glazer”) modified the strategic partnership that has existed in the Illinois market since February 2003. While Glazer and the Company formerly shared profits and losses of ~~the~~Operations Illinois wine and spirits distribution business equally, under the new terms of the alliance, Glazer has committed to fund eighty percent (80%) of operating losses and receive eighty percent (80%) of operating profits effective as of December 1, 2003. The Company will fund twenty percent (20%) of any such losses and receive twenty percent (20%) of any such profits. Day-to day management of the Illinois business will now be the responsibility of Glazer, subject to certain rights and protective provisions in favor of the Company. Under the new terms of the alliance, ownership of the Illinois operation or the Company’s Illinois operating assets has not changed and neither party has the present right to buy or cause the sale of the other party’s interest in the alliance or the Company’s Illinois operating assets. However, at any time after July 31, 2004, if certain conditions are met, Glazer may purchase the Company’s Illinois assets for a purchase price based upon 80% of the then current net assets of the Company’s Illinois operating company and a 20% equity interest in the successor Illinois organization.

~~USB~~The ~~introduced~~following ~~Seagram~~table ~~Smooth,~~includes ainformation ~~malt~~regarding ~~based~~total ~~product~~cases ~~that~~shipped ~~competes~~by NWS ~~in the ready-to-drink market sector,~~ during the ~~quarter~~three months ended ~~June~~July 302, ~~2003.~~2004 ~~The Company’s expenses relating to this product introduction~~ and ~~other~~ ~~brand~~June ~~promotion activities have been substantial in relation to the sales volume~~27, ~~while~~2003: ~~selected advertising and brand support expenditures have been modified due to lower than expected sales volume.~~

For the nine months ended December 31, 2003, the Company’s EBITDA was $11.7 million, as compared to $25.5 million for the prior year’s comparable quarter. Net loss was $3.5 million for the nine months ended December 31, 2003, versus net income of $10.6 million for the prior year’s comparable period, primarily resulting from the decline in the Company’s Illinois sales volume. Although the Company’s USB sales volume increased significantly from the prior year’s period due to the new product introductions, the associated brand promotion costs have more than offset the gross margin contribution from the increased sales volume. The Company’s case volume and revenue from its Indiana and Michigan operations have improved for the nine months ended December 31, 2003, as compared to the prior year’s comparable period.


	Three Months Ended
	July 2, 2004	June 27, 2003	Percent Change
	(Cases in thousands)
Wine (product sales operations)	598	552	8.3	%
Spirits (product sales operations)	572	565	1.2	%
Spirits (distribution fee operations)	761	685	11.1	%

Total wine and spirits	1,931	1,802	7.2	%

Other (including USB sales)	2,813	3,401	(17.3	)%

Total	4,744	5,203	(8.8	)%

USB’s results are included in the other category for the current and prior years.

Three Months Ended July 2, 2004 Compared With Three Months Ended June 27, 2003

Revenue

Total revenue increased $0.6 million to $144.7 million as a result of increased fee revenue and stable product sales. Product sales case volume in the spirits and wine categories increased 1.2% and 8.3%, respectively for the three months ended July 2, 2004 as compared to the prior year’s quarter. Other case volume declined from the prior year’s quarter primarily due to reduced sales volume of Seagram Smooth, a product introduced by the Company’s USB division in last year’s quarter. Increases in the spirits and wine categories in the product sales segment offset the revenue shortfall for Other products as compared to the prior year’s quarter. The addition of the Schieffelin, Future, and expansion of the Diageo and Allied Domecq brands in the fee operations segment were primarily responsible for the $1.2 million, or 18.8%, increase in fee revenue from the prior year’s quarter.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Results of Operations

The following table includes information regarding total cases shipped by NWS during the three months and nine months ended December 31, 2003, compared with the comparable periods ended December 31, 2002:

	Three Months Ended December 31				Nine Months Ended December 31
	2003	2002	Percent Change		2003	2002	Percent Change
	(Cases in thousands)				(Cases in thousands)
Wine (product sales operations)	746	976	(23.6	)%	1,865	2,367	(21.2	)%
Spirits (product sales operations)	668	1,026	(34.9	)%	1,750	2,693	(35.0	)%
Spirits (distribution fee operations)	853	712	19.8	%	2,288	2,011	13.8	%
Total wine and spirits	2,267	2,714	(16.5	)%	5,903	7,071	(16.5	)%
Other (including USB sales)	1,333	1,882	(29.2	)%	7,561	6,911	9.4	%
Total	3,600	4,596	(21.7	)%	13,464	13,982	(3.7	)%

Three Months Ended December 31, 2003, Compared with the Three Months Ended December 31, 2002.

Revenue

Total product revenue decreased $59.3 million to $149.0 million for the three months ended December 31, 2003 versus $208.3 million for the prior year’s comparable quarter. The revenue decrease for the quarter ended December 31, 2003 as compared to the prior year’s comparable quarter was primarily due to the reduced sales volume in the Company’s Illinois business. Product sales in the Company’s Indiana and Michigan operations increased due to the addition of the Diageo (“DEO”) and Schieffelin & Somerset (“S&S”) brands. Fee revenue for the quarter ended December 31, 2003 increased 14.3% from the prior year’s comparable quarter due to the addition of S&S brands being represented in the Company’s Michigan business. Case sales for the Michigan distribution fee business increased 19.8% from the prior year’s comparable quarter. The Company commenced distribution and brokerage of the S&S brands during the quarter ended June 30, 2003, and will commence brokerage services for Fortune Brands starting January 1, 2004 which are expected to increase fee revenue for the remainder of the fiscal year, in comparison to the prior fiscal year periods.

Gross Profit

Gross ~~margin~~profit ondecreased ~~product~~$1.7 ~~sales~~million ~~decreased~~to $1233.62 million ~~for~~due to decreased product sales volume, primarily the ~~three~~result ~~months~~of ~~ended~~the comparison ~~December~~to ~~31,~~the ~~2003~~prior ~~versus~~year’s quarter which included the Seagram Smooth product introduction by the Company’s USB division. Gross profit percentage on product sales of 18.9% was below the prior year’s comparable ~~quarter~~period of 20.9% primarily ~~The~~due ~~sales~~to ~~volume~~competitive ~~decline~~conditions in the Company’s Illinois market and the settlement of a purchase commitment of $1.0 million in the product sales segment. Incremental gross margin from the fee operations segment of $1.2 million was primarily due to the addition of the Schieffelin and Future brands, as well as increased volume of the Diageo and Allied Domecq brands.

Operating Expenses

Total operating expenses declined by $2.8 million, or 8.4% primarily due to the product sales segment, which included reductions in the sales and administrative areas, along with increased management fees, as compared to the prior year’s quarter. Operating expenses for the product sales segment decreased $4.1 million, or 15.0% for the quarter ended July 2, 2004 as compared to the prior year’s quarter. Reduced brand promotional costs, increased management fees, and savings from reduced professional and health care costs were primarily responsible for the reduction in product sales operating expenses during the quarter ended July 2, 2004 as compared to the prior year’s quarter. Operating expenses in the Company’s fee operations increased by approximately $1.3 million due to greater sales expense and increased case volume over the quarter ended July 2, 2004 as compared to the prior year’s quarter.

Warehouse and delivery expenses in the product sales segment remained stable despite the increased case volume, decreasing by $0.1 million during the quarter ended July 2, 2004 as compared to the prior year’s quarter. Warehouse and delivery expenses for the Company’s fee operations increased by approximately $0.3 million, primarily from increased labor expense, equipment repair and supplies that resulted from the increased case volume.

Selling expenses for the product sales segment decreased $2.0 million from the prior year’s quarter, primarily due to reductions in brand promotion costs as compared to the prior year’s quarter, which included product introductions. Sales salaries and associated travel expenses for the fee operations increased by approximately $0.9 million due to the addition of the Schieffelin brands and expansion of the Fortune and Diageo brokerage operations.

Administrative expenses for the product sales segment decreased by $0.8 million for the quarter ended July 2, 2004 as compared to the prior year’s quarter. The decrease was primarily the result of expense reductions for office wages and taxes of $0.3 million, health costs of $0.4 million, and professional fees of $0.3 million. Administrative expenses for the fee operations increased by $0.2 million, primarily due to increased support services that resulted from the increased case volume during the current year’s quarter as compared the prior year’s comparable period.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

~~Company’s~~Management ~~Illinois~~fees ~~business~~from ~~was~~Glazer, ~~primarily~~as ~~responsible~~part ~~for~~of the ~~drop~~management services inagreement, ~~gross~~were ~~margin~~$3.7 ~~dollars~~million ~~during~~for the three months ended ~~December~~July 312, ~~2003~~2004, as compared to $2.5 million for the prior year’s ~~comparable~~ quarter. ~~Gross~~These ~~profit~~increased ~~percentage~~from ~~on product sales of 16.6% was below~~ the prior year’s ~~comparable~~ quarter ~~of 18.4%~~ due to ~~reduced~~ ~~margin percentages in~~ the ~~Company’s~~modification ~~USB and Illinois division, and amortization~~ of ~~distribution~~the ~~rights~~agreement inthat ~~the~~occurred ~~Company’s~~during December ~~Indiana division~~2003.

Operating Expenses

Total operating expenses decreased $5.3 million, or 14.3%, as compared to the prior year’s comparable period for the three months ended December 31, 2003, to $31.4 million. The reduction in operating expenses during the three months ended December 31, 2003, as compared to the prior year’s comparable period, were primarily the result of staffing adjustments, cost reduction initiatives, and management fees received from Glazer in the Company’s Illinois business. The Company’s USB division continued to reduce certain discretionary selling costs during the quarter ended December 31, 2003 as compared to the quarter ended December 31, 2002.

Warehouse and delivery expenses were reduced by $0.5 million during the three months ended December 31, 2003 as compared to the prior year’s comparable period due to reductions in personnel and operations in the Company’s Illinois business. Warehouse and delivery expenses for the Company’s other operations had only modest increases over the prior year’s comparable period.

Selling expenses decreased $2.2 million from the prior year’s comparable period, as a result of significant cost reductions in the Company’s Illinois business. The Company’s Illinois division has significantly reduced sales salaries and commissions due to the reduced sales volume. The Company’s USB division was able to reduce various sales related costs despite increased brand promotion expenditures as compared to the prior year’s comparable quarter. Selling expenses in the Company’s fee business increased during the three months ended December 31, 2003, as compared to the prior year’s comparable period, due to the addition of sales personnel and brand promotion expenditures.

Administrative expense decreased $2.6 million for the three months ended December 31, 2003 as compared to the prior year’s comparable period. The decrease was primarily the result of payments of approximately $2.4 million received from Glazer as part of a management services agreement with Glazer for the Company’s Illinois division. The Company recorded an impairment loss related to distribution rights of approximately $0.6 million during the three months ended December 31, 2003. Cost reductions for wages and related costs by the Company’s Illinois business offset increased costs for professional fees and only moderate increases in administrative expenses in the Company’s other operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Income From Operations

Operating income ~~declined~~for the product sales segment increased by $71.43 million for the ~~three~~quarter ~~months~~ ended ~~December 31,~~July ~~2003~~2, 2004 to $02.85 million, versus ~~$8.2 million for~~ the prior year’s comparable quarter. ~~The~~Stable ~~decline~~revenue inwith ~~revenue~~reduced ~~and~~operating ~~margins~~expenses ~~from~~more than offset the ~~Company’s~~shortfall ~~Illinois~~in ~~division~~gross ~~and~~profit during the ~~increased~~quarter ~~brand~~ended ~~promotion~~July ~~costs~~2, in2004 as compared to the prior ~~Company~~year’s ~~USB~~quarter. ~~division~~Operating ~~were primarily~~income ~~responsible~~for the fee operations segment decreased $0.2 million for the ~~decrease~~three inmonths ~~operating~~ended ~~income~~July 2, 2004, compared to $0.4 million for the prior year’s quarter.

Interest Expense

Interest expense ~~declined~~increased $0.47 million to $2.5 4 million for the ~~three~~quarter ~~months~~ ended ~~December~~July 312, ~~2003~~2004 as compared to the prior year’s ~~comparable period~~quarter. ~~The~~Gains ~~Company’s~~from ~~long-term~~the ~~debt~~repurchase ~~at December 31, 2003~~ of $~~97.~~9.6 million ~~was~~of ~~$17.1~~the ~~million~~Company’s ~~lower~~senior ~~than~~notes during the ~~December~~quarter ~~31,~~ended ~~2002~~June ~~balance~~27, ~~resulting~~ in2003 reduced interest expense ~~during~~by ~~the~~approximately ~~quarter~~$0.7 ~~ended~~million, ~~December~~while ~~31,~~no ~~2003~~debt repurchases occurred during the current year’s quarter.

Other Income or Expense

~~Other~~The reduction in other income ~~increased~~for bythe ~~$0.~~quarter ended July 2, 2004 was ~~million~~primarily due to ~~increased income from~~ the Company’s ~~equity~~share inof ~~earnings~~income from Commonwealth Wine & Spirits, LLC, which decreased by $0.3 million for the three months ended July 2, 2004 as compared to the prior year’s quarter.

Net Income or Loss

Net income ~~declined~~was ~~from~~ $50.61 million ~~from~~for the ~~prior~~three ~~year’s~~months ~~comparable~~ended ~~quarter~~July to2, a2004, ~~net~~which ~~loss~~increased ofby $10.21 million ~~for~~from the ~~three~~prior year’s ~~months~~quarter. ~~ended~~Improvement ~~December~~in ~~31, 2003.~~the ~~Net~~net ~~losses~~income atfrom the ~~Company’s~~product ~~Illinois~~sales ~~and~~segment ~~USB~~of ~~operations~~$0.3 ~~were~~million was primarily ~~responsible~~the reason for the ~~drop~~increase in net income ~~during~~for the three months ended ~~December~~July 312, ~~2003,~~2004 as compared to the prior year’s comparable ~~quarter~~period.

EBITDA

For financial analysis purposes only, the Company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter ended ~~December~~July 312, ~~2003~~2004 was $45.85 million as compared to $~~10.~~4.1 million for the prior year’s comparable ~~reporting period~~quarter. Please see the discussion and reconciliation regarding EBITDA as a non-GAAP financial measure set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview”. EBITDA should not be construed as an alternative to operating income or net cash flow from operating activities and should not be construed as an indication of operating performance or as a measure of liquidity.

1716

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

~~Nine~~Discussion ~~Months~~and ~~Ended~~Analysis ~~December~~of ~~31,~~Financial ~~2003,~~Condition ~~Compared~~and ~~with~~Results ~~the~~of ~~Nine~~Operations ~~Months~~– Overview”. ~~Ended~~EBITDA ~~December~~should 31not be construed as an alternative to operating income or loss, ~~2002~~ or net cash flow from operating activities and should not be construed as an indication of operating performance or as a measure of liquidity.

Revenue

Total product revenue decreased $146.8 million to $408.3 million for the nine months ended December 31, 2003 versus $555.1 million for the prior year’s comparable period. The revenue decrease for the nine months ended December 31, 2003 as compared to the prior year’s comparable period was primarily due to the reduced sales volume in the Company’s Illinois business. Product sales in all of the Company’s other operations were up due to growth of existing brands and the addition of the DEO and S&S brands. Fee revenue and case sales for the nine months ended December 31, 2003 increased 16.0% and 13.8%, respectively, from the prior year’s comparable period due to sales growth of existing brands and the addition of S&S brands being represented in the Company’s Michigan business. The Company commenced distribution and brokerage of the S&S brands during the quarter ended June 30, 2003 and will commence brokerage services for Fortune Brands starting January 1, 2004.

Gross Profit

Gross margin on product sales decreased $34.2 million for the nine months ended December 31, 2003 versus the prior year’s comparable period. The sales volume decline in the Company’s Illinois business was primarily responsible for the drop in gross margin dollars during the nine months ended December 31, 2003, as compared to the prior year’s comparable period. Gross profit percentage on product sales of 18.4% was below the prior year’s comparable period of 19.7% primarily due to increased brand support in the Company’s USB division and amortization of distribution rights in the Company’s Indiana division.

Operating Expenses

Total operating expenses decreased $15.0 million, or 13.8% for the nine months ended December 31, 2003, as compared to the prior year’s comparable period, to $93.9 million. Staffing adjustments, cost reduction initiatives, and management fees received from Glazer in the Company’s Illinois business, whose operating expenses have been reduced by approximately 42% from the prior year, were primarily responsible for the reduction in operating expenses during the nine months ended December 31, 2003 as compared to the prior year’s comparable period. Operating expenses in the Company’s other operations increased moderately due to the increased sales and case volume over the nine months ended December 31, 2003, as compared to the prior year’s comparable period.

Warehouse and delivery expenses were reduced by $1.8 million during the nine months ended December 31, 2003 as compared to the prior year’s comparable period, due to reductions in personnel and operations in the Company’s Illinois business. Warehouse and delivery expenses for the Company’s fee operations had modest increases over the prior year’s comparable period due to the increased brands represented.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Selling expenses decreased $5.1 million from the prior year’s comparable period, as a result of significant cost reductions in the Company’s Illinois business. The Company’s Illinois division has significantly reduced sales salaries and commissions commensurate with the reduced sales volume. Sales expenses, such as commissions, salaries, and brand promotion have increased in other operations due to the addition of the DEO and S&S brands in certain markets and the new product introductions by the Company’s USB division.

Administrative expenses decreased $8.2 million for the nine months ended December 31, 2003 as compared to the prior year’s comparable period. The decrease was primarily the result of payments of approximately $7.6 million received from Glazer as part of a management services agreement with Glazer for the Company’s Illinois division. Cost reductions for wages and related costs by the Company’s Illinois business offset increased costs for professional fees and asset impairment charges in the Company’s other operations.

Income From Operations

Operating income declined $16.3 million for the nine months ended December 31, 2003, to $2.3 million, versus $18.6 million for the prior year’s comparable period. The decline in revenue and margins from the Company’s Illinois division, and the increased brand promotion costs in the Company’s USB division, were primarily responsible for the decrease in operating income.

Interest Expense

Interest expense declined $2.2 million to $6.3 million for the nine months ended December 31, 2003 as compared to the prior year’s comparable period. Gains from the discounted repurchases of the Company’s senior notes and reduced long term debt levels were primarily responsible for the decreased expense. The Company repurchased $9.6 million of its senior notes on the open market during the quarter ended June 30, 2003 at approximately 90% of face value and expensed associated unamortized debt issuance costs resulting in a $0.7 million gain. The Company’s long-term debt at December 31, 2003 of $97.9 million was $17.1 million lower than the December 31, 2002 balance, resulting in reduced interest expense during the nine months ended December 31, 2003.

Other Income

Other income remained even compared to the prior year’s comparable period due to reduced rental income, lower interest income, which were offset by the losses from the investment in eSkye Solutions, Inc. that were incurred during the prior year’s comparable period but not during the current year’s period.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Net Loss

Net income declined from $10.6 million during the prior year’s nine month period to a net loss of $3.5 million for the nine months ended December 31, 2003. Net losses at the Company’s Illinois and USB operations were primarily responsible for the drop in net income during the nine months ended December 31, 2003, as compared to the prior year’s comparable period.

EBITDA

For financial analysis purposes only, the Company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) for the nine months ended December 31, 2003 was $11.7 million as compared to $25.5 million for the prior year’s comparable reporting period. Please see the discussion and reconciliation regarding EBITDA as a non-GAAP financial measure set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview”. EBITDA should not be construed as an alternative to operating income or net cash flow from operating activities and should not be construed as an indication of operating performance or as a measure of liquidity.

Liquidity and Capital Resources

The Company’s primary cash requirements have been to fund accounts receivable and inventories for the product markets in Illinois, Indiana, Michigan, and ~~its~~it’s U.S. Beverage ~~operations~~operation. The Company has historically satisfied its cash requirements principally through cash flow from operations, trade terms, bank borrowings and existing cash balances.

AtThe ~~December 31, 2003, the~~ Company ~~had~~amended ~~$13.2 million of outstanding advances on~~ its $40.0 million revolving ~~line of~~ credit facility ~~and~~as ~~also had $3.7 million in letters~~ of ~~credit~~June ~~outstanding~~30, ~~resulting in availability of $23~~2004.1 ~~million.~~ The ~~line~~amendment ofpermits ~~credit borrowings are collateralized by and based upon eligible accounts receivable and inventories, as defined, and are guaranteed by~~ the Company’s ~~subsidiaries.~~to ~~Interest~~repurchase isup ~~payable~~to monthly at the LIBOR rate or the higher of the prime lending rate or the federal funds rate, plus a margin percentage. The Company’s prime based and LIBOR based revolver rate of interest was 4.00% and 2.92%, respectively, at December 31, 2003. The Company had $610.~~2 million outstanding at the prime based pricing and $7.~~0 million ~~outstanding at the LIBOR pricing as~~ of ~~December~~ ~~31,~~its ~~2003.~~senior ~~The~~notes ~~Company~~subject ~~must~~to ~~maintain~~ certain interest coverage and funded debt coverage ratios, with which the Company was in compliance at December 31, 2003. The Company anticipates that the collateral base for the revolving credit facility will provide adequate availability ~~to fund operations and working capital needs during fiscal 2004~~levels.

20At July 2, 2004, the Company had $5.5 million of outstanding advances on its $40.0 million revolving line of credit facility and also had $3.7 million in letters of credit outstanding, resulting in availability of $30.8 million. The line of credit borrowings are collateralized by and based upon eligible accounts receivable and inventories, as defined, and are guaranteed by the Company’s subsidiaries. Interest is payable monthly at the LIBOR rate or the higher of the prime lending rate or the federal funds rate, plus a margin percentage. The Company’s prime based revolver rate of interest was 5.00% at July 2, 2004. The Company did not have any advances priced at a LIBOR based rate at July 2, 2004. The Company must maintain certain interest coverage and funded debt coverage ratios, with which the Company was in compliance at July 2, 2004. The Company anticipates that the collateral base for the revolving credit facility will provide adequate availability to fund operations and working capital needs during fiscal 2005.

The Company used $4.7 million in net cash from operating activities for the quarter ended July 2, 2004, as compared to cash provided of $9.1 million for the prior year’s comparable quarter. This increased use of operating cash flow was primarily the result of a reduction in working capital of $15.4 million from the Company’s Illinois business during the prior year’s comparable period which did not occur during the current year. Cash used by working capital for the three months ended July 2, 2004 was $8.0 million, primarily due to funding of accounts receivable of $11.5 million for the product sales segment. The Company was able to reduce inventories in the product sales segment which provided $1.6 million of working capital cash flow for the three months ended July 2, 2004. Cash provided by net income (loss) and adjustments for depreciation and amortization were $3.1 million for the quarter ended July 2, 2004, as compared to $2.3 million for the prior year’s comparable quarter.

Net cash used by investing activities was $0.1 million for the quarter ended July 2, 2004, as compared to cash used of $0.2 million for the prior year’s comparable period. The decreased

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

~~The~~use ~~Company~~of ~~generated $6.4 million in net~~ cash ~~from operating activities for the nine months ended December 31~~, ~~2003,~~ as compared to ~~cash used of $2.7 million for~~ the prior year’s ~~comparable~~quarterly period~~. Cash provided by working capital for the nine months ended December 31~~, ~~2003~~ was ~~$2.4 million versus cash used of $19.5 million for the prior year’s comparable period. This $21.9 million improvement was~~ primarily due to reduced ~~the~~spending ~~Illinois~~for ~~business’~~capital ~~net reductions in inventories, receivables, and payment of current liabilities~~expenditures. The Company’s ~~net proceeds~~intends ~~from~~to ~~the~~continue ~~reduction of Illinois working capital was approximately $22.0 million for~~ the ~~nine~~reduced ~~months~~level ~~ended December 31, 2003. Inventory purchases and other working capital cash needs, due to the addition~~ of ~~the S&S brands, were the primary reason for cash used by working~~ capital expenditures during ~~the~~fiscal ~~nine-month~~2005 ~~period~~at ~~ended~~maintenance ~~December~~levels ~~31,~~between ~~2003. Cash provided by net income (loss) and adjustments for depreciation and amortization were~~ $52.40 million ~~for~~and ~~the nine months ended December 31, 2003, as compared to~~ $172.05 million ~~for the prior year’s comparable period~~.

Net cash ~~used~~provided by ~~investing~~financing activities was $06.21 million for the ~~nine months~~ quarter ended ~~December~~July 312, ~~2003~~2004, aan ~~decrease~~increase of $220.30 million from the ~~comparable~~ prior year’s ~~period~~comparable quarter. The ~~decreased~~Company ~~use~~purchased $9.6 million of ~~cash,~~its assenior ~~compared~~notes to and paid down its line of credit by $2.0 million during the ~~prior~~quarter ~~year’s~~ended ~~comparable~~June ~~period~~27, ~~was~~2003, ~~primarily~~while ~~due~~no senior tonotes ~~reduced~~were ~~capital~~repurchased ~~expenditures~~ and ~~intangible~~advances ~~purchases~~on the line of credit increased by $2.85 million during the quarter ended July 2, 2004. ~~The~~There ~~Company~~were ~~reduced~~no ~~its~~distributions ~~capital~~to ~~expenditures~~stockholders during the ~~first~~quarter ~~nine~~ended ~~months~~July of2, ~~fiscal~~ 2004, ~~due~~while distributions were provided to stockholders for estimated income tax payments of $2.6 million during the ~~reduction~~quarter inended June 27, 2003. Stockholder distributions other than for tax liabilities are limited by the ~~Illinois~~ ~~business~~revolving credit facility and indenture. The Company ~~intends~~anticipates tothat fiscal ~~continue~~2005 ~~the~~stockholder ~~reduced~~distributions ~~level~~will be for income tax estimates of ~~capital~~the ~~expenditures~~shareholders ~~during~~and ~~fiscal~~distributions ~~2004~~for atother ~~maintenance~~purposes ~~levels~~will ~~between~~be ~~$2.0~~limited ~~million~~by the credit facility and $2indenture.5 ~~million.~~

~~Net~~Total ~~cash~~assets ~~used~~of by$195.6 ~~financing~~million ~~activities~~at July 2, 2004 increased by $38.5 million ~~for~~from ~~the~~March ~~nine months ended December~~ 31, ~~2003~~2004. asThe ~~compared~~increase ~~to the~~in ~~prior~~assets ~~year’s~~was primarily ~~comparable~~due ~~period.~~to ~~Purchases of~~ the ~~Company’s~~product ~~senior~~sales ~~notes~~segment inwith ~~the~~increased ~~open~~accounts ~~market~~receivable of $810.73 million and ~~payment~~lowered inventories of $21.36 million ~~for distribution rights increased cash used by financing activities for the nine months ended December 31, 2003 as compared to the prior year’s comparable period~~. ~~Increased~~Total net proceeds from the revolving credit facility and decreased stockholder distributions during the nine months ended December 31, 2003, as compared to the prior year’s comparable period, funded the increased uses of cash for debt ~~reduction and payment~~ of ~~the distribution rights. The Company purchased~~ $988.69 million ~~of its senior notes~~ at ~~approximately~~July ~~90% of face~~2, ~~plus accrued interest, during the three months ended June 30, 2003. The Company may continue to selectively pursue repurchase opportunities in the open market during the remainder of fiscal~~ 2004. ~~The~~as ~~revolving~~compared ~~credit facility allows up~~ to ~~$30 million of debt repurchases subsequent to~~ March 31, ~~2003,~~2004 ifincreased ~~after~~by ~~giving effect to the purchase, there is~~ $152.5 million ofdue ~~availability~~to ~~under~~ the advances ~~$40~~on ~~million~~the revolving credit facility. ~~There~~Equity ~~were~~increased to $1312.27 million ~~of outstanding advances on the revolving credit facility~~ at ~~December~~July 312, ~~2003.~~2004 ~~The Company~~as ~~will~~compared ~~utilize~~to ~~the~~March ~~positive cash flow from the downsizing of Illinois operations~~31, ~~existing~~2004 ~~cash,~~due ~~and its credit facility~~ to ~~fund~~net ~~operations~~income ~~and possible additional senior note repurchases during the remainder~~ of ~~fiscal~~$0.1 ~~2004~~million.

The Company’s ~~distributions~~expects to ~~stockholders~~maintain ~~decreased~~adequate bycash ~~$3.4~~balances, ~~million for~~collateral, ~~the~~and ~~nine~~revolving ~~months~~credit ~~ended~~facility ~~December~~availability ~~31, 2003, as compared~~ to satisfy the ~~prior year~~Company’s ~~comparable~~anticipated working ~~period.~~capital ~~Stockholder~~and ~~distributions~~debt ~~during~~service ~~the~~requirements ~~nine~~during ~~months~~fiscal ~~ended~~2005. ~~December 31, 2003 provided funds to~~

21Other

~~Table~~As a matter of ~~Contents~~policy, the Company plans to review and evaluate all professional services firms every three to four years. This review will include but is not limited to legal, audit and information systems services.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

stockholders for estimated income tax payments of $2.6 million and $3.4 million related to certain stockholder obligations described below. The Company’s stockholder distributions have been reduced during fiscal 2004 due to reduced income tax estimates paid by the stockholders. Stockholder distributions other than for tax liabilities are limited by the revolving credit facility and indenture.

During 1998 Mr. LaCrosse transferred substantially all of his non-voting stock to a family trust for estate-planning purposes. As part of that transfer the Company has distributed $3.4 million to Mr. LaCrosse, the family trust, and Mrs. Johnston during the nine months ended December 31, 2003. These distributions were made within the terms and conditions contained in the Company’s indenture governing its senior notes (including the limitation on restricted payments) and the revolving credit facility. The family trust then remitted $2.8 million of these funds to Mr. LaCrosse in repayment of indebtedness for the non-voting stock that was purchased during 1998 and Mrs. Johnston retained $0.6 million. As of December 31, 2003 there is $2.5 million owed to Mr. LaCrosse by the family trust related to the 1998 transfer of non-voting stock.

Total assets of $207.5 million at December 31, 2003 increased $3.8 million from March 31, 2003. The increase in assets was primarily due to the addition of distribution rights, offset by the collection of vendor receivables and reduced capital expenditures. The increase in distribution rights assets was offset by a corresponding increase in distribution rights obligations representing the present value of amounts expected to be paid over the respective contract lives. Cash balances decreased $1.5 million during the nine months ended December 31, 2003 due to funding of open market senior note repurchases that reduced long-term debt. Total debt of $97.9 million at December 31, 2003 as compared to March 31, 2003 decreased slightly due to the Company’s repurchase of $9.6 million of its senior notes on the open market offset by advances of $9.2 million of the revolving credit facility. Equity decreased to $18.3 million at December 31, 2003 as compared to March 31, 2003 due to the stockholder distributions of $6.0 million and the net loss of $3.5 million.

The Company expects to maintain adequate cash balances and revolving credit facility availability to satisfy the Company’s anticipated working capital and debt service requirements during fiscal 2004.

Inflation

Inflation has not had a significant impact on the Company’s operations but there can be no assurance that inflation will not have a negative effect on the Company’s financial condition, results of operations or debt service capabilities in the future.

2218

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Environmental Matters

The Company currently owns and leases a number of properties, and historically it has owned and/or leased others. Under applicable environmental laws, the Company may be responsible for remediation of environmental conditions relating to the presence of certain hazardous substances on such properties. The liability imposed by such laws is often joint and several without regard for whether the property owner or operator knew of, or was responsible for, the presence of such hazardous substances. In addition, the presence of such hazardous substances, or the failure to properly remediate such substances, may adversely affect the property owner’s ability to borrow using the real estate as collateral and to transfer its interest in the real estate. Although the Company is not aware of the presence of hazardous substances requiring remediation, there can be no assurance that releases unknown to the Company have not occurred. Except for blending and bottling of a few of the Company’s private label brands, the Company does not manufacture any of the wine or spirit products it sells and believes that it has conducted its business in substantial compliance with applicable environmental laws and regulations. Compliance with environmental laws has not had a material effect upon NWS’ capital expenditures, earnings or competitive position.

Critical Accounting Policies

The Company’s consolidated financial statements and accompanying notes have been prepared in accordance with generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses during the reporting periods.

The Company continually evaluates its accounting policies and estimates it uses to prepare the consolidated financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

The Company believes its critical accounting policies and estimates, as reviewed and discussed with the ~~Audit~~audit ~~Committee~~committee of the Board of Directors, include accounting for impairment of long-lived assets, accounts receivable valuation, inventory valuation, vendor allowances, and pensions.

Impairment of Long-lived Assets. The Company evaluates long-lived assets and intangibles subject to amortization whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In performing the review of recoverability, the Company estimates future cash flows expected to result from the use of the asset and its eventual disposition. The estimates of future cash flows, based on reasonable and supportable assumptions and projections, require management’s subjective judgments. The time periods for

2319

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

~~assumptions and projections, require management’s subjective judgments. The time periods for~~ estimating future cash flows is often lengthy, which increases the sensitivity to assumptions made. Depending on the assumptions and estimates used, the estimated future cash flows projected in the evaluation of long-lived assets can vary within a wide range of outcomes. The Company considers the probability of possible outcomes in determining the best estimate of future cash flows.

Receivables and Credit Policies. The carrying amount of accounts receivable is reduced by an allowance that reflects management’s best estimate of the amounts that will not be collected. Management individually reviews all accounts receivable balances and creates an allowance for doubtful accounts based on the credit worthiness of specific accounts and an estimate of other uncollectible accounts based on historical performance.

~~Vendor~~Inventory ~~Allowances Received~~Valuation. The ~~Company~~carrying ~~records~~amount ~~vendor~~of ~~allowances~~inventories ~~and~~is ~~discounts~~reduced ~~in accordance with EITF 02-16: Accounting~~ by ~~a Customer (including a Reseller) for Certain Consideration Received from a Vendor. The Company~~ ~~receives~~an ~~allowances~~allowance ~~from~~that ~~vendors~~reflects asmanagement’s aestimate ~~result~~ of ~~purchasing~~inventory ~~and~~at ~~promoting~~net ~~their~~realizable ~~products~~value. ~~Vendor~~Management ~~allowances~~reviews ~~provided~~inventory asturnover, asales ~~reimbursement~~activity, ofindividual ~~specific,~~product ~~incremental~~spoilage, and ~~identifiable~~historical ~~costs~~destruction ~~incurred~~data to ~~promote~~calculate ~~a vendor’s products are recorded as~~ an ~~expense~~ ~~reduction~~allowance when the cost is incurred. All other vendor allowances, including vendor allowances received in excess of the Company’s cost to promote a vendor’s product, or vendor allowances directly related to purchase of afor ~~vendor’s product are initially deferred~~obsolescence. ~~The deferred amounts are then recorded as a reduction of cost of goods sold when the related product is sold.~~

~~Defined~~Vendor ~~Benefit~~Allowances ~~Pension Plan~~Received. The ~~most significant element in determining the~~ Company’s records ~~pension~~vendor ~~income~~allowances ~~(cost)~~and discounts in accordance with ~~SFAS~~EITF ~~No.~~02-16: 87Accounting isby ~~the~~a ~~expected~~Customer ~~return~~(including ona ~~plan~~Reseller) ~~assets.~~for InCertain ~~2003,~~Consideration ~~the~~Received ~~Company~~from ~~assumed~~a ~~that the expected long-term rate of return on plan assets would be 8~~Vendor.~~5%.~~ The ~~assumed~~Company ~~long-term~~receives ~~rate~~allowances offrom ~~return~~vendors onas ~~assets is applied to~~ a ~~calculated~~result ~~value~~ of ~~plan~~purchasing and ~~assets,~~promoting ~~which~~their ~~recognizes~~products. ~~changes~~Vendor inallowances ~~the~~provided ~~fair~~as ~~value of plan assets in~~ a ~~systematic~~reimbursement ~~manner~~of ~~over~~specific, ~~five~~incremental, ~~years.~~and ~~This~~identifiable ~~produces~~costs ~~the~~incurred ~~expected~~to ~~return~~promote ona ~~plan~~vendor’s ~~assets~~products ~~that~~are isrecorded ~~included~~as inan ~~pension~~expense ~~income~~reduction ~~(cost).~~when ~~The difference between this expected return and~~ the ~~actual~~cost ~~return on plan assets~~ is ~~deferred~~incurred. ~~The~~All ~~net~~other vendor ~~deferral~~allowances, ofincluding ~~past~~vendor ~~asset~~allowances ~~gains~~received ~~(losses)~~in ~~affects~~excess ~~the calculated value~~ of ~~plan assets and, ultimately, future pension income (cost). Over~~ the ~~long term, the~~ Company’s ~~pension~~cost ~~plan~~to ~~assets have~~promote ~~generated~~ a ~~return~~vendor’s ~~in excess of 9.5%. However~~product, ~~the~~or ~~plan~~vendor ~~assets~~allowances ~~have~~directly ~~lost~~related anto ~~average~~purchase of ~~14.9%~~a ~~per~~vendor’s ~~year~~product ~~during~~are ~~the~~initially ~~last two years~~deferred. ~~Should~~The ~~this~~deferred amounts ~~trend~~are ~~continue,~~then ~~the~~recorded ~~Company~~as ~~would~~a bereduction ~~required~~of tocost ~~reconsider its assumed expected rate~~ of ~~return~~good onsold ~~plan assets.~~when If the ~~Company~~related ~~were~~product tois ~~lower this rate, future pension cost would increase~~sold.

AtMany ~~the end~~ of ~~each year,~~ the ~~Company~~vendor ~~determines~~allowance ~~the~~programs ~~discount~~are ~~rate~~not topart ~~be used to calculate the present value~~ of ~~plan~~written ~~liabilities.~~contracts ~~The~~and ~~discount~~collectibility ~~rate is an estimate~~ of ~~the~~amounts ~~current~~owed ~~interest~~to ~~rate~~NWS atunder ~~which~~such ~~the~~agreements ~~pension liabilities~~cannot ~~could~~ be ~~effectively~~assured. Management ~~settled~~reviews atvendor ~~the~~accounts ~~end~~receivable ofbalances ~~the~~for ~~year.~~collectibility Inand ~~estimating~~records ~~this~~an ~~rate,~~allowance ~~the~~for ~~Company uses the preceding November~~management’s ~~Moody’s~~best AAestimate ~~Corporate Bond Index rounded down to the nearest ¼~~ of auncollectible ~~percentage point~~accounts. ~~At March 31, 2003, the Company determined this~~

24Defined Benefit Pension Plan. The most significant element in determining the Company’s pension income (cost) in accordance with SFAS No. 87 is the expected return on plan assets. In fiscal 2004, the Company reduced its expected long-term rate of return on plan assets to 7.5% from 8.5% during the prior fiscal year. The assumed long-term rate of return on assets reflects the weighted average rate of earnings expected on the classes of funds invested, or to be invested to provide for the plan benefits. An analysis of the composition of the plan’s investments and investment policy compared against the investment’s expected returns results in the expected return on plan assets that is included in pension income (cost). The difference between this expected return and the actual return on plan assets is deferred. The net deferral of

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

~~rate~~past toasset begains ~~6.5%,~~(losses) acan ~~decrease~~affect offuture 50pension ~~basis~~income ~~points~~(cost). ~~from~~Over the ~~rate~~long ~~used~~term, the atCompany’s ~~March~~pension ~~31,~~plan ~~2002. Changes~~assets have earned in ~~discount~~excess ~~rates~~of ~~over~~9.3%. However, the ~~past~~plan ~~three~~assets ~~years~~ have ~~not~~lost ~~materially~~an ~~affected~~average ~~pension~~of ~~income~~2.0% ~~(cost),~~per ~~and~~year during the ~~net~~last ~~effect~~two ofyears. ~~changes~~Should inthis trend continue, the ~~discount~~Company ~~rate,~~will asagain ~~well~~be asrequired ~~the~~to ~~net~~reconsider ~~effect~~its assumed expected rate of ~~other~~return ~~changes~~on inplan ~~actuarial~~assets. ~~assumptions~~If ~~and~~the ~~experience,~~Company ~~have~~were ~~been deferred~~to lower this rate, infuture ~~accordance~~pension ~~with~~cost ~~SFAS~~would Noincrease. ~~87.~~

At the end of each year, the Company determines the discount rate to be used to calculate the present value of plan liabilities. The ~~significant~~discount rate is an ~~declines~~estimate inof the ~~financial~~current ~~markets~~interest ~~over~~rate at which the ~~past~~pension ~~two~~liabilities ~~years~~could ~~coupled~~be ~~with~~effectively settled at the ~~decline~~end inof ~~interest~~the ~~rates~~year. ~~have~~In ~~caused~~estimating this rate, the Company uses the preceding November’s ~~accumulated~~Moody’s ~~pension~~AA ~~obligation~~Corporate toBond ~~exceed~~Index rounded down to the ~~fair~~nearest ~~value~~¼ of a percentage point. At March 31, 2004, the ~~related~~Company ~~plan~~determined ~~assets.~~this Asrate ato ~~result~~be 6.0%, ~~for~~a ~~fiscal~~decrease of 50 basis points from the rate used at March 31, 2003. Changes in discount rates over the ~~Company~~ ~~recorded~~past anthree ~~increase~~years tohave ~~accrued~~not materially affected pension ~~liability~~income (cost), and athe ~~non-cash~~net ~~charge~~effect toof ~~equity~~changes ofin ~~approximately~~the ~~$1.1~~discount ~~million.~~rate, ~~This~~as ~~charge~~well ~~may~~as bethe ~~reversed~~net effect of other changes in ~~future~~actuarial ~~periods~~assumptions ifand ~~market~~experience, ~~conditions~~have ~~improve~~been ordeferred, ~~interest~~in ~~rates~~accordance ~~rise~~with SFAS No. 87.

The Company’s accumulated pension obligation exceeded the fair value of the related plan assets primarily due to the difference in the actual return on assets compared to the expected return on assets and the reduction in the discount rate assumption. As a result, in fiscal 2004 the Company recorded an increase to accrued pension liability and a non-cash charge to equity of approximately $0.1 million. This charge may be reversed in future periods if asset returns improve or interest rates rise. For the year quarter ended ~~March~~July 312, ~~2003~~2004, the Company recognized ~~consolidated~~ consolidated pretax pension cost of $0.52 million, upequal ~~from~~to the $0.32 million in ~~2002~~the quarter ended June 27, 2003. The Company currently expects that the consolidated pension cost for ~~2004~~fiscal 2005 will not be materially different from ~~2003~~fiscal 2004. The Company’s required minimum amount of ~~2004~~fiscal ~~contributions~~2005 ~~will not exceed actual~~ contributions ~~made~~are inapproximately ~~2003~~$0.9 million. However, the Company may elect to increase the minimum level of contributions in ~~2004~~fiscal ~~over~~2005 ~~2003 levels~~ based on a number of factors, including performance of pension investments, changes in interest rates, and ~~changes~~ inthe ~~workforce~~funded ~~compensation~~percentage of the plan.

~~Recently~~21 ~~Issued Accounting Pronouncements~~

In April 2002 the Financial Accounting Standards Board issued Statement No. 145: Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections. This Statement amends FASB Statement No. 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. This Statement also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions as well as addresses the classifications of gains and losses on debt extinguishment. Accordingly, the Company classified its gains from repurchases of its long-term debt in interest expense on the Consolidated Statement of Operations.

The Company adopted the Emerging Issues Task Force Issue 02-16: Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor for arrangements either modified or created after December 31, 2002. This statement reached a consensus that cash consideration represents a reimbursement of costs incurred by the customer to sell the vendor’s products and should be characterized as a reduction of that cost when recognized in the customer’s income statement if the cash consideration represents a reimbursement of a specific, incremental, identifiable cost incurred by the customer in selling the vendor’s products or services. If the amount of cash consideration paid by the vendor exceeds the cost being reimbursed, that excess amount should be characterized in the customer’s statement of operations as a reduction of cost of sales when recognized in the customer’s statement of operations.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

The Company has reviewed its accounting policies and methods and concluded that the recording of cash consideration received from vendors was in accordance with the statement.

The Company receives allowances from vendors as a result of purchasing and promoting their products. Vendor allowances provided as a reimbursement of specific, incremental and identifiable costs incurred to promote a vendor’s products are recorded as an expense reduction when the cost is incurred. All other vendor allowances, including vendor allowances received in excess of the Company’s cost to promote a vendor’s product, or vendor allowances directly related to purchase of a vendor’s product are initially deferred. The deferred amounts are then recorded as a reduction of cost of goods sold when the related product is sold.

In January 2003, the FASB issued FASB Interpretation No. 46 (FIN 46): Consolidation of Variable Interest Entities and during December 2003 issued Interpretation 46 (FIN 46R): Consolidation of Variable Interest Entities, and Interpretation of ARB 51. The term “variable interest” is defined in FIN 46 as “contractual, ownership or other pecuniary interest in an entity that change with changes in the entity’s net asset value.” Variable interests are investments or other interest that will absorb a portion of an entity’s expected losses if they occur or receive portions of the entity’s expected residual returns if they occur. FIN 46R defers the effective date of FIN 46 for certain entities and makes several other changes to FIN 46. The Company does not expect the recognition provisions of FIN 46 or FIN 46R to have a material impact on the Company’s financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150 (SFAS 150): Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity. SFAS 150 establishes standards on the classification and measurement of certain financial instruments with characteristics of both liabilities and equity. The provisions of SFAS 150 are effective for financial instruments entered into or modified after May 31, 2003 and to all instruments that exist as of the beginning of the first interim financial reporting period beginning after June 15, 2003. The adoption of SFAS 150 did not have a material impact on the Company’s results of operations or financial position.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

The Company uses long-term debt as a primary source of capital in its business. The following table presents the principal cash repayments and related weighted average interest rates by maturity date for the Company’s long-term fixed-rate debt and other types of long-term debt at ~~December~~July 312, ~~2003~~2004:

	2003		2004		2005		2006			2007			Thereafter				Total				Fair Value
	2006		2007		2008		2009				2010				Thereafter			Total				Fair Value
Fixed	$	—	$	—	$	—	$	—79,029,000		$	—$	—	$	~~80,329,000~~	$	—	$	~~80,329,000~~$	79,029,000		$	~~72,296,000~~$	73,497,000
Avg. Rate		—		—		—		—10.125	%		—	—		~~10.125~~	%	—		~~10.125~~	%10.125	%
Variable	$	—	$	—	$	—	$	—5,500,000		$	—$	4,328,000	$	~~17,528,000~~	$	—	$	~~17,528,000~~$	9,828,000		$	~~17,528,000~~$	9,828,000
Avg. Rate		—		—		—		—5.00	%		—	4.00	%	~~4.00~~	%	—		~~4.00~~	%4.56	%

The Company is exposed to fluctuations in interest rate risk as a result of its variable rate debt. The Company’s objectives in managing its exposure to changes in interest rates are to limit the effect of interest rate changes on earnings and cash flows and to minimize the amount of borrowings under the Company’s revolving line of credit. This approach to managing interest rate risk does not consider the changes in the Company’s competitive environment indirectly related to changes in interest rates and management’s responses to these changes.

Item 4. Controls and Procedures

As of ~~December~~July 312, ~~2003~~2004, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer, Chief Financial Officer, and the Company’s Corporate Controller, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures. Based upon that evaluation, the Company’s Chief Executive Officer, Chief Financial Officer, and the Company’s Corporate Controller concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic SEC filings. No changes in the Company’s internal control over financial reporting occurred during the quarter ended ~~December~~July 312, ~~2003~~2004 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

The Company is a party to various lawsuits and claims arising in the normal course of business. While the ultimate resolution of lawsuits or claims against the Company cannot be predicted with certainty, management is vigorously defending all claims and does not expect that these matters will have a material adverse effect on the financial position or results of operations of the Company.

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

~~Table~~The shareholders of ~~Contents~~National Wine & Spirits, Inc. voted unanimously, via written consent, to add John J. Baker, David W. Goodrich and Stephen E. LaCrosse to the Board of Directors effective May 1, 2004.

Item 5. Other Events

In connection with the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, National Wine & Spirits, Inc. is identifying in exhibit 99 to this quarterly report important factors that could cause the Company’s actual results to differ materially from those projected in forward-looking statements of the Company made by, or on behalf of, the Company.

Item 6. Exhibits and Reports on Form 8-K


(a)		Exhibits

(31) Section 302 Certification



(10.5)		Amendment No.3 To Credit Agreement

(31)		Section 302 Certification

(99)		Exhibit 99 – Forward-Looking Statements

(99) Exhibit 99 – Forward-Looking Statements


(b)	Reports on Form 8-K	Item.

	Form 8-K dated June 28, 2004	Item 9
	Form 8-K dated June 29, 2004	Item 9

~~(b)~~23 ~~Reports on Form 8-K Item.~~

Form 8-K dated November 13, 2003 Item 9

SIGNATURES

Pursuant to the requirements of ~~Section 13 or 15(d) 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, ~~on February 11, 2004~~.

Dated as of August 12, 2004


NATIONAL WINE & SPIRITS, INC.

By:		/s/ James E. LaCrosse
		James E. LaCrosse,
		Chairman, President,
		Chief Executive Officer, and
		Chief Financial Officer

2924

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Table of Contents

Filing Compare · NATIONAL WINE & SPIRITS INC