As filed with the Securities and Exchange Commission on September 26, 2013

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

Southeastern Grocers, LLC

(to be converted into Southeastern Grocers, Inc.)

(Exact name of registrant as specified in its charter)

Delaware

5411

27-1845190

(State or other jurisdiction of

incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification Number)

5050 Edgewood Court

Jacksonville, Florida 32254

(904) 783-5000

(Address, including zip code, and telephone number,

including area code, of registrant’s principal executive offices)

Randall Onstead

Chief Executive Officer

Southeastern Grocers, LLC

5050 Edgewood Court

Jacksonville, Florida 32254

(904) 783-5000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Jeffrey A. Chapman

Peter W. Wardle

Gibson, Dunn & Crutcher LLP

2100 McKinney Ave., Suite 1100

Dallas, TX 75201

tel: (214) 698-3100

fax: (214) 571-2900

Keith M. Townsend

Jeffrey M. Stein

King & Spalding LLP

1180 Peachtree Street, NE

Atlanta, GA 30309

tel: (404) 572-4600

fax: (404) 572-5100

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: ¨

If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨

If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering: ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


Large accelerated filer ¨		Accelerated filer ¨		Non-accelerated filer x		Smaller reporting company ¨

(Do not check if a smaller reporting company)

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)(2)	Amount of Registration Fee
Common Stock, par value $0.001 per share	$500,000,000	$68,200

(1)

Includes shares that the underwriters have the option to purchase. See “Underwriting.”

(2)

Estimated solely for the purpose of calculating the registration fee under Rule 457(o) of the Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information contained in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 26, 2013

PRELIMINARY PROSPECTUS

Shares

Southeastern Grocers, Inc.

Common Stock

$ per share

This is the initial public offering of our common stock. We are selling shares of our common stock. We currently expect the initial public offering price to be between $ and $ per share of common stock.

We have granted to the underwriters an option to purchase up to additional shares of common stock.

We intend to apply to list our common stock on the under the symbol “SEG.”

Investing in our common stock involves risks. See “Risk Factors” beginning on page 13.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.


	Per Share	Total
Public Offering Price	$	$
Underwriting Discount	$	$
Proceeds to Southeastern Grocers (before expenses)	$	$

The underwriters expect to deliver the shares to purchasers on or about , 2013 through the book-entry facilities of the Depository Trust Company.

Joint Book-Running Managers



Citigroup	Credit Suisse	Deutsche Bank Securities



William Blair		Wells Fargo Securities

, 2013

TABLE OF CONTENTS


	Page
Summary		1
Risk Factors		13
Forward-Looking Statements		29
Use of Proceeds		31
Dividend Policy		32
Capitalization		33
Dilution		35
Selected Consolidated and Combined Financial Data		36
Unaudited Pro Forma Combined Financial Information		39
Management’s Discussion and Analysis of Financial Condition and Results of Operations		41
Business		61
Management		71
Executive Compensation		78
Principal Stockholders		93
Certain Relationships and Related Party Transactions		95
Description of Capital Stock		97
Description of Indebtedness		102
Shares Eligible for Future Sale		106
U.S. Federal Tax Considerations for Non-U.S. Holders		109
Underwriting (Conflicts of Interest)		114
Legal Matters		120
Experts		120
Where You Can Find More Information		120
Index to Financial Statements		F-1

We are responsible for the information contained in this prospectus and in any free-writing prospectus we prepare or authorize. We have not authorized anyone to provide you with different information, and we take no responsibility for any other information others may give you. We are not, and the underwriters are not, making an offer to sell these shares in any jurisdiction where the offer or sale is not permitted. You should not assume that the information contained in this prospectus is accurate as of any date other than its date.

Until (25 days after the date of this prospectus), all dealers that buy, sell or trade shares of our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This delivery requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as an underwriter and with respect to their unsold allotments or subscriptions.

EXPLANATORY NOTE

Southeastern Grocers, LLC, the registrant whose name appears on the cover of this registration statement, is a Delaware limited liability company. Immediately prior to the effectiveness of this registration statement, Southeastern Grocers, LLC will be converted into a Delaware corporation and renamed Southeastern Grocers, Inc., which we refer to as our corporate conversion. Shares of common stock of Southeastern Grocers, Inc. are being offered by this prospectus.

MARKET AND INDUSTRY DATA AND FORECASTS

Market and industry data and certain industry forecasts used throughout this prospectus were obtained from internal surveys, market research, consultant surveys, publicly available information and industry publications and surveys, including information from the Progressive Grocer, as well as our own estimates and research. The Progressive Grocer provides market data for our industry and targets its core audience as top management in the retail food industry. Management estimates are derived from publicly available information released by independent industry analysts and third-party sources, as well as data from our internal research, and are based on assumptions made by us upon reviewing such data and our knowledge of our industry and markets, which we believe to be reasonable. In addition, projections, assumptions and estimates of the future performance of our industry and our future performance are necessarily subject to a high degree of uncertainty and risk due to a variety of factors, including those described in “Risk Factors.” These and other factors could cause results to differ materially from those expressed in the estimates made by the independent parties and by us.

BASIS OF PRESENTATION

We have historically operated on a 52-week fiscal year ending on the Saturday closest to December 31. Our fiscal years include 13 four-week reporting periods. Our first quarter of each fiscal year includes four reporting periods (or 16 weeks), while the remaining quarters include three reporting periods (or 12 weeks each quarter). Our 2010 fiscal year ended on January 1, 2011, our 2011 fiscal year ended on December 31, 2011 and our 2012 fiscal year ended on December 26, 2012 and each consisted of 52 weeks. Beginning in fiscal 2012, we revised our fiscal year to end on the last Wednesday in December, in order to facilitate aligning fiscal weeks and periods with our recently acquired subsidiary, Winn-Dixie Stores, Inc. Our 2013 fiscal year ends on December 25, 2013 and will consist of 52 weeks.

COMPARABLE STORE SALES

As used in this prospectus, the term “comparable store sales growth” refers to the percentage change in our comparable store sales as compared to the prior comparable period. We define comparable store sales as sales from continuing operations of stores that have been owned by us and open for at least a year, including stores that we remodeled or enlarged during the period and, for fiscal 2010, 2011 and 2012, excluding stores that opened, were acquired or closed during the period. Comparable store sales for fiscal 2008 and 2009 includes stores that opened, were acquired or closed during the period. Since we did not own any Winn-Dixie stores prior to our acquisition of Winn-Dixie on March 9, 2012, sales from Winn-Dixie stores are excluded from comparable store sales for all periods through the first quarter of fiscal 2013, but are included in comparable store sales for the second quarter of fiscal 2013. This definition may differ from the methods that other retailers use to calculate comparable store sales.

As used in this prospectus, “pro forma comparable store sales” gives effect, for all periods beginning with the first quarter of fiscal 2012, to our acquisition of Winn-Dixie as if it had taken place on the first day of fiscal 2011. Pro forma comparable store sales through fiscal 2011 reflect only sales from BI-LO stores, while pro forma comparable store sales beginning with the first quarter of fiscal 2012 also include sales from Winn-Dixie stores.

In addition, in this prospectus we sometimes refer to comparable store sales growth on a “two-year stack basis,” which is computed by adding the pro forma comparable store sales growth of the period referenced and the pro forma comparable store sales growth of the corresponding fiscal period in the prior fiscal year.

RECENT TRANSACTIONS

On April 24, 2013, one of our subsidiaries entered into a sale leaseback transaction whereby our Baldwin distribution center and certain related personal property was sold to AR Capital, LLC and, immediately thereafter, we leased back the property, or the Baldwin Sale/Leaseback. See “Description of Indebtedness—Baldwin Sale/Leaseback”.

On May 10, 2013, we entered into a new eight-year supply agreement, which we refer to, as amended, as the C&S supply arrangement, under which C&S Wholesale Grocers, Inc., or C&S, agreed to provide inventory supply services for all of our stores and we agreed to purchase our retail merchandise exclusively from C&S, subject to certain exceptions. We also agreed to license the use of certain facilities to C&S, to transfer ownership of our existing inventory, certain equipment and other tangible assets to C&S, and to assign certain agreements related to the operation of the licensed facilities to C&S. See “Business—Sources of Supply.”

On May 27, 2013, we entered into an Agreement and Plan of Merger with Delhaize America, LLC and certain of its subsidiaries, which we refer to collectively as Delhaize, pursuant to which we will acquire 155 operating supermarkets under the “Sweetbay,” “Harveys” and “Reid’s” banners, constituting substantially all stores operating under those banners, plus ten previously closed locations, for $265.0 million in cash, subject to certain adjustments, and the assumption of all related lease liabilities, including approximately $92.0 million of capital lease liabilities of Delhaize, or the Delhaize transaction. The financial information relating to the Delhaize business located elsewhere in this prospectus is based on information provided by Delhaize prepared under International Financial Reporting Standards, or IFRS.

We expect the Delhaize transaction to close in the first quarter of fiscal 2014. Consummation of the Delhaize transaction is subject to the satisfaction or waiver of customary closing conditions, including the expiration or termination of the waiting period under the Hart-Scott Rodino Antitrust Improvements Act, which could be conditional upon us divesting certain stores. In addition, the Delhaize merger agreement may be terminated by either party if the initial closing is not consummated by November 30, 2014. We intend to finance the Delhaize transaction with a combination of borrowings under the ABL facility, a five-year $700 million revolving senior secured credit facility with Deutsche Bank Trust Company Americas, as administrative agent, and a lender, and Citibank N.A. and the other financial institutions party thereto as lenders, and with cash on hand. Consummation of the Delhaize transaction is not conditioned on our receipt of financing. This offering is not conditioned upon the closing of the Delhaize transaction and there can be no assurance that the Delhaize transaction will be completed. See “Summary—Our Company.”

On July 22, 2013, we entered into an agreement with Publix Super Markets, Inc. to sell seven leased stores for approximately $59 million, with an expected pre-tax gain of approximately $50 million. The transaction is expected to close in the fourth quarter of fiscal 2013. These seven stores are, and will continue to be until the transaction closes, included in our total store count.

On September 4, 2013, we entered into an agreement with Piggly Wiggly Carolina Company, Inc. to purchase 21 Piggly Wiggly operating supermarkets located in South Carolina and Georgia for a purchase price of approximately $35 million in cash. We refer to the Delhaize transaction and the Piggly Wiggly transaction together in this prospectus as the pending transactions. We expect the Piggly Wiggly transaction to close in the fourth quarter of fiscal 2013.

On September 13, 2013, we agreed to enter into a sale leaseback transaction whereby we will sell six of our stores located in Florida and Louisiana for consideration of approximately $45 million and, immediately thereafter, we will lease back these store locations. The transaction is subject to customary conditions, including completion of due diligence by our counterparty. The transaction is expected to close in the fourth quarter of fiscal 2013.

iii

On September 20, 2013, we issued $475 million aggregate principal amount of our 8.625%/9.375% Senior PIK Toggle Notes due 2018, which we refer to in this prospectus as our PIK toggle notes. The PIK toggle notes were sold to qualified institutional buyers under Rule 144A and to persons outside the United States under Regulation S of the Securities Act of 1933, as amended. Also on September 20, 2013, we made a distribution of approximately $458 million to Lone Star from the proceeds of the offering of our PIK toggle notes.

ABOUT THIS PROSPECTUS

Except where the context otherwise requires or where otherwise indicated, the terms “we,” “us,” “our,” the “Company” and “our business” refer to Southeastern Grocers, Inc. and its consolidated subsidiaries, which we operate under the banners “BI-LO”, “Super BI-LO”, “BI-LO at the Beach” and “Winn-Dixie”.

Throughout this prospectus, we provide a number of key performance indicators used by management and typically used by our competitors in the supermarket industry. These key performance indicators are discussed in more detail in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Key Financial Definitions.” In this prospectus we also reference EBITDA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITDA margin, which are not presented in accordance with U.S. generally accepted accounting principles, or GAAP. See “Summary—Summary Selected Historical and Pro Forma Financial and Other Data” for a discussion of these non-GAAP measures, as well as a reconciliation to the most directly comparable financial measure required by, or presented in accordance with GAAP.

GLOSSARY

In this prospectus:

•

“banner” refers to the brand under which a store operates. We operate supermarkets under the “BI-LO”, “Super BI-LO”, “BI-LO at the Beach” and “Winn-Dixie” banners. References to the “BI-LO” banner include the “BI-LO”, “Super BI-LO” and “BI-LO at the Beach” banners.

•

“$4/$10 generic Rx” refers to our generic drug discount program under which selected generic drugs are specially priced at a discounted rate for 30-day, 60-day and 90-day supplies.

•

“fuelperks!” refers to our program that provides customers with the ability to earn fuel discounts based on their in-store spending habits. The fuel discounts can be redeemed at retailers such as BP, Shell, Chevron, Spinx and Sunoco. In order to participate in fuelperks!, customers must use their BONUSCARD or Customer Rewards Card.

•

“high / low” refers to a pricing strategy whereby a retailer promotes low prices on some items while charging higher prices on other items.

•

“loyalty card programs” refers to BI-LO’s BONUSCARD and Winn-Dixie’s Customer Rewards Card, which provide cardholders with instant discounts and promotions on items throughout the store and other rewards for use.

•

“loyalty programs” refers to our loyalty card programs, fuelperks!, $4/$10 generic RX and Real Fresh or any of them.

•

“peers” refers to Ahold USA, Delhaize America, Kroger, Ingles Markets, Publix, Roundy’s, Safeway, and Supervalu (Retail Food). Our peers operate in some of or all of our markets and may also operate in markets in which we are not present.

•

“Real Fresh” refers to our “Real Fresh” merchandising program, which emphasizes the quality and freshness of our produce and meat offerings, signature items and clean stores.

•

“supermarkets” refers to:

•

“conventional supermarkets” and “conventional supermarket operators”, such as Winn-Dixie, BI-LO, Kroger and Publix;

•

“supercenters”, such as Walmart;

•

limited assortment supermarkets, such as Save-A-Lot, Aldi and Grocery Outlet;

•

natural/gourmet food supermarkets, such as Whole Foods and Fresh Market;

•

warehouse clubs, such as Costco, Sam’s Club and BJ’s Wholesale Club; and

•

military commissaries.

Supermarkets excludes conventional convenience stores, gas stations/kiosks, superettes, conventional club stores and military convenience stores.

SUMMARY

The following summary highlights selected information about us contained in this prospectus. It does not contain all of the information that may be important to you and all of the information that you should consider before you invest in our common stock. Before deciding to invest in our common stock, you should carefully review this prospectus in its entirety, including the “Risk Factors” beginning on page 13, the financial statements and the related notes appearing elsewhere in this prospectus and the Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing elsewhere in this prospectus. Some of the statements in this prospectus constitute forward-looking statements. For more information, see “Forward-Looking Statements.”

Our Company

We are a leading supermarket operator with a strong history in the Southeastern United States and a non-union work force. As of July 10, 2013, we operated 685 stores serving many key metropolitan areas in Florida, Georgia, Alabama, Louisiana, Mississippi, South Carolina, North Carolina, and Tennessee under the “Winn-Dixie”, “BI-LO”, “Super BI-LO”, and “BI-LO at the Beach” supermarket banners. We believe we are the sixth largest conventional supermarket operator in the United States based on number of stores and the second largest conventional supermarket operator in the eight states in which we operate based on aggregate number of stores in these states. We strive to differentiate ourselves from our competitors by providing our customers with a value proposition that combines conveniently located and well-maintained stores (averaging 40,000-50,000 square feet), with a strong focus on customer service, high-quality food products, and prices that are competitive with other supermarket operators in our markets. For the fiscal year ended December 26, 2012, we generated approximately $8.6 billion of net sales, approximately $103.1 million of net income (including approximately $7.6 million of tax expense) and approximately $370.4 million of adjusted EBITDA. For the 28 weeks ended July 10, 2013, we generated approximately $5.6 billion of net sales, approximately $208.0 million of net income (including approximately $56.1 million of tax benefits) and approximately $276.4 million of adjusted EBITDA. For a reconciliation of adjusted EBITDA to net income and a discussion of why we consider it useful, see “—Summary Selected Historical and Pro Forma Financial and Other Data.”

We have experienced substantial growth in recent years through a combination of organic operating initiatives and acquisitions. We have achieved strong financial results during this period, as evidenced by the following:

•

Through July 10, 2013, we have achieved 18 consecutive quarters of positive pro forma comparable store sales growth.

•

We have achieved average pro forma comparable store sales growth of 3.1% over our last six consecutive quarters.

•

We have grown our store count from 207 stores at January 1, 2011 to 685 stores at July 10, 2013, and we anticipate that our pending Delhaize transaction and Piggly Wiggly transaction will significantly expand the number of operating stores in our footprint.

•

We have increased our net income and adjusted EBITDA from fiscal year 2008 when we had a net loss of approximately $88.8 million and adjusted EBITDA of approximately $142.4 million, to net income and adjusted EBITDA of approximately $103.1 million and $370.4 million, respectively, for fiscal 2012. For a reconciliation of adjusted EBITDA to net income and a discussion of why we consider it useful, see “—Summary Selected Historical and Pro Forma Financial and Other Data.”

assortment of grocery products, including dry and canned groceries, frozen items, produce, dairy, meat and seafood, bread and baked goods, and other fresh product offerings. In addition, a majority of our stores include pharmacies.

On March 9, 2012, we acquired Winn-Dixie Stores, Inc. for a total cash purchase price of $559.3 million. The Winn-Dixie acquisition significantly expanded our store base and geographic market area, with no overlap in markets between BI-LO and Winn-Dixie. The Winn-Dixie acquisition has allowed us to realize significant cost savings. We have achieved over $180 million of annual run-rate cost savings from operational improvements and synergies to date and expect to realize moderate additional cost savings prior to completion of the integration. We have incurred approximately $71.8 million in upfront integration-related costs through July 10, 2013, and we anticipate we will incur modest additional costs through completion of integration. Consistent with our strategy of reducing operating costs and reinvesting these savings in the business to stimulate customer traffic, we are investing a portion of these cost savings in merchandising and pricing initiatives to drive sales.

On May 27, 2013, we entered into the Delhaize merger agreement, pursuant to which we agreed to acquire 155 operating supermarkets (subject to regulatory approvals, which may require divestitures) under the “Sweetbay”, “Harveys”, and “Reid’s” banners, for $265.0 million in cash and the assumption of all related lease liabilities, including approximately $92.0 million of capital lease liabilities. Based on information provided by Delhaize, for the 52-week period ended December 29, 2012, we believe the 155 operating supermarkets generated approximately $1.7 billion of revenues. In addition, based on information provided by Delhaize and our management’s estimate of allocable corporate costs, we believe that the average per store operating performance of the 155 operating supermarkets for the 52-week period ended December 29, 2012 was substantially equivalent to the average per store pro forma operating performance of our stores for fiscal 2012. The financial information relating to the Delhaize business being acquired is based on information provided by Delhaize, has not been audited or otherwise been subject to auditor review, and does not give effect to any required store divestitures. We expect the Delhaize transaction to close in the first quarter of 2014. In addition, on September 4, 2013, we entered into an agreement to purchase 21 Piggly Wiggly operating supermarkets for a purchase price of approximately $35 million in cash. We expect the Piggly Wiggly transaction to close during the fourth quarter of fiscal 2013. These transactions, covering stores located in Florida, Georgia and South Carolina, will further build on the strength of our BI-LO and Winn-Dixie stores and will expand our customer base.

We believe our customer relationships, merchandising initiatives and experienced management team, combined with our focus on operational excellence, have positioned us to deliver strong financial results.

Our Competitive Strengths

We believe the following key competitive strengths contribute to our success:

Leading Market Positions with Well Recognized Local Banners. We are the second largest conventional supermarket operator in the eight Southeastern states in which we operate, as defined by aggregate number of stores. We are ranked as the number one or number two conventional supermarket operator in 44 of the major metropolitan markets in which we operate, where approximately 83% of our stores are located. Our BI-LO and Winn-Dixie banners have deep local heritages that go back many decades and are well known institutions in the communities they serve. We believe our leading market positions and the strong brand recognition of our banners help generate customer traffic and loyalty.

Strategically Positioned to Capitalize on Favorable Market Demographics in the Southeastern U.S. We believe that the Southeastern U.S. is an attractive region for supermarket retailing that is characterized by:

•

expected population growth above the national average;

•

a business-friendly environment with low relative operating costs; and

•

an established competitive landscape, including relative saturation of supercenters.

According to IHS Global Insight, the eight states in which we operate are expected to have a weighted average population growth between 2012 and 2030 of 19.5%, as compared to a weighted average population growth of 13.1% in the rest of the U.S. IHS Global Insight estimates that Florida, where 48% of our stores are located, will experience a population growth of 27.6% in this period, driven by higher birth rates compared to the national average, continuing high levels of immigration and an overall aging U.S. population that is drawn to Florida.

We believe aggressive government promotions and incentives for businesses are driving industrial growth in the Southeast. We believe that state governments across the region, seeking to create jobs for their residents, are offering attractive tax incentives for businesses that build in or relocate to these states. We believe the Southeast also offers an attractive labor market for us, with lower average wage rates than the national average and a generally non-union work force. Unlike the employees of many supermarket operators in other regions of the U.S., none of our employees are covered by a collective bargaining agreement.

We believe the competitive landscape in the Southeast is well established, with relative saturation of supercenters such as Walmart, and dollar stores such as Dollar General, Dollar Tree and Family Dollar. As of January 31, 2012, in the states we serve, there were approximately 14 Walmarts per million people, compared to approximately 9 per million in the rest of the U.S., and there were approximately 113 dollar stores per million people compared to approximately 56 per million in the rest of the U.S. Given this saturation, although the new store opening strategies of competitors operating these formats are unknown, we believe it is likely that we will be confronted with fewer new store openings by these formats in the future, compared to the rest of the U.S. Additionally, we believe we have developed an effective strategy and shopping experience to compete with these formats, as evidenced by our consistent positive pro forma comparable store sales growth over the past several years.

Compelling Customer Value Proposition that Promotes Loyalty. We are a competitively priced, “high / low” operator. This pricing strategy allows us to target a broad customer base and drive customer traffic through periodic promotions on selected items. In addition, we have developed a number of customer loyalty and merchandising initiatives, including our BONUSCARD and Customer Reward Card loyalty programs, our fuelperks! program, our $4/$10 generic Rx program and our “Real Fresh” program.

Supported by fuelperks!, our loyalty card programs now include over 15 million active card holders. The average dollar value of loyalty card transactions was 176% greater than the average dollar value of transactions by non-card holders in the first 28 weeks of fiscal 2013. We use our loyalty card programs to track customer sales transaction data in a frequent shopper database, which enables us to target our promotions to specific customer groups. Supported by these initiatives, we have experienced positive pro forma comparable store sales growth for 18 consecutive quarters through the second quarter of fiscal 2013. Additionally, our last six quarters comparable store sales growth on a two-year stack basis averaged 6.6%, significantly outpacing that of our peers, which averaged 1.7% over this timeframe based on publicly available information.

Attractive, Well Maintained Stores. Within the last five fiscal years, 46% of our stores have been remodeled. We believe our store remodels have driven further traffic to our stores. We intend to continue remodeling selected stores, focusing our capital spending decisions on the anticipated return on our investment in these remodels. We seek to locate our stores in high-traffic areas that are in close proximity to residential neighborhoods. Most of our stores occupy between 40,000 and 50,000 square feet, providing our customers with a balance of convenience and assortment.

operator, unlike many of our competitors in the grocery industry, we benefit from a lack of burdensome and often underfunded multi-employer pension plan obligations. We believe our cash flow generation is a competitive advantage that will allow for strong operational and financial flexibility.

Track Record of Expansion and Platform for Future Growth Through Acquisitions. We acquired Winn-Dixie in March 2012, which more than tripled our store base. This year, we have entered into definitive agreements with Delhaize and Piggly Wiggly to acquire a large number of operating stores, which we expect will further strengthen our market position in the Southeast. Our management team has gained valuable experience and established a track record of identifying and executing strategic acquisitions, and we believe that our corporate infrastructure, systems and centralized functions have the capacity to accommodate further growth through acquisitions. As a result, we believe we are well positioned to take advantage of future acquisition opportunities.

Realization of Value-Creating Synergies. We have extensive experience in creating value through strategic acquisitions. As demonstrated by the combination of BI-LO and Winn Dixie, our increased scale allows us to lower our purchasing costs, achieve efficiencies in distribution and further decrease our fixed cost structure to improve profitability. The Winn-Dixie merger presented us with a significant opportunity to generate synergies which, in conjunction with our belief that we could more efficiently deploy capital and conduct operations at Winn-Dixie, underpinned our rationale in pursuing the acquisition. We have achieved over $180 million of annual run-rate cost savings from operational improvements and synergies to date and expect to realize moderate additional cost savings prior to completion of the integration. We have incurred approximately $71.8 million in upfront integration-related costs through July 10, 2013, and we anticipate we will incur modest additional costs through completion of integration.

Proven and Experienced Management Team. The executive team of BI-LO Holding, which manages our operations, averages 32 years of retail industry experience. Randall Onstead, our CEO, is a 33-year industry veteran. Prior to his tenure with us, he served as Chairman and CEO of Randall’s Food Markets, Inc., a Houston-based supermarket chain, and as President of Dominick’s Finer Foods. Our management team also includes Brian Carney (Executive Vice President and Chief Financial Officer), Larry Stablein (Executive Vice President and Chief Merchandising Officer) and Mark Prestidge (Executive Vice President and Chief Operations Officer). Mr. Onstead, as a director and as CEO, Mr. Carney and the management team have led several core initiatives, which we believe have resulted in:

•

18 consecutive quarters of positive pro forma comparable store sales growth;

•

the expansion, prior to our Winn-Dixie acquisition, of BI-LO’s adjusted EBITDA margins, which increased from 5.6% in fiscal 2010 to 6.0% in fiscal 2011. For a reconciliation of adjusted EBITDA margin and a discussion of why we consider it useful, see “—Summary Selected Historical and Pro Forma Financial and Other Data”;

•

an expansion of our store base by 478 operating stores since the beginning of fiscal 2011, through the identification and execution of the Winn-Dixie acquisition; and

•

the realization of significant cost savings and synergies from the acquisition of Winn-Dixie.

Our Strategy

We plan to pursue strategies that will allow us to maintain our strong financial performance and further expand our market share and store base, including:

Continue to Drive Strong Sales Performance. We are focused on driving additional sales and household penetration by increasing customer loyalty and attracting new customers into existing stores. We believe our promotional and merchandising programs, quality product offerings, attractive and well-maintained stores, and competitive prices will facilitate the achievement of this goal by delivering a superior and value-oriented shopping experience. We believe we have the opportunity to further increase our market share by remodeling selected stores to improve their sales productivity. Our strong focus on customer service, coupled with our well maintained store base, provides our customers with an attractive shopping experience that helps drive sales.

Continue to Focus on Growing Profitability. We believe we can continue to grow our profitability by reducing costs, leveraging our fixed cost base and improving comparable store sales through our merchandising programs. We plan to continue reducing operating expenses in ways that do not negatively impact our customers’ shopping experience, while investing in programs that increase customer loyalty and drive top-line sales growth. For example, since the Winn-Dixie acquisition, we have significantly cut expenses and realized synergies through scale efficiencies and operational improvements while at the same time improving our comparable store sales performance.

Our private label program is one example of a merchandising program that exemplifies this strategy. Private label products are similar in quality to their brand name counterparts, they benefit our customers through lower prices and they are generally more profitable to us than their branded counterparts. Private label products represented 16.9% of our sales volume and 20.8% of our unit volume for the first 28 weeks of fiscal 2013. We employ a multi-tiered private label strategy, through which we seek to satisfy the needs of customers seeking premium, standard, or value products.

Selectively Pursue Expansion Through Acquisitions and New Store Openings. We will target new store openings in existing and adjacent markets where we believe we are well positioned to capitalize on opportunities. We will also continue to seek value enhancing store acquisitions, such as the Delhaize transaction and the Piggly Wiggly transaction, that complement our existing store base. We expect that the integration of these stores will allow us to further enhance our revenue growth, leverage our cost structure, and increase profitability.

Industry Overview

We operate in the approximately $600 billion U.S. supermarket industry, which is a highly fragmented sector, with a large number of players competing in each region and few truly national players. According to Progressive Grocer, there are approximately 37,000 supermarkets in the United States with at least $2 million of annual sales, with the top 10 supermarket operators accounting for approximately 10,000 locations or approximately 27% of total supermarkets. We believe we are the sixth largest conventional supermarket operator based on number of stores. According to Progressive Grocer, conventional supermarkets accounted for 67% of total U.S. supermarket sales in 2012, having grown their share from 65% of total U.S. supermarket sales in 2009.

According to Progressive Grocer, sales at supermarkets increased 3.1% in 2012 to $602.6 billion. This growth was partially driven by moderate food retail price inflation. The Consumer Price Index (CPI) for food at home increased 1.3% in 2012, down from a 6.0% increase in 2011. Over the past 5 years, CPI for food at home has grown by approximately 3% annually, and the U.S. Department of Agriculture is forecasting food at home inflation of 1.5% to 2.5% in 2013 and 2.5% to 3.5% in 2014.

Our stores are located in attractive markets where we have faced our primary competitors for an extended period of time. We believe the competitive landscape in our markets is well established and that we can successfully manage the incremental impact of any new competing store openings by executing our key strategies and delivering on our strong customer value proposition.

Our Sponsor

Lone Star Fund V (U.S.), L.P. and Lone Star Fund VII (U.S.), L.P., which we refer to in this prospectus, along with their affiliates and associates (excluding us and other companies that they own as a result of their investment activity), as Lone Star, or our sponsor, are part of a leading private equity firm. Since the establishment of its first fund in 1995, Lone Star has organized 11 private equity funds with aggregate capital commitments totaling over $38 billion. The funds are structured as closed-end, private-equity limited partnerships, the limited partners of which include corporate and public pension funds, sovereign wealth funds, university endowments, foundations, fund of funds and high net worth individuals. Immediately prior to this offering, Lone Star owned all of our outstanding equity interests, and will own approximately % of our common stock immediately following consummation of this offering, assuming no exercise of the underwriters option to purchase additional shares of common stock. Therefore, we expect to be a “controlled company” under the corporate governance standards and to take advantage of the corporate governance exceptions related thereto.

Corporate Information

Our executive offices are located at 5050 Edgewood Court, Jacksonville, Florida 32254. Our principal mailing address is also 5050 Edgewood Court, Jacksonville, Florida 32254, and our telephone number is (904) 783-5000. Our website address is www.biloholdings.com. Information contained on our website is not part of and is not incorporated by reference into this prospectus. BI-LO, Super BI-LO, Southern Home, Winn-Dixie, and other trademarks or service marks of ours appearing in this prospectus are our property. Other trademarks and service marks appearing in this prospectus are the property of their respective holders.

Summary Risk Factors

An investment in our common stock involves various risks. You should consider carefully the risks discussed below and under “Risk Factors” before purchasing our common stock. If any of these risks actually occur, our business, financial condition or results of operations may be materially adversely affected. In such case, the trading price of our shares of common stock would likely decline and you may lose all or part of your investment. The following is a summary of some of the principal risks we face:

•

We rely on a principal supplier for a substantial portion of our retail merchandise.

•

We may not realize the benefits of outsourcing operations in connection with the C&S supply arrangement, including integration synergies.

•

We operate in a highly competitive industry with low profit margins, and actions taken by our competitors can negatively affect our results of operations.

•

Adverse economic conditions could negatively affect our results of operations and financial condition.

•

Failure to execute successfully our core strategic initiatives could adversely affect us.

•

We may not fully realize the benefits of integrating our Winn-Dixie acquisition, including merger integration synergies.

•

This offering is not conditioned upon the closing of the pending transactions, and there can be no assurance that the pending transactions will be completed or, if completed, that we will obtain all of the anticipated benefits of the pending transactions.

•

We may not fully realize the anticipated benefits of the pending transactions.

•

Our operating costs can be significantly impacted by various factors which could negatively affect our financial position.

Conflicts of Interest

Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Wells Fargo Securities, LLC, each of whom are underwriters in this offering, are, or their affiliates are, expected to receive more than 5% of the net proceeds of this offering in connection with the prepayment of a portion of our ABL facility. See “Use of Proceeds.” Accordingly, this offering is being made in compliance with the requirements of Financial Industry Regulatory Authority, or FINRA, Rule 5121, which requires a “qualified independent underwriter,” as defined by the FINRA rules, participate in the preparation of the registration statement and the prospectus and exercise the usual standards of due diligence in respect thereto, and has served in that capacity and will not receive any additional fees for serving as qualified independent underwriter in connection with this offering. We have agreed to indemnify against liabilities incurred in connection with acting as a qualified independent underwriter, including liabilities under the Securities Act. To comply with FINRA Rule 5121, will not confirm sales to any account over which it exercises discretionary authority without the specific written approval of the transaction of the accountholder. See “Underwriting—Conflicts of Interest.”

The Offering

Common stock offered by us

Common stock to be outstanding immediately after this offering

Option to purchase additional shares from us

Use of proceeds

We estimate our net proceeds from this offering will be approximately $ million, based on the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering to repay approximately $ million of outstanding indebtedness, including amounts outstanding in respect of our senior secured notes, the ABL facility and/or our PIK toggle notes, and the remainder for working capital and other general corporate purposes.

Risk factors

Investing in shares of our common stock involves a high degree of risk. See “Risk Factors” beginning on page 13 of this prospectus for a discussion of factors you should carefully consider before investing in shares of our common stock.

Dividend policy

Following the consummation of this offering our board of directors expects to implement a regular, cash dividend program. Whether we will declare such dividends, however, and their timing and amount, will be subject to approval and declaration by our board of directors and will depend on a variety of factors, including our financial results, cash requirements and financial condition, our ability to pay dividends under our debt financing agreements and any other applicable contracts, and other factors deemed relevant by our board of directors.

symbol

“SEG”

The number of shares of our common stock to be outstanding immediately after this offering as set forth above is based on the number of shares outstanding as of , 2013 and excludes shares reserved for issuance under our equity incentive plan (of which no options to purchase shares had been granted as of such date) of which we intend to grant options to purchase shares to our executive officers and certain director nominees under our equity incentive plan at the time of the pricing of this offering with an exercise price equal to the initial public offering price.

Unless otherwise indicated, this prospectus:

•

assumes the completion of our corporate conversion, as a result of which all membership interests of Southeastern Grocers, LLC will be converted into shares of common stock of Southeastern Grocers, Inc.;

•

assumes an initial public offering price of $ per share, the midpoint of the estimated initial public offering price range, set forth on the cover page of this prospectus; and

•

assumes no exercise of the underwriters’ option to purchase up to an additional shares of our common stock.

Summary Selected Historical and Pro Forma Financial and Other Data

The following table sets forth our summary selected historical and pro forma financial and other data for fiscal 2010, fiscal 2011 and fiscal 2012. We derived the summary selected historical financial data as of December 31, 2011 and December 26, 2012 and for fiscal 2010, fiscal 2011 and fiscal 2012 (retrospectively adjusted for discontinued operations) from the audited consolidated financial statements which are included elsewhere in this prospectus. We derived the summary selected financial information as of January 1, 2011 from our audited consolidated financial statements which are not included in this prospectus. We derived the summary selected historical financial data as of July 10, 2013 and for the 28-week periods ended July 14, 2012 (retrospectively adjusted for discontinued operations) and July 10, 2013 from the unaudited condensed consolidated financial statements which are also included elsewhere in this prospectus. We derived the summary historical financial data as of July 14, 2012 from our unaudited condensed consolidated financial statements which are not included in this prospectus. Such unaudited financial information has been prepared on a basis consistent with the annual audited financial statements. In the opinion of management, such unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of these data. The results for the 28-week periods ended July 14, 2012 and July 10, 2013 are not necessarily indicative of the results for a full year or for any future period. The information included under “Other Financial and Store Data” was derived from our accounting records.

The summary selected historical financial information as of the end of and for fiscal 2012 and as of and for the 28-week period ended July 14, 2012 includes Winn-Dixie results since the acquisition date of March 9, 2012. The summary selected pro forma financial and other data as of the end of and for fiscal 2012 gives pro forma effect to the Winn-Dixie acquisition as of the first day of fiscal 2012 and should be read in conjunction with the “Unaudited Pro Forma Combined Financial Information.”

The information set forth below should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the complete historical financial statements and related notes thereto included elsewhere in this prospectus.

The pro forma information set forth below does not give effect to the Baldwin Sale/Leaseback, the C&S supply arrangement, the pending transactions or the issuance of our PIK toggle notes.


										Pro Forma			28-Week Period Ended
	Fiscal 2010 (52 weeks)(1)			Fiscal 2011 (52 weeks)(1)			Fiscal 2012 (52 weeks)			Fiscal 2012 (52 weeks)(2)			July 14, 2012			July 10, 2013
	(In millions of dollars, except Per Share and Other Financial and Store Data)
Statement of Operations Data:
Net sales	$	2,641.1		$	2,779.2		$	8,632.9		$	9,735.6		$	4,097.1		$	5,574.5
Gross profit(3)		685.2			717.8			2,350.4			2,675.6			1,124.6			1,508.6
Operating, general and administrative expenses		616.2			621.6			2,136.3			2,436.0			1,024.3			1,308.4
Interest expense		62.4			85.9			76.9			81.0			39.5			46.6
Income tax provision (benefit)		3.3			4.1			7.6			7.5			2.2			(56.1	)
Income from continuing operations		7.6			6.2			129.6			151.0			58.6			209.7
Income (loss) from discontinued operations		7.4			(0.5	)		(26.5	)		(24.2	)		1.2			(1.7	)
Net income	$	15.0		$	5.7		$	103.1		$	126.8		$	59.8		$	208.0

Per Share Data:
Pro forma basic and diluted earnings per share(4)
As adjusted pro forma basic and diluted earnings per share(4)(5)

Balance Sheet Data (end of period):
Total assets	$	768.3		$	793.0		$	2,171.7					$	2,160.7		$	2,298.0
Long-term debt (including current portion)(6)		187.3			285.0			655.9						385.0			530.4
Obligations under capitalized leases		84.4			79.3			112.3						119.6			95.0
Other financing obligations(7)		201.8			185.4			176.3						168.9			269.9
Other long-term liabilities (including long term portion of self-insurance liabilities)		27.2			26.6			241.7						251.7			235.3
Total membership interests (deficiency)		47.2			(23.1	)		75.5						311.6			283.5
Working capital		105.5			126.8			236.3						246.8			275.1

Cash Flow Data:
Net cash provided by operating activities before reorganization items	$	89.8		$	89.9		$	277.7					$	200.6		$	170.5
Net cash provided by (used in) financing activities		10.1			(16.8	)		282.2						307.4			(39.1	)(8)
Net cash (used in) investing activities		(17.1	)		(46.9	)		(555.0	)					(493.3	)		(131.2	)(8)
Net cash provided by continuing operations		17.1			26.2			4.9						14.7			0.2
Capital expenditures		17.9			47.8			140.9						76.8			50.7

Other Financial and Store Data:
Adjusted EBITDA(9)	$	147.3		$	167.3		$	370.4		$	411.5		$	192.1		$	276.4
Adjusted EBITDAR(9)	$	169.9		$	189.3		$	536.9		$	605.5		$	266.9		$	385.5
Number of stores (at end of period)		207			207			689						687			685
Average sales per store (000s)	$	12,608		$	13,338		$	14,422					$	7,856		$	8,054
Average store size (in square feet) (000s)		43			43			46						45			46
Total square feet (at end of period) (000s)		8,857			8,857			31,517						31,381			31,642
Sales per average square foot	$	295		$	312		$	317					$	174		$	175
Comparable store sales increases (decreases) (%)(10)		3.7			5.5			3.1						3.3			0.8
Pro forma comparable store sales increases (decreases) (%)(11)		—			—			3.8						3.3			1.8

(1)

Amounts include only results of BI-LO stores.

(2)

Pro forma adjustments include Winn-Dixie’s financial information for the unpublished results from January 12, 2012 to March 9, 2012 to approximate our 52-week fiscal period ended December 26, 2012. See “Unaudited Pro Forma Combined Financial Information.” Pro forma adjustments do not include the Baldwin Sale/Leaseback, the pending transactions, the C&S supply arrangement or the issuance of our PIK toggle notes.

(3)

Gross profit is defined as total revenues less merchandising costs, including warehousing and transportation expenses.

(4)

Assumes all shares of common stock issued by us in this offering were outstanding for the entire period because the approximately $458 million dividend declared on September 20, 2013, exceeds net income for the applicable period.

(5)

Assumes the proceeds from this offering are used to repay indebtedness. See “Use of Proceeds.”

(6)

Long-term debt includes the loan balance under any revolving credit facility then outstanding (but not outstanding letters of credit). As of the end of fiscal 2011 and fiscal 2012, and as of July 10, 2013, long-term debt includes $285.0 million, $430.9 million, and $430.4 million, respectively attributable to our senior secured notes due 2019.

(7)

Other financing obligations exclude obligations related to land which will not require future cash payments, and for which there are related land assets recorded, that will offset the obligation at the end of the financing term, resulting in no gain or loss. In addition, on April 24, 2013, we sold our only owned warehouse located in Baldwin, Florida for gross proceeds of approximately $99.8 million and subsequently leased the property back for an initial period of 20 years with four five-year extension options. The transaction will be accounted for similar to a nonqualified sale-leaseback. The related assets will remain on the balance sheet and continue to be depreciated. An other financing obligation was recorded for the amount of consideration received, and will be amortized over the life of the lease.

(8)

Subsequent to the completion of our Condensed Consolidated Financial Statements as of July 10, 2013, we identified a classification error in the Condensed Consolidated Statement of Cash Flows for the 28 weeks ended July 10, 2013. This error was restated and had no impact on net cash flow, and did not affect the accompanying Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations and Comprehensive Income or Condensed Consolidated Statements of Changes in Membership Interests. See Note 12 to the consolidated financial statements included elsewhere in this prospectus.

(9)

EBITDA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITDA margin are supplemental measures of our performance that are not required by, or presented in accordance with, GAAP. None of EBITDA, adjusted EBITDA, adjusted EBITDAR or adjusted EBITDA margin is a measurement of our financial performance under GAAP and should not be considered as an alternative to net income or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities as a measure of our liquidity.

We define EBITDA as earnings before interest expense, income taxes, depreciation and amortization and income (loss) from discontinued operations. We define adjusted EBITDA as EBITDA plus (minus) (a) reorganization losses (gains), (b) charges related to certain corporate transactions, (c) other charges related to our bankruptcy proceedings, (d) merger and integration costs, (e) losses from closed stores, (f) losses (gains) on asset disposals, (g) impairment expense, (h) franchise taxes and (i) fees and expense reimbursements to our sponsor. We define adjusted EBITDAR as adjusted EBITDA plus rent expense. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of net sales. We caution investors that amounts presented in accordance with our definitions of EBITDA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITDA margin may not be comparable to similar measures disclosed by our competitors, because not all companies and analysts calculate EBITDA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITDA margin in the same manner. We present EBITDA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITDA margin because we consider them to be important supplemental measures of our performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in our industry. Management believes that investors’ understanding of our performance is enhanced by including these non-GAAP financial measures as a reasonable basis for comparing our ongoing results of operations. Many investors are interested in understanding the performance of our business by comparing our results from ongoing operations period over period and would ordinarily add back non-cash expenses such as depreciation and amortization, as well as items that are not part of normal day-to-day operations of our business. Management and our principal stockholder use EBITDA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITDA margin:

•

as a measurement of operating performance because they assist us in comparing the operating performance of our stores on a consistent basis, as they remove the impact of items not directly resulting from our core operations;

•

for planning purposes, including the preparation of our internal annual operating budget and financial projections;

•

to evaluate the performance and effectiveness of our operational strategies;

•

to evaluate our capacity to fund capital expenditures and expand our business; and

•

to calculate incentive compensation payments for our employees, including assessing performance under our annual incentive compensation plan.

By providing these non-GAAP financial measures, together with a reconciliation, we believe we are enhancing investors’ understanding of our business and our results of operations, as well as assisting investors in evaluating how well we are executing our strategic initiatives. Items excluded from these non-GAAP measures are significant components in understanding and assessing financial performance. In addition, the instruments governing our indebtedness use EBITDA (with additional adjustments) to measure our compliance with covenants such as interest coverage and debt incurrence. EBITDA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITDA margin have limitations as analytical tools, and should not be considered in isolation, or as an alternative to, or a substitute for net income or other financial statement data presented in our consolidated financial statements and in accordance with GAAP as indicators of financial performance. Some of the limitations of non-GAAP financial measures are:

•

such measures do not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments;

•

such measures do not reflect changes in, or cash requirements for, our working capital needs;

•

such measures do not reflect the interest expense, or the cash requirements necessary to service interest or principal payments on our debt;

•

such measures do not reflect our tax expense or the cash requirements to pay our taxes;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future and such measures do not reflect any cash requirements for such replacements; and

•

other companies in our industry may calculate such measures differently than we do, limiting their usefulness as comparative measures.

Due to these limitations, EBITDA, adjusted EBITDA, adjusted EBITDAR and adjusted EBITDA margin should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using these non-GAAP measures only supplementally.

The following table reconciles EBITDA, adjusted EBITDA and adjusted EBITDAR to the most directly comparable GAAP financial performance measure, which is net income (loss):


										Pro Forma			28 Week Period Ended
	Fiscal 2010 (52weeks)(a)			Fiscal 2011 (52weeks)(a)			Fiscal 2012 (52weeks)			Fiscal 2012 (52weeks)(b)			July 14, 2012			July 10, 2013
	(In millions of dollars, except for margin data)
Reconciliation of EBITDA and EBITDAR:
Net income	$	15.0		$	5.7		$	103.1		$	126.8		$	59.8		$	208.0
Plus:
Depreciation and amortization expense(c)		64.2			53.8			98.1			105.7			44.3			64.5
Interest expense		62.4			85.9			76.9			81.0			39.5			46.6
Income tax provision (benefit)		3.3			4.1			7.6			7.5			2.2			(56.1	)
(Income) loss from discontinued operations		(7.4	)		0.5			26.5			24.2			(1.2	)		1.7
EBITDA	$	137.5		$	150.0		$	312.2		$	345.2		$	144.6		$	264.7
Plus:
Charges related to bankruptcy proceedings and corporate reorganization(d)		2.3			7.0			4.2			4.2			3.5			—
Loss from closed stores		8.7			0.3			2.2			2.0			1.0			0.8
(Gain) on assets disposals		(0.5	)		—			(0.9	)		(0.8	)		(0.2	)		0.2
Impairment expense		1.6			1.8			—			—			—			—
Franchise taxes		0.4			0.4			0.6			0.5			0.3			0.3
Fees and expense reimbursement to our sponsor(e)		1.5			4.5			2.5			2.5			0.6			1.8
Merger and integration costs		—			3.4			59.9			68.1			42.3			13.1
Other nonoperating (income)		(4.2	)		(0.1	)		(10.3	)		(10.2	)		—			(4.5	)
Adjusted EBITDA	$	147.3		$	167.3		$	370.4		$	411.5		$	192.1		$	276.4
Plus:
Rent expense(f)		22.6			22.0			166.5			194.0			74.8			109.1
Adjusted EBITDAR	$	169.9		$	189.3		$	536.9		$	605.5		$	266.9		$	385.5
Adjusted EBITDA margin		5.6			6.0			4.3			4.2			4.7			5.0

(a)

See footnote 1 above.

(b)

See footnote 2 above.

(c)

Fiscal 2012 and fiscal 2013 periods include depreciation and amortization related to acquired Winn-Dixie warehouse and transportation assets, which is a component of cost of sales on the condensed consolidated statements of operations.

(d)

Includes legal and other costs incurred to defend litigation related to Bruno’s Supermarkets, LLC (a former subsidiary).

(e)

During fiscal 2012, $3.8 million of fees and expenses paid to our sponsor was included in the merger and integration costs.

(f)

Fiscal 2012 and fiscal 2013 periods include rent expense relating to acquired warehouse and transportation facilities and equipment.

(10)

We define comparable store sales as sales from continuing operations stores, including stores that we remodeled, enlarged or replaced during the period and excluding stores that opened or closed during that period. Comparable store sales for 2010, 2011 and 2012 excludes stores that opened, were acquired or closed during the reporting period.

(11)

Pro forma comparable store sales gives effect, for all periods beginning with the first quarter of fiscal 2012, to the Winn-Dixie acquisition assuming it occurred January 2, 2011.

RISK FACTORS

Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information included in this prospectus, before making a decision to invest in our common stock. Any of the following risks, as well as other risks and uncertainties, could harm our business, financial condition, results of operations and cash flows and cause the value of our common stock to decline, which in turn could cause you to lose all or part of your investment.

Risks Related to Our Business

We rely on a principal supplier for a substantial portion of our retail merchandise.

We rely on a single supplier, C&S, to provide all of the retail merchandise (other than merchandise that is delivered directly from the manufacturers to our stores (known as “direct store delivery”) and prescription drugs) pursuant to a long-term supply agreement. During the 28-week period ended July 10, 2013, C&S supplied approximately 22% of our retail merchandise. On May 10, 2013, we entered into the C&S supply arrangement in which the scope of C&S’s services has been expanded to cover the Winn-Dixie stores. Under the C&S supply arrangement, C&S will supply all of the retail merchandise (other than direct store delivery and prescription drugs) to all of our 685 stores as of July 10, 2013, including the 479 stores under the Winn-Dixie banner. See “Business—Sources of Supply.” This will result in a substantially higher proportion of our merchandise being supplied by one supplier. We anticipate approximately 75-80% of our retail merchandise will be supplied by C&S under this arrangement.

Due to our significantly increased reliance on C&S to supply our merchandise, the cancellation of the C&S supply arrangement or the disruption, delay or inability of C&S to deliver products to our stores could have a material adverse effect on our business. Other suppliers that could provide similar products are limited in number and there is no assurance that we would be able to secure an alternative supplier on commercially reasonable terms or at all. In addition, a change in suppliers could cause a delay in distribution and a possible loss of sales, which would have a material adverse effect on our business, financial condition and results of operations.

We may not realize the benefits of outsourcing operations in connection with the C&S supply arrangement, including integration synergies.

To be successful in our recent logistics outsourcing to C&S, we will need to turn over certain warehouse and trucking operations and personnel to C&S in a manner that does not disrupt store operations or supply and integrate our ordering and purchasing systems. This will require substantial management attention and could distract attention from our day-to-day business. If we cannot implement the C&S supply arrangement successfully, we may fail to realize the expected benefits and our operations could be adversely affected. In addition, any interruption of supply to our store locations could lead to a loss of sales. We expect that the C&S supply arrangement will result in significant savings on the cost of inventory and supplies if successfully implemented. There can be no assurance that any of these savings will in fact be realized.

We operate in a highly competitive industry with low profit margins, and actions taken by our competitors can negatively affect our results of operations.

We compete with various types of retailers, including local, regional and national supermarket operators, convenience stores, retail drug chains, national general merchandisers and discount retailers, membership clubs, super-centers, warehouse stores and independent and specialty grocers. Our competitors include national and regional supermarket chains that compete on the basis of location, quality of products, service, price, product mix, store conditions and promotional offerings. We also face heightened competition from restaurants and fast food chains due to the increasing portion of household food expenditures directed to the purchase of food prepared outside the home. In addition, over the past several years, we have experienced a significant number of competitor store openings in the regions in which we operate.

Our industry is highly competitive with low profit margins. Pricing is a significant driver of consumer choice in our industry and we regularly engage in price competition, particularly through our promotional programs. To the extent that our competitors lower prices, through increased promotional activity or otherwise, our ability to maintain gross profit margins and sales levels may be negatively impacted. Several of our primary competitors are larger than we are, have greater financial resources available to them and, therefore, may be able to devote greater resources to invest in pricing and promotional programs. Additionally, we may not have sufficient resources to respond to significant investments by our competitors in pricing or promotional programs or store base.

Actions taken by our competitors may have a material adverse effect on our business, financial condition and results of operations.

Adverse economic conditions could negatively affect our results of operations and financial condition.

The retail food industry is sensitive to changes in overall economic conditions that impact consumer spending and purchasing habits, both nationally and locally. General economic conditions in our market areas, such as higher levels of unemployment, weakness in the housing market, inflation in food and energy, and lagging consumer confidence, could reduce consumer spending and cause consumers to switch to a less expensive mix of products or trade down to discounters for grocery items. Furthermore, we may experience additional reductions in traffic in our supermarkets or limitations on the prices that we can charge for our products, either of which may reduce our sales and profit margins and have a material adverse effect on our business, financial condition and results of operations.

Failure to execute successfully our core strategic initiatives could adversely affect us.

Our multi-year strategic initiatives include building customer loyalty, improving our brand image and growing profitable sales. Over the last several years, we have focused on creating a positive, “fresh and local” shopping experience in our stores which we expect will further evolve and improve our brand image. Our strategy focuses on improving our customers’ shopping experiences through improved service, product selection and price.

Successful execution of this strategy requires a balance between sales growth and generating cost savings and reinvesting in our business. Maintaining this strategy requires the ability to develop and execute plans to generate cost savings and productivity improvements that can be invested in the merchandising and pricing initiatives necessary to support our customer-focused programs, as well as recognizing and implementing organizational changes as required. Because many of our operating costs—such as rent, utilities and minimum labor staffing levels—are largely fixed, low levels of sales productivity negatively impact profitability.

If we are unable to execute our plans, or if our plans fail to meet our customers’ expectations, our business, financial condition and results of operations could be adversely affected.

We may not fully realize the benefits of integrating our Winn-Dixie acquisition, including merger integration synergies.

While we have operated for over five full fiscal quarters since our acquisition of Winn-Dixie, work remains to be done to combine and integrate the operations of BI-LO and Winn-Dixie into one company, with particular emphasis on aligning and upgrading key retail information technology and related systems. Integration will continue to require substantial management attention and could detract attention from day-to-day business. We could encounter difficulties in the integration process, such as the need to revise assumptions about revenues, capital expenditures, operating costs and projected cost savings and merger integration synergies, the loss of key employees or commercial relationships, the need to address unanticipated liabilities or the deployment of technologies disrupting on-going operations and affected stores. If we cannot continue to integrate the BI-LO and

Winn-Dixie businesses successfully, we may fail to realize fully the expected benefits of the acquisition of Winn-Dixie, including the expected cost savings and merger integration synergies.

In May 2013, we signed a definitive merger agreement under which we will acquire substantially all of the operating supermarkets under the “Sweetbay,” “Harveys” and “Reid’s” banners from Delhaize and certain of its subsidiaries for $265.0 million in cash (subject to certain adjustments) and the assumption of all related lease liabilities, including approximately $92.0 million of capital lease liabilities of Delhaize. We expect the Delhaize transaction to close in the first quarter of 2014, subject to the satisfaction or waiver of customary closing conditions. Either party may terminate the agreement if the closing does not occur by November 30, 2014. This offering is not conditioned upon the closing of the Delhaize transaction and there can be no assurance that the Delhaize transaction will be completed.

Completion of the Delhaize transaction is conditioned upon, among other things, the receipt of certain governmental clearances or approvals, including those required by antitrust laws, such as the expiration or termination of applicable waiting periods under the HSR Act. We cannot assure you that these clearances or approvals will be obtained or, if obtained, when. In addition, the governmental authorities from which these approvals are required have broad discretion in administering the governing regulations. As a condition to approval of the acquisition, these governmental authorities may impose requirements, limitations or costs or require divestitures or place restrictions on the conduct of our business after the completion of the acquisition. On July 8, 2013, the Federal Trade Commission, or the FTC, issued a request for additional information, or a second request, to us and Delhaize. The FTC has indicated on a preliminary basis that it believes the transaction may raise competitive concerns in certain regions and could require us to divest certain stores as a condition to the FTC’s approval of the transaction.

On September 4, 2013, we entered into an agreement to purchase 21 Piggly Wiggly operating supermarkets. We expect this acquisition to close during the fourth quarter of fiscal 2013, subject to the satisfaction or waiver of customary closing conditions. This offering is not conditioned upon the closing of the Piggly Wiggly transaction and there can be no assurance that the Piggly Wiggly transaction will be completed.

If we become subject to any term, condition, obligation or restriction (whether by governmental order, consent or because the terms of the merger agreement require it), the imposition of such term, condition, obligation or restriction could reduce the anticipated benefits of the affected pending transactions or otherwise materially adversely affect our business and results of operations after the completion of the affected pending transactions.

We may not fully realize the anticipated benefits of the pending transactions.

Integration of the pending transactions will require substantial management attention and could detract attention from day-to-day business. We could encounter difficulties in the integration process of the pending transactions, such as the need to revise assumptions about revenues, capital expenditures, operating costs and projected cost savings and business integration synergies, the loss of key employees or commercial relationships or the need to address unanticipated liabilities. If we cannot integrate the businesses successfully, we may fail to realize fully the expected benefits of the pending transactions.

Our operating costs can be significantly impacted by various factors which could negatively affect our financial position.

We and our suppliers depend on trucks to distribute goods to our markets. Therefore, fluctuations in fuel and oil prices affect our cost of doing business. Increases in the cost of electricity, which will remain our responsibility

under the C&S supply arrangement, and other utilities affect the cost of illuminating and operating our stores and warehouse and distribution facilities. Many products we sell include ingredients such as wheat, corn, oils, milk, sugar, cocoa and other commodities and any increase in commodity prices may cause our vendors to seek price increases from us. Also, the cost of plastic and paper bags can be significantly impacted by increases in commodity prices. The cost of our promotional mailings depends on postal rates and paper and printing costs. We also rely on discounts from the basic postal rate structure, such as discounts for bulk mailings and sorting by zip code and carrier routes. In addition, as the use of payment cards grows and banks continue to raise their fees for accepting payment cards at the point of sale, bank interchange fees continue to decrease profit margins. Furthermore, changes in federal and state minimum wage laws and other laws relating to employee benefits could cause us to incur additional wage and benefit costs. We may not be able to recover these or other rising costs through increased prices charged to our customers. Increases in the cost of one or more of these or other items could have a material adverse effect on our business, financial condition and results of operations.

Changes in laws, rules and regulations affecting our industry could adversely affect our results of operations.

We are subject to numerous federal, state and local laws, rules and regulations that affect our business, such as those affecting food manufacturing, food and drug distribution and retailing, labor and environmental practices, accounting standards and taxation requirements. We must also comply with numerous provisions regulating, among other things, health and sanitation standards, food labeling and safety, equal employment opportunity, minimum wages, and licensing for the sale of food, drugs, and alcoholic beverages.

Ongoing efforts related to the implementation of recently enacted food safety and health care reform legislation create uncertainty about the probability and impact of future regulatory changes. In addition, new mandates, fees and taxes and stricter regulatory oversight can significantly impact operations and compliance costs.

We cannot predict future laws, rules and regulations or the effect they will have on our operations. In any event, however, they could significantly increase the cost of doing business. These changes could result in additional record keeping, expanded documentation of the properties of certain products, expanded or different labeling. Any or all of these requirements could have a material adverse effect on our business, financial condition and results of operations.

In addition, many of our customers rely on food stamps and other governmental assistance programs to supplement their grocery-shopping budget. As a result, any change in the ability of our customers to obtain food stamps and other governmental assistance could have a material adverse effect on our business, financial condition and results of operations.

Healthcare reform legislation could adversely affect our business.

The Federal Patient Protection and Affordable Care Act as well as other healthcare reform legislation considered by Congress and state legislators could significantly impact our business. These health care reform laws require employers such as us to provide health insurance for all qualifying employees or pay penalties for not providing coverage. We cannot predict the effects this legislation or any future state or federal healthcare legislation or regulation will have on our business because of the breadth and complexity of the legislation and because many of the rules, reforms and regulations required to implement these laws have not yet been adopted. However, we expect these reforms to significantly increase our employee healthcare and other related costs. We are currently evaluating the potential impact the healthcare reform legislation will have on our business and the steps necessary to mitigate the impacts, including potential modifications to our current benefit plans, operational changes to minimize the impact of the legislation to our cost structure and other changes to minimize the expected cost increases. As the provisions of this legislation are phased in over time, the resulting changes to our healthcare cost structure and any inability to effectively modify our programs and operations in response to this legislation could have a material adverse effect on our business, financial conditions and results of operations.

Disruptions or compromises in our information technology systems could adversely affect our operations and our reputation and have a material adverse effect on our business.

Our business is increasingly dependent on information technology systems that are complex and vital to continuing operations. If we were to experience difficulties maintaining existing systems or integrating BI-LO systems with Winn-Dixie systems, we could incur significant losses due to disruptions in our operations. Our information technology systems are subject to damage or interruption from power outages, computer and telecommunications failures, computer viruses, security breaches, catastrophic events and user errors. Our information technology systems are also subject to security breaches, including cyber security breaches and breaches of transaction processing, that could result in the compromise of confidential customer data, including debit and credit cardholder data or personal information about customers from their frequent shopper cards. Any disruptions in information technology systems or a security breach could require that we expend significant additional resources related to our information security systems, adversely affect our reputation with our customers, result in litigation against us or the imposition of penalties and adversely affect our results of operations. Also, various third parties, such as our suppliers and payment processors, rely on information technology systems, which are subject to the same risks.

We face risks inherent in providing pharmacy services at our stores, and continued reimbursement rate pressures and increased regulatory requirements in the pharmacy industry may adversely affect our business and results of operations.

Pharmacies are exposed to risks such as filling and labeling of prescriptions, adequacy of warnings, unintentional distribution of counterfeit drugs and expiration of drugs. Although we maintain professional liability and errors and omissions liability insurance, we cannot guarantee that the coverage limits under our insurance programs will be adequate to protect us against future claims or that we will be able to maintain this insurance on acceptable terms in the future or at all. Our business, financial condition and results of operations may be materially adversely affected if, in the future, our insurance coverage is inadequate or unavailable, there is an increase in the liability for which we self-insure, or we suffer harm to our reputation as a result of a claim.

Sales of prescription drugs reimbursed by third party payers, including Medicare Part D and state sponsored Medicaid agencies, represent a significant portion of our pharmacy sales. Continued reimbursement rate pressures, and increased regulatory requirements related to such third party payers, may adversely affect our business and results of operations.

Unexpected changes in the insurance market or factors affecting self-insurance reserve estimates could have a material adverse effect on us.

We use a combination of insurance coverage and self-insurance to provide for potential liability for workers’ compensation, general liability, property losses, fleet liability, employee benefits and directors and officers liability. There is no assurance that we will be able to continue to maintain our insurance coverage or obtain comparable insurance coverage at a reasonable cost. Self-insurance reserves are determined based on actual claims experience and an estimate of claims incurred but not reported including, where necessary, actuarial studies. Actuarial projections of losses are subject to a high degree of variability caused by, but not limited to, such factors as future interest and inflation rates, future economic conditions, litigation trends and benefit level changes. Our business, financial condition and results of operations could be adversely affected by an increase in the frequency or costs of claims and changes in actuarial assumptions.

Litigation or legal proceedings could expose us to significant liabilities and may materially adversely affect our businesses, financial condition and results of operations.

Our operations are characterized by a high volume of customer traffic and by transactions involving a wide variety of product selections. These operations carry a higher exposure to consumer litigation risk when compared to the operations of companies operating in many other industries. Consequently, we may be a party to

individual personal injury, product liability and other legal actions in the ordinary course of our business. The outcome of litigation, particularly class action lawsuits and regulatory actions, is difficult to assess or quantify. Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits may remain unknown for substantial periods of time. The cost to defend future litigation may be significant. There may also be adverse publicity associated with litigation that may decrease consumer confidence in our business, regardless of whether the allegations are valid or whether we are ultimately found liable. As a result, litigation may materially adversely affect our business, financial condition and results of operations.

Product liability claims, product recalls and the resulting unfavorable publicity could adversely affect us.

The packaging, marketing, distribution and sale of grocery, drug and other products purchased from suppliers or manufactured by us entails an inherent risk of product liability claims, product recalls and the resulting adverse publicity. Such products may contain contaminants that we may inadvertently distribute. These contaminants may, in certain cases, result in illness, injury or death if processing at the consumer level does not eliminate the contaminants. Even an inadvertent shipment of adulterated products is a violation of law and may lead to a product recall and/or an increased risk of exposure to product liability claims. There can be no assurance that such claims will not be asserted against us or that we will not be obligated to perform product recalls in the future. If a product liability claim is successful, our insurance coverage may not be adequate to pay all liabilities, and we may not be able to continue to maintain such insurance coverage or obtain comparable insurance coverage at a reasonable cost. If we do not have adequate insurance coverage or contractual indemnification available, product liability claims relating to defective products could have an adverse effect on our ability to successfully market our products and on our business, financial condition and results of operations. In addition, even if a product liability claim is not successful or is not fully pursued, the adverse publicity surrounding any assertion that our products caused illness or injury could have an adverse effect on our reputation with existing and potential customers and on our business, financial condition and results of operations.

Failure to maintain the services of key personnel, as well as attracting, training and retaining a qualified labor staff could adversely affect our ability to carry out strategic initiatives and ultimately impact our financial performance.

Our continued success depends on the availability and performance of our key personnel. The loss of the services of any of our executive officers or other key employees could adversely affect our business. In addition, it is critical that we are able to adequately meet our labor needs. Maintaining a qualified labor staff, while controlling wage and labor-related costs, is subject to numerous external factors, including the availability of a sufficient number of qualified persons in the work force in the markets in which we are located, unemployment levels within those markets, unionization of the available work force, prevailing wage rates, changing demographics, health and other insurance costs and changes in employment legislation.

We must maintain the services of key personnel as well as attract, train and retain a qualified labor staff in order to continue to operate our business.

The geographic concentration of our locations in the Southeast increases our exposure to the risks of the local economy, vulnerability to severe storm damage and other local adverse conditions.

Our operations are concentrated in states along the Gulf of Mexico and the Atlantic Ocean, which makes us vulnerable to regional economic downturns and increases the likelihood of being negatively affected by hurricanes and windstorm activity. Specific risks that we face include:

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our ability to re-open stores that may close as a result of damage to the store and/or the operating area;

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our ability and the ability of our suppliers to continue to distribute products to stores;

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our ability to fund losses of inventory and other costs in advance of receipt of insurance payments; and

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our ability to collect on insurance coverage, which is subject to the solvency of our insurance carriers, their approval of our claims and the timing of claims processing and payment.

Any unforeseen events or circumstances in our region (such as changes in the economy, weather conditions, including hurricanes and floods, earthquakes, fires, demographics, population outflows or increased levels of unemployment) could also materially adversely affect our business, financial condition and results of operations.

Any failure to maintain our brand recognition and value may adversely affect our business.

We believe our leading market positions have contributed to our banners’ strong brand recognition and value. Our BI-LO and Winn-Dixie banners have deep local heritages that go back several decades and are well known institutions in the communities they serve, which we believe helps generate customer traffic and loyalty. Maintaining and developing our brand recognition and value will depend largely on the success of our marketing and merchandising efforts and our ability to provide consistent, high-quality customer service. In addition, brand recognition and value is based in large part on perceptions of subjective qualities, and even isolated incidents can erode trust and confidence, particularly if they result in adverse publicity, governmental investigations or litigation. Our company, including our brand recognition and value, could be adversely affected if our public image or reputation is tarnished by negative publicity. Any loss of confidence on the part of customers in our brands would be difficult and costly to overcome and could have a material adverse effect on our business, financial condition and results of operations.

Attempts to organize our employees could adversely affect our business.

None of our employees are currently subject to a collective bargaining agreement, unlike many players in our industry. Unions may attempt to organize some or all of our employee base at certain stores, within certain states or under one or more of our banners. In addition, some or all of our employees may independently explore the possibility of organizing. Addressing any attempts at organization may distract management and our employees and could have a material adverse effect on individual stores, certain groups of stores or our business as a whole. In addition, any attempts to unionize some or all of our workforce that are successful could increase our operating costs and otherwise negatively affect our business, financial condition and results of operations.

We may be unable to maintain or increase comparable store sales, which could adversely affect our business.

We may not be able to maintain or improve the levels of comparable store sales that we have experienced in the past. Our comparable store sales could be inconsistent with or lower than our historical average or prior periods for many reasons, including:

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actions by our existing or new competitors, including pricing changes;

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general U.S. economic and political conditions;

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performance of the stores and banners we have acquired and those that we may acquire in the future;

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the effectiveness of our inventory management;

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timing and effectiveness of our marketing activities;

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supply shortages; and

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seasonal fluctuations due to, among other things, extreme weather conditions.

These and other factors may cause our comparable store sales to be inconsistent with or materially lower than in prior periods, which could have a material adverse effect on our business, financial condition and results of operations.

Our high level of fixed lease obligations could adversely affect our business.

Our high level of fixed lease obligations require us to commit a significant portion of cash generated by operating activities to satisfy these obligations. If we are unable to make the required lease payments, the lenders or owners may take appropriate action under the applicable lease, including commencing foreclosure activities, repossessing the applicable assets or accelerating our outstanding obligations due thereunder. Furthermore, our fixed lease obligations could increase because of changes in the real estate markets, including the availability of attractive store locations.

We generally cannot terminate our leases. If we decide to close or relocate a location, we may nonetheless be committed to perform our obligations under the applicable lease, including paying the base rent for the remaining lease term. We are currently obligated to pay rent under leases for 21 Winn-Dixie and BI-LO locations that have been closed, with lease expiration dates ranging from October 2013 to November 2023. There can be no assurances that we will not close or relocate additional store locations or that the aggregate rent we are committed to pay in respect of closed or relocated stores will not increase over time.

Risks Related to our Indebtedness

Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations and limit our ability to plan for and react to changes in the economy, our industry or our business, and we may not be able to generate sufficient cash to service all of our indebtedness.

As of July 10, 2013, after giving effect to the issuance of our PIK toggle notes and the application of proceeds therefrom as if it had occurred on that date, our total consolidated indebtedness would have been approximately $1,364.9 million (excluding $131 million of letters of credit under our senior secured ABL credit facility). In addition, as of July 10, 2013, we had approximately $1.1 billion in other current and noncurrent liabilities recorded on our balance sheet, and there was approximately $469 million of available borrowings under the ABL facility. Our significant leverage could have important consequences, including the following:

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it may limit our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions or general corporate or other purposes;

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it may require us to dedicate a substantial portion of our cash flows from operations to the payment of principal and interest on our indebtedness, thereby reducing availability of our cash flow to fund our operations, capital expenditures and business opportunities;

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because borrowings under the ABL facility are at variable rates of interest, we may be exposed to the risk of increased interest rates;

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it may limit our flexibility in planning for, or our ability to adjust to, changes in our business or the industry in which we operate and place us at a competitive disadvantage compared to less-leveraged competitors; and

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we may be vulnerable to a downturn in general economic conditions or in our business, or we may be unable to carry out capital spending that is important to our growth.

Our ability to make scheduled payments or to refinance our debt obligations depends on our financial and operating performance, which is subject to prevailing economic and competitive conditions and to certain financial, business and other factors beyond our control. We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness. If our cash flows and capital resources are insufficient to fund our debt service obligations, we may be forced to reduce or delay capital expenditures, sell assets or operations, seek additional capital or restructure or refinance our indebtedness. We cannot assure you that we would be able to take any of these actions, that these actions would be successful and permit us to meet our scheduled debt service obligations or that these actions would be permitted under the terms of our existing or future debt agreements, including the ABL facility or the indentures governing our 9.25% senior secured notes due 2019 and our PIK toggle notes. If

we face substantial liquidity problems, we might be required to dispose of material assets or operations to meet our debt service and other obligations. The credit agreement governing the ABL facility and the indentures governing our senior secured notes and our PIK toggle notes restrict our ability to dispose of assets and use the proceeds from the disposition. We may not be able to consummate those dispositions and these proceeds may not be adequate or available to meet any debt service obligations then due.

Restrictive covenants in the agreements governing our indebtedness may adversely affect our operations.

The agreements governing our indebtedness contain various covenants that limit our ability to, among other things:

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incur, assume or guarantee additional indebtedness;

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make dividend payments or other restricted payments;

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make investments;

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create liens;

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transfer or sell assets, including stock of our subsidiaries;

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enter into certain types of transactions with affiliates; and

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enter into mergers, consolidations or sales of all or substantially all of our assets.

The ABL facility also requires us to maintain specified financial ratios and satisfy other financial condition tests under certain conditions based on the amount available for borrowing under the ABL facility. The ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet them. These restrictions and any inability to meet the financial ratios and tests could have a material adverse effect on our business, financial condition and results of operations.

Variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Our borrowings under the ABL facility bear interest at variable rates and expose us to interest rate risk. If interest rates increase, our debt service obligations on the variable rate indebtedness would increase even though the amount borrowed remains the same, and our net income would decrease. A hypothetical 0.50% increase in LIBOR rates applicable to borrowings under the ABL facility would result in an estimated increase of $3.5 million per year of interest expense related to such debt, assuming the ABL facility is fully borrowed.

Risks Related to this Offering and Ownership of our Common Stock

There is no existing market for our common stock and we do not know if one will develop to provide you with adequate liquidity.

Prior to this offering, there has not been a public market for our common stock. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market, and if developed, the extent to which it will be sustained, or how liquid any trading market might become. The initial public offering price for our common stock was determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. If you purchase shares of our common stock, you may not be able to sell those shares at or above the initial offering price. The lack of an active market may also reduce the fair market value of your shares. An inactive market may impair our ability to raise capital by selling shares of capital stock in the future and may impair our ability to acquire other companies by using our shares as consideration. If an active trading market does not develop, you may have difficulty selling any shares of our common stock that you buy at the time you wish to sell them or at a price that you consider reasonable.

Our stock price may be volatile, the market price of our common stock may decline and you could lose all or a significant part of your investment.

Even if an active trading market for our common stock develops, the market price of our common stock could be subject to wide fluctuations in response to many factors, some of which are beyond our control, including:

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our quarterly or annual earnings or those of other companies in our industry;

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the failure of securities analysts to cover our common stock after this offering or changes in financial estimates by analysts who follow our company and our industry;

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announcements by us or our competitors of new openings, entry into key markets, strategic investments or acquisitions;

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actual or anticipated variations in our or our competitors’ operating results, and our and our competitors’ growth rates;

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failure by us or our competitors to meet analysts’ projections or guidance that we or our competitors may give the market;

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general or regional economic conditions or events;

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fluctuations in operating results;

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additions to or departures of our senior management personnel;

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terrorist acts;

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changes in laws or regulations, or new interpretations or applications of laws and regulations, that are applicable to our business;

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changes in accounting standards, policies, guidance, interpretations or principles;

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short sales, hedging and other derivative transactions in the shares of our common stock;

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future sales or issuances of our common stock, including sales or issuances by us, our directors or executive officers and our significant stockholders;

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our dividend policy; and

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investor perceptions of us, our competitors and our industry.

Furthermore, the stock markets have experienced price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. These fluctuations have often been unrelated or disproportionate to the operating performance of those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, governmental monetary policy or interest rate changes, may cause the market price of our common stock to decline. If the market price of our common stock after this offering does not exceed the initial public offering price, you may not realize any return on your investment in us and may lose some or all of your investment.

In addition, in the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could seriously harm our business.

If securities or industry analysts do not publish research or reports about our business, publish inaccurate or unfavorable research about our business or change their recommendations regarding our stock adversely, our stock price and trading volume could decline.

The trading market for our common stock will be influenced in part by the research and other reports that industry or securities analysts may publish about us or our business. We do not currently have, and may never

obtain, research coverage by industry or financial analysts. If no or few analysts commence coverage of us, the trading price of our stock would likely be negatively impacted. Even if we do obtain analyst coverage, if one or more of the analysts who cover us downgrade our stock, or if analysts issue other unfavorable commentary or inaccurate research, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

Lone Star owns a substantial portion of our common stock, it may have conflicts of interest with other stockholders in the future and its significant ownership may limit your ability to influence corporate matters.

Immediately after this offering, Lone Star will beneficially own approximately % (or % if the underwriters’ over-allotment option is exercised in full) of our outstanding common stock. See “Principal Stockholders” for more information on our beneficial ownership. As a result of this concentration of stock ownership, Lone Star acting on its own has sufficient voting power to effectively control all matters submitted to our stockholders for approval, including director elections and proposed amendments to our bylaws. We currently expect that, following this offering, four of the nine members of our board of directors will be employees or affiliates of Lone Star.

In addition, this concentration of ownership may delay or prevent a merger, consolidation or other business combination or change in control of our company and make some transactions that might otherwise give you the opportunity to realize a premium over the then-prevailing market price of our common stock more difficult or impossible without the support of Lone Star. The interests of Lone Star may not always coincide with our interests as a company or the interests of other stockholders. Accordingly, Lone Star could cause us to enter into transactions or agreements of which you would not approve or make decisions with which you would disagree. This concentration of ownership may also adversely affect our share price. After the lock-up period expires, Lone Star will be able to transfer control of us to a third-party by transferring their common stock, which would not require the approval of our board of directors or other stockholders.

Additionally, Lone Star is in the business of making investments in companies and may from time to time acquire and hold interests in businesses that compete directly or indirectly with us. Lone Star may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. In recognition that principals, members, directors, managers, partners, stockholders, officers, employees and other representatives of Lone Star and its affiliates and investment funds may serve as our directors or officers, our certificate of incorporation to be adopted in connection with this offering will provide, among other things, that none of Lone Star or any principal, member, director, manager, partner, stockholder, officer, employee or other representative of Lone Star has any duty to refrain from engaging directly or indirectly in the same or similar business activities or lines of business that we do. In the event that any of these persons or entities acquires knowledge of a potential transaction or matter which may be a corporate opportunity for itself and us, we will not have any expectancy in such corporate opportunity, and these persons and entities will not have any duty to communicate or offer such corporate opportunity to us and may pursue or acquire such corporate opportunity for itself or direct such opportunity to another person. These potential conflicts of interest could have a material adverse effect on our business, financial condition, results of operations or prospects if, among other things, attractive corporate opportunities are allocated by the sponsors to themselves or their other affiliates. The terms of our certificate of incorporation to be adopted are more fully described in “Description of Capital Stock—Corporate Opportunities and Transactions with Lone Star.”

We will be a “controlled company” within the meaning of the rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements.

Upon completion of this offering, Lone Star will continue to control a majority of the voting power of our outstanding common stock. As a result, we will be a “controlled company” within the meaning of the corporate governance standards. Under the rules, a company of which more than 50% of the voting

power is held by a person or group is a “controlled company” and need not comply with certain requirements, including the requirement that a majority of the board of directors consist of independent directors and the requirements that our compensation and nominating and corporate governance committees be comprised entirely of independent directors. Following this offering, we intend to utilize these exemptions. As a result, we may not have a majority of independent directors and our nominating and compensation committees may not consist entirely of independent directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the corporate governance requirements.

Future sales of our common stock in the public market could cause our stock price to fall.

If our existing stockholder sells substantial amounts of our common stock in the public market following this offering, the market price of our common stock could decrease significantly. The perception in the public market that our existing stockholder might sell substantial amounts of our common stock could also depress the market price of our common stock. Any such sale or perception could also impair our ability to raise capital or pay for acquisitions using our equity securities.

Immediately after completion of this offering, we will have shares of common stock outstanding, including shares that will be beneficially owned by Lone Star. Following completion of this offering, Lone Star will beneficially own approximately % of our outstanding shares of common stock (or % if the underwriters exercise their over-allotment option in full) and, unless such shares are registered under the Securities Act of 1933, as amended, or the Securities Act, such shares may only be resold into the public markets in accordance with the requirements of Rule 144, including the volume limitations, manner of sale requirements and notice requirements thereof. See “Shares Eligible for Future Sale.” In addition, the remaining shares of our common stock that will be outstanding immediately after completion of this offering will become eligible for sale in the public markets from time to time, subject to Securities Act restrictions, following the expiration of lock-up agreements. We, Lone Star, and our officers and directors have signed lock-up agreements with the underwriters that will, subject to certain exceptions, restrict the sale of shares of our common stock held by them for 180 days following the date of this prospectus, subject to extension in the case of an earnings release or material news or a material event relating to us. The underwriters may, without notice except in certain limited circumstances, release all or any portion of the shares of common stock subject to lock-up agreements. See “Underwriting” for a description of these lock-up agreements. Upon the expiration of the lock-up agreements described above, all of such shares will be eligible for resale in the public market, subject in the case of shares held by our affiliates, to the volume, manner of sale and other limitations under Rule 144. We expect that Lone Star will be considered an affiliate of us after this offering based on their expected share ownership following this offering.

After completion of this offering, Lone Star will have the right to demand that we file a registration statement with respect to the shares of our common stock held by it, and will have the right to include its shares in any registration statement that we file with the Securities and Exchange Commission, or SEC, subject to certain exceptions. See “Shares Eligible for Future Sale.” Any registration of the shares owned by Lone Star would enable those shares to be sold in the public market, subject to certain restrictions in our registration rights agreement and the restrictions under the lock-up agreements referred to above.

The market price for shares of our common stock may drop significantly when the restrictions on resale by our existing stockholder lapse or if those restrictions on resale are waived. A decline in the price of shares of our common stock might impede our ability to raise capital through the issuance of additional shares of our common stock or other equity securities. In addition, following this offering, we intend to file a registration statement on Form S-8 under the Securities Act registering shares under our stock incentive plan. Subject to the terms of the awards granting the shares included in this registration statement and except for shares held by affiliates who will have certain restrictions on their ability to sell, the shares will be available for sale in the public market immediately after the registration statement is filed. We expect that the initial registration statement on Form S-8 will cover shares of our common stock. See “Shares Eligible for Future Sale.”

If you purchase shares of common stock sold in this offering, you will experience immediate and substantial dilution.

If you purchase shares in this offering, the value of your shares based on our actual book value will immediately be less than the price you paid. This reduction in the value of your equity is known as dilution. This dilution occurs in large part because our earlier investors paid substantially less than the initial public offering price when they purchased their shares of our common stock. If you purchase shares in this offering, you will suffer, as of July 10, 2013, immediate dilution of $ per share, in the net tangible book value after giving effect to the sale of common stock in this offering at an assumed initial public offering price of $ per share, which is the midpoint of the estimated price range appearing on the cover of this prospectus, less underwriting discounts and commissions and the estimated expenses payable by us, and the application of the net proceeds as described in “Use of Proceeds.” If outstanding options to purchase our shares of common stock are exercised in the future, you will experience additional dilution. In addition, if we raise funds by issuing additional securities, the newly issued shares will further dilute your percentage ownership of our company.

In the future, we expect to issue options, restricted stock and other forms of stock-based compensation, which have the potential to dilute stockholder value and cause the price of our common stock to decline.

We expect to offer stock options, restricted stock and other forms of stock-based compensation to our directors, officers and employees in the future. If any options that we issue are exercised, or any restricted stock that we may issue vests, and those shares are sold into the public market, the market price of our common stock may decline. In addition, the availability of shares of common stock for award under our equity incentive plan, or the grant of stock options, restricted stock or other forms of stock-based compensation, may adversely affect the market price of our common stock.

Our ability to raise capital in the future may be limited.

Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds through the issuance of new equity securities, debt or a combination of both. Additional financing may not be available on favorable terms, or at all. If adequate funds are not available on acceptable terms, we may be unable to fund our capital requirements. If we issue new debt securities, the debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. If we issue additional equity securities, existing stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. Thus, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.

We are a holding company and depend on the cash flow of our subsidiaries.

We are a holding company with no material assets other than the equity interests of our subsidiaries. Our subsidiaries conduct substantially all of our operations and own substantially all of our assets and intellectual property. Consequently, our cash flow and our ability to meet our obligations and pay any future dividends to our stockholders depends upon the cash flow of our subsidiaries and the payment of funds by our subsidiaries directly or indirectly to us in the form of dividends, distributions and other payments. Any inability on the part of our subsidiaries to make payments to us could have a material adverse effect on our business, financial condition and results of operations.

Provisions of our charter documents, Delaware law and other documents could discourage, delay or prevent a merger or acquisition at a premium price.

Provisions in our certificate of incorporation and bylaws that we intend to adopt prior to the consummation of this offering may have the effect of delaying or preventing a change of control or changes in our management. For example, our certificate of incorporation and bylaws will include provisions that:

•

permit us to issue, without stockholder approval, preferred stock in one or more series and, with respect to each series, fix the number of shares constituting the series and the designation of the series, the voting powers, if any, of the shares of the series and the preferences and other special rights, if any, and any qualifications, limitations or restrictions, of the shares of the series;

•

prevent stockholders from calling special meetings;

•

restrict the ability of stockholders to act by written consent after such time as Lone Star owns less than a majority of our common stock;

•

limit the ability of stockholders to amend our certificate of incorporation and bylaws;

•

require advance notice for nominations for election to the board of directors and for stockholder proposals;

•

do not permit cumulative voting in the election of our directors, which means that the holders of a majority of our common stock may elect all of the directors standing for election; and

•

initially establish a classified board of directors with staggered three-year terms.

These provisions may discourage, delay or prevent a merger or acquisition of our company, including a transaction in which the acquiror may offer a premium price for our common stock.

We are also subject to Section 203 of the Delaware General Corporation Law, or the DGCL, which, subject to certain exceptions, prohibits us from engaging in any business combination with any interested stockholder, as defined in that section, for a period of three years following the date on which that stockholder became an interested stockholder. In addition, our equity incentive plan will permit vesting of stock options and restricted stock, and payments to be made to the employees thereunder in certain circumstances, in connection with a change of control of our company, which could discourage, delay or prevent a merger or acquisition at a premium price. In addition, our ABL credit facility and the indentures governing our notes include, and other debt instruments we may enter into in the future may include, provisions entitling the lenders to demand immediate repayment of all borrowings upon the occurrence of certain change of control events relating to our company, which also could discourage, delay or prevent a business combination transaction. See “Description of Capital Stock—Provisions of Our Certificate of Incorporation and Bylaws to be Adopted and Delaware Law That May Have an Anti-Takeover Effect.”

If we are unable to implement and maintain the effectiveness of our internal control over financial reporting or if we fail to remediate an identified material weakness in our internal controls over financial reporting, our independent registered public accounting firm may not be able to provide an unqualified report on our internal controls, which could adversely affect our stock price.

expect that this material weakness will be remediated before the end of the 40-week period ending October 2, 2013. However, there is no guarantee that we will be able to successfully remediate this material weakness by such time or at all, or that additional material weaknesses will not be identified in the future. Any failure to remediate this material weakness or implement new or improved controls could cause us to fail to meet our future reporting obligations, including potential misstatements of our accounts and disclosures that would not be prevented or detected and could result in a material misstatement to our annual or interim consolidated financial statements in future periods.

Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002 and the related rules adopted by the SEC and the Public Company Accounting Oversight Board, starting with the second annual report that we file with the SEC after the consummation of this offering, our management will be required to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. We may encounter problems or delays in completing the implementation of any changes necessary to our internal control over financial reporting to conclude such controls are effective. If we, together with our independent registered public accounting firm, conclude, that our internal control over financial reporting is not effective, investor confidence and our stock price could decline.

Matters impacting our internal controls may cause us to be unable to report our financial information on a timely basis and thereby subject us to adverse regulatory consequences, including sanctions by the SEC or violations of applicable stock exchange listing rules, and result in a breach of the covenants under our financing arrangements. There also could be a negative reaction in the financial markets due to a loss of investor confidence in us and the reliability of our financial statements. Confidence in the reliability of our financial statements also could suffer if we or our independent registered public accounting firm were to report a material weakness in our internal controls over financial reporting. This could materially adversely affect us and lead to a decline in the price of our common stock.

Even though we intend to pay dividends, our cash dividends are not guaranteed and may fluctuate, and our ability to pay dividends is restricted by our indebtedness.

We expect our board of directors will implement a regular, cash dividend program following consummation of this offering. However, we are not required to distribute our cash and cash dividends are not guaranteed, may fluctuate and may not be paid at all. The amount of dividends, if any, will be determined at the sole discretion of our board of directors. Our ability to pay dividends, and the timing and amount thereof, will also depend on our ability to generate sufficient cash from operations, which, in turn, will be affected by all of the factors discussed in “—Risks Related to Our Business.” Our ability to pay dividends may also be restricted by, among other things, applicable laws and regulations and the terms of the agreements governing our indebtedness, including the ABL Facility and the indentures governing our senior secured notes and our PIK toggle notes, which restrict our ability to pay dividends. See “Description of Indebtedness.” In addition, such instruments contain certain other covenants that could limit our ability to pay dividends. For example, the ABL facility also require us to maintain specified financial ratios and satisfy other financial condition tests under certain conditions based on the amount available for borrowing under the ABL facility. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we cannot assure you that we will meet them. A breach of any such covenants could result in a default under the terms of the ABL facility and/or the indentures governing our senior secured notes and our PIK toggle notes, and in the event of any such default, no dividends can be paid and our stockholders, and our lenders could elect to accelerate the maturity of all outstanding notes or loans. Future financing agreements may also contain restrictions or prohibitions on the payment of dividends. We cannot assure you that the agreements governing our current and future indebtedness will permit us to pay dividends. If we are unable to pay dividends, you may not receive any return on your investment unless you sell your common stock for a price greater than which you paid for it.

We will incur increased costs as a result of being a publicly-traded company.

As a company with publicly-traded securities, we will incur significant legal, accounting and other expenses not presently incurred. In addition, the Sarbanes-Oxley Act of 2002, as well as rules promulgated by the SEC and the stock exchange on which we will list our common stock, require us to adopt corporate governance practices applicable to U.S. public companies. These rules and regulations will increase our legal and financial compliance costs and may place a strain on our systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal controls over financial reporting. To maintain and improve the effectiveness of our disclosure controls and procedures, we will need to commit significant resources, hire additional staff and provide additional management oversight. We will be implementing additional procedures and processes for the purpose of addressing the standards and requirements applicable to public companies.

FORWARD-LOOKING STATEMENTS

This prospectus includes forward-looking statements. Forward-looking statements are those that do not relate solely to historical fact and are about future events, which involve risks and uncertainties. They include, but are not limited to, any statement that may predict, forecast, indicate or imply future results, performance, achievements or events. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will,” “could,” “may,” “plan,” “potential,” “likely,” “goal,” “target,” “objective,” “outlook,” “seek” and similar expressions identify forward-looking statements.

Important factors relating to forward-looking statements may include, among others, assumptions regarding:

•

supply problems, including our dependence on a principal supplier;

•

our ability to realize the benefits of outsourcing operations in connection with the C&S supply arrangement;

•

pricing, market strategies, the expansion and other activities of competitors, and our ability to respond to the promotional practices of competitors;

•

adverse economic conditions and the impact on consumer demand and spending and our pricing strategy;

•

our ability to execute our core strategic initiatives;

•

our ability to realize the benefits of integrating our Winn-Dixie acquisition;

•

consummation of the pending transactions and our ability to realize the benefits of such transactions;

•

our ability to effectively increase or maintain our profit margins;

•

changes in, or the failure or inability to comply with, laws and governmental regulations applicable to the operation of our pharmacy and other businesses;

•

risks of liability under environmental laws and regulations;

•

the adequacy of our information technology systems;

•

the adequacy of our insurance coverage against claims of our consumers in connection with our pharmacy services;

•

our ability to maintain our existing insurance coverage and accurately estimate self-insurance reserves;

•

litigation claims or legal proceedings against us;

•

events that give rise to food and drug safety concerns or product liability claims, product recalls, or any adverse publicity relating to these types of concerns, whether or not valid;

•

our ability to attract, train and retain qualified key personnel;

•

our exposure to the local economy and other adverse conditions due to our geographic concentration;

•

decisions by our sponsor that may conflict with the interests of the holders of our common stock; and

•

other factors discussed in “Risk Factors” and elsewhere in this prospectus.

Forward-looking statements reflect our current expectations, based on currently available information, and are not guarantees of performance. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, these expectations could prove inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability to control or predict. Should one or more of these risks or uncertainties, or other risks or uncertainties not currently known to us or that we currently deem to be immaterial, materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors relating to these risks and uncertainties include, but are not limited to, those described in “Risk Factors.” For these reasons, we caution you against relying on

forward-looking statements, which speak only as of the date on which they are made. Except as may be required by applicable law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date on which they are made or to reflect the occurrence of unanticipated events. You should carefully read this prospectus in its entirety as it contains important information about our business and the risks we face.

USE OF PROCEEDS

Our net proceeds from this offering will be approximately $ million (or approximately $ million if the underwriters exercise in full their over-allotment option to purchase up to additional shares of our common stock), after deducting underwriting discounts and commissions and estimated offering expenses payable by us, based on an assumed initial public offering price of $ per share, which is the midpoint of the estimated price range appearing on the cover of this prospectus. We intend to use the net proceeds from this offering as follows:

•

to repay outstanding indebtedness, including:

•

$ million of our senior secured notes (which includes approximately $ million in respect of a 3% pre-payment premium on the notes to be redeemed),

•

$ million outstanding under the ABL facility, and/or

•

$ million of our PIK toggle notes (which includes approximately $ million in respect of a 2% pre-payment premium on the notes to be redeemed); and

•

the remainder for working capital and other general corporate purposes.

The terms of our senior secured notes, the ABL facility and our PIK toggle notes are described in detail under “Description of Indebtedness.” Citigroup Global Markets Inc., Deutsche Bank Securities Inc. and Wells Fargo Securities, LLC, each of whom are underwriters in this offering, are, or their affiliates are, expected to receive more than 5% of the net proceeds of this offering in connection with the prepayment of a portion of our ABL facility. Accordingly, this offering is being made in compliance with the requirements of FINRA Rule 5121. See “Underwriting—Conflicts of Interest.”

Pending use of the net proceeds from this offering described above, we may invest the net proceeds in short- and intermediate-term interest-bearing obligations, investment-grade instruments, certificates of deposit or direct or guaranteed obligations of the United States government.

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, the midpoint of the initial public offering price range set forth on the cover page of this prospectus, would increase or decrease the net proceeds to us from this offering by approximately $ million, assuming the number of shares offered, as set forth on the cover page of this prospectus, remains the same, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

DIVIDEND POLICY

We paid aggregate distributions to Lone Star of $76 million and $305 million in fiscal 2011 and fiscal 2012, respectively. In addition, on September 20, 2013, we made a distribution to Lone Star of approximately $458 million from the proceeds from the issuance of our PIK toggle notes. These distributions were effected to return capital to Lone Star. We have not made any other distributions on our equity since the beginning of fiscal 2011.

Following the consummation of this offering, our board of directors expects to implement a regular, cash dividend program. However, there can be no assurances that we will institute such a program or that, if implemented, for how long it will run. All future decisions concerning the payment of dividends on our common shares will depend upon our results of operations, financial condition, contractual restrictions, business prospects and capital expenditure plans, as well as any other factors that our board of directors may consider relevant. The agreements governing our indebtedness place restrictions on our ability to pay dividends. Specifically:

•

the ABL facility imposes certain minimum excess availability and minimum fixed charge coverage ratio conditions on our ability to, among other things, pay dividends or make other distributions, and if excess availability falls below a minimum threshold, we will be subject to a minimum fixed charge coverage ratio of 1.00:1.00, which will further limit our ability to pay dividends; and

•

the indentures governing our senior secured notes and our PIK toggle notes contain covenants that, among other things and subject in each case to certain specified exceptions, limit our ability to make restricted payments, including the payment of dividends.

See “Description of Indebtedness.” In addition, the agreements governing any future indebtedness may also impose restrictions on our ability to pay dividends.

CAPITALIZATION

The table below sets forth our cash and cash equivalents and capitalization as of July 10, 2013:

•

on an actual basis;

•

on a pro forma basis to reflect (i) the completion of our corporate conversion whereby Southeastern Grocers, LLC will be converted into a Delaware corporation and renamed Southeastern Grocers, Inc., (ii) the issuance of $475 million aggregate principal amount of our PIK toggle notes and the application of the net proceeds therefrom, including the payment of an approximately $458 million distribution to Lone Star effected on September 20, 2013; and

•

on a pro forma as adjusted basis to give effect to the matters described above and the issuance and sale of shares of our common stock offered by us in this offering at an assumed offering price of $ per share, which is the midpoint of the estimated price range appearing on the cover of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, and the application of such proceeds as described in “Use of Proceeds.”

You should read this table together with the information in this prospectus under “Use of Proceeds,” “Selected Consolidated and Combined Financial Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Description of Capital Stock,” and with the consolidated financial statements and the related notes to those statements included elsewhere in this prospectus.


	As of July 10, 2013
	Actual			Pro Forma	Pro Forma As Adjusted
				(Unaudited)
	(in millions, except share amounts)
Cash and cash equivalents	$	51.7		$	$

Debt:
ABL Facility(1)	$	100.0		$	$
9.25% Senior Secured Notes due 2019(2)		425.0				(3)
Capital leases and other financing obligations(4)		364.9
8.625%/9.375% Senior PIK Toggle Notes due 2018(5)		—				(6)
Total debt	$	889.9		$	$
Stockholders’ equity:
Membership interests (deficiency)		71.1
Undesignated preferred stock, par value $0.001 per share: no shares authorized, issued or outstanding actual, shares authorized, no shares issued and outstanding pro forma and pro forma as adjusted		—
Common stock, par value $0.001 per share: no shares authorized, issued or outstanding actual, shares authorized, shares issued and outstanding pro forma and shares issued and outstanding pro forma as adjusted		—
Additional paid-in capital		—
Accumulated other comprehensive loss		(1.6	)
Retained earnings	$	214.0		$	$

Total stockholders’ equity	$	283.5		$	$

Total capitalization	$	1,173.4		$	$

(1)

As of July 10, 2013, $469 million was available for borrowing under the ABL facility.

(2)

Excludes unamortized issue premium.

(3)

Assumes $ million of the net proceeds from this offering will be used to redeem $ aggregate principal amount of the senior secured notes at a redemption price of 103% of the aggregate principal amount redeemed.

(4)

Other financing obligations include the obligation from non-qualified sale-leaseback transactions, including the Baldwin Sale/Leaseback, related to the building portion of the applicable real property. The obligation is amortized over the life of the lease, with the related interest expense charged to other interest on the Consolidated Statements of Operations and Comprehensive Income. Obligations related to the land portion of the sale-leaseback are not included in other financing obligations, do not require future cash payments and are not amortized.

(5)

Excludes unamortized issue premium or discount.

(6)

Assumes $ million of the net proceeds from this offering will be used to redeem $ aggregate principal amount of the PIK toggle notes at a redemption price of 102% of the aggregate principal amount redeemed.

Each $1.00 increase or decrease in the assumed initial public offering price of $ per share, the midpoint of the initial public offering price range set forth on the cover page of this prospectus, would increase or decrease the pro forma as adjusted amount of each of cash and cash equivalents, additional paid-in capital, total stockholders’ equity and total capitalization by approximately $ million, assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

DILUTION

Dilution represents the difference between the amount per share paid by investors in this offering and the as adjusted net tangible book value per share of our common stock immediately after this offering. The data in this section have been derived from our consolidated balance sheet as of July 10, 2013. Net tangible book value per share is equal to our total tangible assets less the amount of our total liabilities, divided by the sum of the number of our shares of common stock outstanding. Our net tangible book value as of July 10, 2013 was $ million, or $ per share of common stock.

After giving effect to our receipt of the estimated net proceeds from our sale of common stock in this offering at an assumed offering price of $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and other estimated offering expenses payable by us and the application of such proceeds as described in “Use of Proceeds,” our net tangible book value, as adjusted, as of July 10, 2013 would have been $ million, or $ per share of common stock. This represents an immediate decrease in net tangible book value to our existing stockholders of $ per share and an immediate dilution to new investors in this offering of $ per share. The following table illustrates this per share dilution:


Assumed initial public offering price per share		$

Net tangible book value per share of common stock as of July 10, 2013	$
Pro forma increase in net tangible book value per share attributable to new investors

Pro forma net tangible book value per share after the offering

Dilution per share to new investors		$

The following table shows on a pro forma basis at July 10, 2013, after giving effect to the completion of our corporate conversion, the total cash consideration paid to us and the average price per share paid by our existing stockholder and by new investors in this offering before deducting underwriting discounts and estimated offering expenses payable by us.


	Shares Purchased				Total Consideration				Average Price Per Share
	Number	%			Amount	%			Average Price Per Share
Existing stockholder				%	$			%	$
New investors

Total			100	%	$		100	%

The information in the preceding table has been calculated using an assumed initial public offering price of $ per share, the midpoint of the estimated price range set forth on the cover page of this prospectus. A $1.00 increase or decrease in the assumed initial public offering price per share would increase or decrease, respectively, the as adjusted net tangible book value per share of common stock after this offering by $ per share and increase or decrease, respectively, the dilution per share of common stock to new investors in this offering by $ per share, in each case calculated as described above and assuming that the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same.

If the underwriters exercise their over-allotment option in full, our existing stockholders would own approximately % and our new investors would own approximately % of the total number of shares of our common stock outstanding immediately after this offering, based on shares outstanding after this offering, and the total consideration paid by our existing stockholder and new investors would be approximately $ (or %) and $ (or %), respectively.

An aggregate of additional shares of our common stock will initially be available for future awards under the equity incentive plan that we intend to implement in connection with this offering and are not included in the above discussion and table. To the extent that we grant awards in the future with exercise prices below the initial public offering price in this offering, investors purchasing in this offering will incur additional dilution.

SELECTED CONSOLIDATED AND COMBINED FINANCIAL DATA

We derived the selected consolidated financial data as of the end of fiscal 2011 and fiscal 2012 and for fiscal 2010, 2011 and 2012 (retrospectively adjusted for discontinued operations) from the audited consolidated financial statements which are included elsewhere in this prospectus. We derived the consolidated financial data as of the end of fiscal 2008, 2009 and 2010 and for fiscal 2008 and 2009 from our audited consolidated financial statements not included elsewhere in this prospectus. We derived the summary selected historical financial data as of July 10, 2013 and for the 28-week periods ended July 14, 2012 and July 10, 2013 from the unaudited condensed consolidated financial statements included elsewhere in this prospectus. We derived the summary historical financial data as of July 14, 2012 from our unaudited condensed consolidated financial statements not included elsewhere in this prospectus. Such unaudited financial information has been prepared on a basis consistent with the annual audited financial statements. In the opinion of management, such unaudited financial statements contain all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of these data. The results for the 28-week periods ended July 14, 2012 and July 10, 2013 are not necessarily indicative of the results for a full year or for any future period. The information included in “Other Financial and Store Data” was derived from accounting records.

The selected consolidated and combined financial data below represent portions of our financial statements and are not complete. You should read this information together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes to those statements included elsewhere in this prospectus. Historical results are not necessarily indicative of future performance.


	Fiscal														28-Week Period Ended
	2008(1) (52 weeks)			2009(1) (53 weeks)			2010(1) (52 weeks)		2011(1) (52 weeks)			2012 (52 weeks)			July 14, 2012		July 10, 2013
	(In millions, except Per Share Data and Other Financial and Store Data)
Statement of Operations Data:
Net sales	$	2,626.4		$	2,558.5		$	2,641.1	$	2,779.2		$	8,632.9		$	4,097.1	$	5,574.5
Gross profit(2)		713.6			682.9			685.2		717.8			2,350.4			1,124.6		1,508.6
Operating, general and administration expenses		710.1			621.4			616.2		621.6			2,136.3			1,024.3		1,308.4
Interest expense		71.1			62.9			62.4		85.9			76.9			39.5		46.6
Income tax provision (benefit)		(33.2	)		3.9			3.3		4.1			7.6			2.2		(56.1	)
Income (loss) from continuing operations		(34.3	)		(28.8	)		7.6		6.2			129.6			58.6		209.7
Income (loss) from discontinued operations		(54.5	)		3.7			7.4		(0.5	)		(26.5	)		1.2		(1.7	)
Net (loss) income	$	(88.8	)	$	(25.1	)	$	15.0	$	5.7		$	103.1		$	59.8	$	208.0

Per Share Data:
Pro forma basic and diluted earnings per share(3)
As adjusted pro forma basic and diluted earnings per share(3)(4)

Balance Sheet Data (end of period):
Total assets	$	881.4		$	826.9		$	768.3	$	793.0		$	2,171.7		$	2,160.7	$	2,298.0
Long-term debt (including current portion)(5)		260.0			31.0			187.3		285.0			655.9			385.0		530.4
Obligations under capitalized leases		103.1			92.3			84.4		79.3			112.3			119.6		95.0
Other financing obligations(6)		253.4			224.6			201.8		185.4			176.3			168.9		269.9
Other long-term liabilities (including long term portion of self-insurance liabilities)		32.9			25.9			27.2		26.6			241.7			251.7		235.3
Total membership interests (deficiency)		(108.9	)		(117.8	)		47.2		(23.1	)		75.5			311.6		283.5
Working capital		(232.4	)		88.9			105.5		126.8			236.3			246.8		275.1


	Fiscal															28-Week Period Ended
	2008(1) (52 weeks)			2009(1) (53 weeks)			2010(1) (52 weeks)			2011(1) (52 weeks)			2012 (52 weeks)			July 14, 2012			July 10, 2013
	(In millions, except Per Share Data and Other Financial and Store Data)

Cash Flow Data:
Net cash provided by operating activities before reorganization items	$	98.4		$	59.8		$	89.8		$	89.9		$	277.7		$	200.6		$	170.5
Net cash provided by (used in) financing activities (7)		(48.6	)		(13.4	)		10.1			(16.8	)		282.2			307.4			(39.1	)
Net cash (used in) investing activities (7)		(37.7	)		(9.7	)		(17.1	)		(46.9	)		(555.0	)		(493.3	)		(131.2	)
Net cash provided by continuing operations		12.1			9.7			17.1			26.2			4.9			14.7			0.2
Capital expenditures		49.4			10.8			17.9			47.8			140.9			76.8			50.7

Other Financial and Store Data:
Adjusted EBITDA (8)	$	142.4		$	138.0		$	147.3		$	167.3		$	370.4		$	192.1		$	276.4
Adjusted EBITDAR (8)	$	164.1		$	161.2		$	169.9		$	189.3		$	536.9		$	266.9		$	385.5
Number of stores (at end of period)		222			214			207			207			689			687			685
Average sales per store (000s)	$	11,712		$	11,953		$	12,608		$	13,338		$	14,422		$	7,856		$	8,054
Average store size (in square feet) (000s)		43			43			43			43			46			45			46
Total square feet (at end of period) (000s)		9,516			9,176			8,857			8,857			31,517			31,382			31,642
Sales per average square foot	$	274		$	279		$	295		$	312		$	317		$	174		$	175
Comparable store sales increases (decreases) (%)(9)		(3.3	)		2.3			3.7			5.5			3.1			3.3			0.8
Pro forma comparable store sales increases (decreases)(%)(10)		—			—			—			—			3.8			3.3			1.8

(1)

Amounts include only results of BI-LO stores.

(2)

Gross profit is defined as total revenues less merchandising costs, including warehousing and transportation expenses.

(3)

Assumes all common shares issued by us in this offering were outstanding for the entire period because the approximately $458 million dividend declared on September 20, 2013 exceeds net income for the applicable period.

(4)

Assumes the proceeds from this offering are used to repay indebtedness. See “Use of Proceeds.”

(5)

Long-term debt includes the loan balance under any revolving credit facility then outstanding (but not outstanding letters of credit). As of the end of fiscal 2011 and fiscal 2012, and as of July 10, 2013, long-term debt includes $285.0 million, $430.9 million, and $430.4 million, respectively, attributable to our senior secured notes due 2019.

(6)

Other financing obligations exclude obligations related to land which will not require future cash payments, and for which there are related land assets recorded, that will offset the obligation at the end of the financing term, resulting in no gain or loss. In addition, on April 24, 2013, we sold our only owned warehouse (located in Baldwin, Florida) for gross proceeds of approximately $99.8 million and subsequently leased the property back for an initial period of 20 years with four five-year extension options. The transaction will be accounted for similar to a nonqualified sale-leaseback. The related assets will remain on the balance sheet and continue to be depreciated. An other financing obligation was recorded for the amount of consideration received, and will be amortized over the life of the lease.

(7)

(8)

Please see footnote 9 to “Summary—Summary Selected Historical and Pro Forma Financial and Other Data” for our definitions of EBITDA, adjusted EBITDA and adjusted EBITDAR and why we consider them useful. The following table reconciles EBITDA, adjusted EBITDA and adjusted EBITDAR to the most directly comparable GAAP financial performance measure, which is net income (loss):


	Fiscal															28 Week Period Ended
	2008(a) (52 weeks)			2009(a) (53 weeks)			2010(a) (52 weeks)			2011(a) (52 weeks)			2012 (52 weeks)			July 14, 2012			July 10, 2013
	(In millions of dollars, except for margin data)
Reconciliation of EBITDA and EBITDAR:
Net income (loss)	$	(88.8	)	$	(25.1	)	$	15.0		$	5.7		$	103.1		$	59.8		$	208.0
Plus:
Depreciation and amortization expense(b)		79.9			72.4			64.2			53.8			98.1			44.3			64.5
Interest expense		71.1			62.9			62.4			85.9			76.9			39.5			46.6
Income tax provision (benefit)		(33.2	)		3.9			3.3			4.1			7.6			2.2			(56.1	)
(Income) loss from discontinued operations		54.5			(3.7	)		(7.4	)		0.5			26.5			(1.2	)		1.7
EBITDA		83.5			110.4		$	137.5		$	150.0		$	312.2		$	144.6		$	264.7
Plus:
Charges related to bankruptcy proceedings and corporate reorganization(c)		—			(1.2	)		2.3			7.0			4.2			3.5			—
Loss from closed stores		5.0			0.4			8.7			0.3			2.2			1.0			0.8
(Gain) on assets disposals		(0.6	)		0.2			(0.5	)		—			(0.9	)		(0.2	)		0.2
Impairment expense		46.2			3.4			1.6			1.8			—			—			—
Franchise taxes		0.4			0.6			0.4			0.4			0.6			0.3			0.3
Fees and expense reimbursement to our sponsor(d)		0.5			0.8			1.5			4.5			2.5			0.6			1.8
Merger and integration costs		—			—			—			3.4			59.9			42.3			13.1
Other nonoperating (income)		7.4			23.4			(4.2	)		(0.1	)		(10.3	)		—			(4.5	)
Adjusted EBITDA		142.4			138.0		$	147.3		$	167.3		$	370.4		$	192.1		$	276.4
Plus:
Rent expense(e)		21.7			23.2			22.6			22.0			166.5			74.8			109.1
Adjusted EBITDAR		164.1			161.2		$	169.9		$	189.3		$	536.9		$	266.9		$	385.5
Adjusted EBITDA margin		5.4			5.3			5.6			6.0			4.3			4.7			5.0

(a)

See footnote 1 above.

(b)

(c)

Includes legal and other costs incurred to defend litigation related to Bruno’s Supermarkets, LLC (a former subsidiary).

(d)

During fiscal 2012, $3.8 million of fees and expenses paid to our sponsor was included in the merger and integration costs.

(e)

Fiscal 2012 and fiscal 2013 periods include rent expense relating to acquired warehouse and transportation facilities and equipment.

(9)

We define comparable store sales as sales from continuing operations stores, including stores that we remodeled, enlarged or replaced during the period and excluding stores that opened or closed during that period. Comparable store sales for 2008 and 2009 includes stores that opened, were acquired or closed during the reporting period. Comparable store sales for 2010, 2011 and 2012 excludes stores that opened, were acquired or closed during the reporting period.

(10)

Pro forma comparable store sales give effect, for all periods beginning with the first quarter of 2012, to the Winn-Dixie acquisition assuming it occurred on January 2, 2011.

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The following unaudited pro forma combined statements of operations have been provided to present illustrative combined unaudited statements of operations for the fiscal year ended December 26, 2012, giving effect to the Winn-Dixie acquisition on March 9, 2012 as if the acquisition occurred on January 1, 2012, the beginning of fiscal 2012. The unaudited supplemental pro forma statement of operations for the fiscal year ended December 26, 2012 combines BI-LO’s historical audited consolidated statement of operations for the fiscal year ended on December 26, 2012 with Winn-Dixie’s historical consolidated statement of operations for the period from January 1, 2012 to March 9, 2012, which are not included in this prospectus. The unaudited pro forma statement of operations should be read together with the historical financial statements and related notes included elsewhere in this prospectus.

The unaudited pro forma condensed combined statements of operations give effect to the acquisition of Winn-Dixie on March 9, 2012, including:

•

the allocation of the consideration paid in connection with the acquisition of Winn-Dixie to the fair value of assets acquired and liabilities assumed;

•

additional debt and interest expense incurred to effect the acquisition of Winn-Dixie;

•

the reduction of depreciation and amortization expense due to the fair values of the acquired tangible and intangible assets being reduced from their historical book values;

•

the exclusion of acquisition related expenses and compensation expense for one time change of control cost; and

•

reclassifications made to conform Winn-Dixie to BI-LO’s historical financial statement presentations.

The unaudited pro forma combined statements of operations do not give effect to the pending transactions, the C&S supply arrangement, the Baldwin Sale/Leaseback, the issuance of the PIK toggle notes and the related distribution made to Lone Star or this offering. The unaudited pro forma financial information is presented for informational purposes only and does not purport to represent what our actual results of operations would have been had the Winn-Dixie acquisition actually occurred on the date indicated, nor does this information purport to project our results of operations for any future period.

The fair value estimate of assets acquired and liabilities assumed and the allocation of the purchase price to the net assets acquired has been determined by management with the assistance of independent valuation specialists. The determination of the assets acquired and liabilities assumed was based on the established fair value of the assets acquired and the liabilities assumed as of the acquisition date. The stock acquisition generated no adjustments to the original tax reporting values of the assets held by Winn-Dixie on the date of the acquisition.

Unaudited Pro Forma Combined Statement of Operations Year Ended December 26, 2012


	Year Ended December 26, 2012			Period From January 12, 2012 to March 9, 2012(1)			Year Ended December 26, 2012
	BI-LO(2)			Winn-Dixie			Pro Forma Adjustments			Total Pro Forma
	(Amounts in thousands)
Net sales	$	8,632,861		$	1,102,755		$	—		$	9,735,616
Cost of sales, including warehouse and delivery expense		6,282,443			781,368			(3,789	)(3)(4)		7,060,022

Gross profit		2,350,418			321,387			3,789			2,675,594
Operating, general and administrative expenses		2,136,317			344,107			(44,446	)(4)(5)		2,435,978

Income (loss) from operations		214,101			(22,720	)		48,235			239,616
Interest expense		76,867			1,929			2,240	(6)		81,036

Income (loss) from continuing operations before income taxes		137,234			(24,649	)		45,995			158,580
Income tax provision (benefit)		7,647			(152	)		—	(7)		7,495

Income (loss) from continuing operations		129,587			(24,497	)		45,995			151,085
(Loss) income from discontinued operations		(26,465	)		2,228			—			(24,237	)

Net income (loss)	$	103,122		$	(22,269	)	$	45,995		$	126,848

(1)

Does not include the results of operations for January 1, 2012 to January 11, 2012, which were the last eleven days of the last completed fiscal quarter for Winn-Dixie prior to the acquisition. Determination of the actual results for this time period is not practicable and we do not believe them to be material.

(2)

BI-LO financial information includes the results of Winn-Dixie for the period beginning on March 10, 2012.

(3)

The pro forma adjustment to costs of sales, including warehouse and delivery expense, includes the conversion of Winn-Dixie’s inventory method from LIFO to FIFO.

(4)

Includes an adjustment due to fair values of the acquired tangible and intangible assets being adjusted from their historical book values. See Note 2 to Consolidated Financial Statements for Southeastern Grocers, LLC and subsidiaries as of December 26, 2012, December 31, 2011 and for the fiscal years ended December 26, 2012, December 31, 2011 and January 1, 2011 for the purchase price allocation and information regarding assets and liabilities as well as useful lives of identified tangible and intangible assets acquired.

(5)

Includes an adjustment to exclude Winn-Dixie’s compensation expense for one-time change of control cost of $13,109 and acquisition-related expenses of $18,300.

(6)

The pro forma adjustment to interest expense is for the interest on the $260 million of borrowings from the ABL facility for the acquisition of Winn-Dixie.

(7)

There is no adjustment to Income tax provision (benefit) due to Winn-Dixie’s full valuation allowance against substantially all of its net deferred tax assets.

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our consolidated financial condition and results of operations for the 28 weeks ended July 10, 2013 and July 14, 2012 and for the fiscal years ended December 26, 2012, December 31, 2011 and January 1, 2011 should be read in conjunction with “Selected Consolidated and Combined Financial Data,” “Unaudited Pro Forma Combined Financial Information” and the historical audited consolidated financial statements and the unaudited condensed consolidated financial statements and related notes included elsewhere in this prospectus. Some of the information contained in this discussion and analysis or set forth elsewhere in this prospectus, including information with respect to our plans and strategies for our business, includes forward-looking statements that involve risks and uncertainties. You should review the section entitled “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in, or implied by, the forward-looking statements contained in this prospectus.

Our Company

We are a supermarket operator based in Jacksonville, Florida. Prior to the acquisition of Winn-Dixie (as discussed below) on March 9, 2012, we operated retail stores under the “BI-LO”, “Super BI-LO” and “BI-LO at the Beach” banners. Subsequent to the acquisition, we added retail stores operated under the “Winn-Dixie” banner. As of July 10, 2013, we operated 685 retail stores in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee.

We strive to differentiate ourselves from our competitors by providing our customers with a value proposition that combines conveniently located and well-maintained stores (averaging 40,000-50,000 square feet), with a strong focus on customer service, high-quality food products, and prices that are competitive with other conventional supermarket operators in our markets. We generate revenues by selling an assortment of grocery products, including dry and canned groceries, frozen items, produce, dairy, meat and seafood, bread and baked goods, and other fresh product offerings. In addition, a majority of our stores include pharmacies. We have experienced a total of 18 consecutive quarters of positive pro forma comparable stores growth.

Performance Highlights

Key highlights of our recent performance are provided below and are discussed in further detail throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

•

Net Sales. We reported net sales of approximately $5,574.5 million for the 28-week period ended July 10, 2013, which increased from the corresponding period in fiscal 2012 due primarily to sales from acquired Winn-Dixie stores. Net sales increased $5,853.6 million in fiscal 2012 compared to fiscal 2011, which was attributable primarily to sales from acquired Winn-Dixie stores totaling $5,821.6 million.

•

Comparable store sales. The comparable store sales for the 28-week period ended July 10, 2013 increased 0.8% compared to the 28-week period ended July 14, 2012. Our comparable store sales for fiscal 2012 increased 3.1% compared to fiscal 2011.

•

Gross Profit. We reported gross profit of approximately $1,124.6 million, or 27.4% of net sales, for the 28-week period ended July 14, 2012 compared to $1,508.6 million, or 27.1% of net sales, for the 28-week period ended July 10, 2013. We reported gross profit of approximately $717.8 million, or 25.8% of net sales, for fiscal 2011 compared to $2,350.4 million, or 27.2% of net sales, for fiscal 2012.

•

Net Income. We reported net income of approximately $59.8 million for 28 weeks ended July 14, 2012 compared to $208.0 million for the 28-week period ended July 10, 2013. We reported net income of approximately $5.7 million for fiscal 2011 compared to $103.1 million for fiscal 2012.

Key Financial Definitions

•

Net Sales. Net sales is recognized at the time of sale for retail sales and is reported net of sales taxes and similar taxes. Net sales also includes other operating income, which is comprised of commissions, non-retail sales and other revenue. Comparable store sales, average transaction size and number of transactions are key indicators of net sales.

•

Comparable store sales. Comparable store sales are sales from all stores that have been owned by us and open for at least a full year, including stores that we remodeled or enlarged during the period, but excluding stores that opened, were acquired or closed during the period. We compute the percentage change in comparable store sales by comparing sales from all stores in our comparable store base for a reporting period against sales from the same stores for the same number of operating weeks in the comparable reporting period of the prior year. This definition may differ from the methods that other retailers use to calculate comparable store sales. We also calculate pro forma comparable store sales, which gives effect, for the all periods beginning with the first quarter of fiscal 2012, to our acquisition of Winn-Dixie as if it had taken place on the first day of fiscal 2011.

•

Average transaction size and number of transactions. Average transaction size is calculated by dividing net sales by transaction count for a given time period. Transaction count represents the number of transactions reported at our stores over such period and includes transactions that are voided, return transactions and exchange transactions. We use average transaction size to track the trends in average dollars spent in our stores per customer transaction. The two drivers of average transaction size are average item value and items per transaction. Average item value is calculated by dividing net sales by the number of items sold. Items per transaction is calculated by dividing the number of items sold by the number of transactions.

•

Cost of sales. Cost of sales includes merchandise costs and warehouse and transportation expense. Rent expense attributable to the acquired Winn-Dixie warehouse and transportation leases are included in warehouse and transportation expense. Also, depreciation and amortization expense related to the acquire warehouse and transportation assets is included in warehouse and transportation expense.

•

Gross Profit. Gross profit represents total revenues, which includes net sales and other operating income, less cost of sales. Gross profit is impacted by changes in the mix of products, the rate at which we open or acquire new stores, adjustments to our merchandising plans, pricing and promotion programs, distributions expenses including fuel costs, and costs related to our loyalty programs.

•

Operating, general and administrative expenses. Operating, general and administrative expenses includes store labor and benefits expense, advertising expense, rent expense, net of sublease income, other store operating expense, administrative expense, depreciation and amortization expense, other expenses and charges, net, impairment expense, and merger and integration expenses.

•

Interest expense. Interest expense includes capital lease interest, other interest, amortization of deferred financings costs and prepayment penalties.

•

Income (loss) from discontinued operations. The results of operations of an exited store are included in discontinued operations if the cash flows for such store will not be significant to our ongoing operations and cash flows of nearby stores are not expected to increase significantly because of the exit. If such store qualifies, costs incurred to dispose of a location are included in loss on disposal of discontinued operations. Our fiscal 2012 consolidated statement of operations and statement of cash flows were retrospectively reclassified from continuing to discontinued operations for the effect of three Winn-Dixie stores that were closed in the first quarter of fiscal 2013.

•

Comprehensive income. Comprehensive income represents net income plus any change in post-retirement benefit obligation or benefit plan gain.

Outlook

We intend to continue our profitable growth by driving sales while increasing or preserving operating margins. Key elements of our strategy include increasing customer loyalty, offering high-quality products, creating innovative merchandising initiatives and promotions and continuing to provide a superior, value-oriented in-store experience. We also intend to enhance our operating margins through continued cost discipline and enhancements to our merchandise offerings. In addition, we intend to selectively pursue expansion through acquisitions and organic store growth, and will target new store growth in existing markets where we believe we are well positioned to capitalize on opportunities.

We believe that we are well positioned to capitalize on evolving consumer preferences and other trends currently shaping the food retail industry. These trends include: a growing emphasis on the customer shopping experience; an increasing consumer focus on healthy eating choices and fresh, quality offerings; and an improving perception of private-label product quality.

Acquisition of Winn-Dixie

On March 9, 2012, we acquired all of the common stock of Winn-Dixie at a total purchase price of approximately $559.3 million ($416.7 million, net of cash acquired). Founded in 1925, Winn-Dixie is a grocery retailer which, as of the acquisition date, operated 482 retail locations in southeastern states or market areas in which BI-LO did not previously operate, including Florida, Alabama, Louisiana, Georgia and Mississippi.

The Winn-Dixie acquisition significantly expanded our store base and geographic market area, with no overlap in markets between BI-LO and Winn-Dixie. Both BI-LO and Winn-Dixie are strong regional brands, and we will continue to operate under both brand names in their respective markets. The acquired Winn-Dixie stores contain substantially the same selling departments, sell substantially the same products within those departments and are substantially the same size as the BI-LO stores. No BI-LO or Winn-Dixie stores were closed as a result of the merger.

On March 12, 2012, we announced the relocation of the Company’s headquarters to Jacksonville, Florida. Our relocation and integration efforts that are currently in progress will continue through 2013.

The Winn-Dixie acquisition has significantly expanded our store base and geographic market area. We believe we are the sixth largest conventional supermarket operator in the United States based on number of stores. The combination of BI-LO and Winn-Dixie has presented us with a significant opportunity to generate merger integration synergies. This synergy opportunity, in conjunction with our belief that we can more efficiently deploy capital and conduct operations at Winn-Dixie, underpinned our rationale in pursuing the acquisition. A substantial portion of these expected synergies has already been realized, and we expect that the full impact of these synergies on a run-rate basis will be realized by the end of fiscal year 2014. Key areas where we have realized savings and where we expect to generate additional savings are in elimination of duplicative overhead costs, strategic sourcing and vendor initiatives, advertising efficiencies and optimization of store labor hours.

During the integration process, we have incurred certain one-time costs specific to the integration, including the costs of professionals to assist with the integration tasks and employee-related costs, such as severance, retention and relocation. We incurred approximately $71.8 million of these costs through July 10, 2013, including in connection with the relocation of our headquarters during fiscal 2012, and expect to incur modest additional costs to complete the integration efforts. However, we believe that the expected long-term savings and synergies will enhance our long-term profitability.

In connection with the merger, we entered into the ABL facility, which matures in March 2017, and which replaced our $100 million revolving credit facility entered into in February 2011. The purchase price was funded principally by a $260 million draw on the ABL facility and a $275 million equity contribution from Lone Star. The remaining purchase price and acquisition-related costs were funded from cash on hand.

Our operating results and cash flows for the 28 weeks ended July 10, 2013, and July 14, 2012, included 28 weeks and 18 weeks, respectively, of the Winn-Dixie results of operations and cash flows after the March 2012 acquisition. Therefore, our operating results and cash flows for the 28 weeks ended July 10, 2013, and July 14, 2012, are not comparable.

Similarly, our operating results and cash flows for the 52 weeks ended December 26, 2012, include the Winn-Dixie results of operations and cash flows from the acquisition date of March 9, 2012, through December 26, 2012. Due to the acquisition of Winn-Dixie in fiscal 2012, the results of operations and statements of financial condition are not comparable to prior periods.

Recent Events

Baldwin Sale/Leaseback

On April 24, 2013, one of our subsidiaries entered into the Baldwin Sale/Leaseback, a sale leaseback transaction with AR Capital, LLC whereby our Baldwin distribution center and certain related personal property was sold to AR Capital, LLC and, immediately thereafter, we leased back the property. The lease has an initial term of 20 years with four five-year extension options. The consideration for the sale was approximately $99.8 million, of which approximately $83.5 million is required under the terms of our senior secured notes to be held in a collateral account pending reinvestment. See “Description of Indebtedness—Baldwin Sale/Leaseback”. This transaction is accounted for similarly to a nonqualified sale/leaseback. Therefore, the related asset remains on the balance sheet and continues to be depreciated, and another financing obligation was recorded for the amount of $99.8 million, which is being amortized over the life of the lease.

C&S Supply Arrangement

On May 10, 2013, we entered into the C&S supply arrangement, under which C&S agreed to provide inventory supply services, including warehouse, transportation and inventory procurement, maintenance and purchasing services, for both the BI-LO and Winn-Dixie brand stores and, subject to certain exceptions, certain stores that we may acquire in the future. Under the C&S supply arrangement, C&S provides products to us at prices based on manufacturer’s prices, market conditions, availability and the aggregate volume of items that we purchase. Upon full implementation, the C&S supply arrangement replaces the existing inventory supply arrangements that the BI-LO brand stores have had with C&S, and requires us to exclusively purchase retail merchandise, other than direct store delivery items and pharmaceutical drugs, from C&S for resale at substantially all of our stores. The C&S supply arrangement, when fully implemented, will reduce our capital lease balance by approximately $23 million and will reduce our inventory by approximately $186 million (based upon inventory balances as of July 10, 2013). We project that, after full implementation, the new arrangements with C&S will result in cost reductions of approximately $35 million per year, consisting of reductions in the cost of inventory and supplies. We anticipate that these benefits will be realized on a run-rate basis by the end of fiscal year 2014. The term of the C&S supply arrangement is eight years.

Delhaize Transaction

On May 27, 2013, the Company entered into the Delhaize merger agreement with Delhaize to acquire substantially all of the store-related assets and assume the leases of 155 stores operating under the “Sweetbay,” “Harveys” and “Reid’s” banners plus ten previously closed locations, subject to regulatory approvals, which may require divestitures, for cash consideration of $265 million plus lease assumptions. The transaction is expected to

close in the first quarter of 2014, subject to regulatory approvals, which may require divestitures, and other customary closing conditions, including expiration or termination of the waiting period under the HSR Act. We intend to finance the Delhaize transaction with a combination of borrowings under the ABL facility and with cash on hand, including a substantial portion of the funds on deposit with the trustee for our senior secured notes from the Baldwin Sale/Leaseback.

Store Disposition

Piggly Wiggly Transaction

On September 4, 2013, we entered into an agreement with Piggly Wiggly Carolina Company to purchase 21 Piggly Wiggly operating supermarkets for a purchase price of approximately $35 million in cash. We expect this transaction to close in the fourth quarter of fiscal 2013.

Florida and Louisiana Store Sale Leaseback

Issuance of PIK Toggle Notes

On September 20, 2013, we issued $475 million aggregate principal amount of our PIK toggle notes. The net proceeds from the issuance of the notes were used to make an approximately $458 million distribution to Lone Star. Lone Star made a $15 million capital contribution on September 20, 2013.

Fiscal Periods

Beginning with fiscal 2012, our fiscal year ends on the last Wednesday in December. Prior to fiscal 2012, our fiscal year ended on the Saturday closest to December 31. The three day change in our fiscal 2012 year was not significant to our financial condition, results of operations, or cash flows. Fiscal 2010 and fiscal 2011 were each comprised of 52 weeks ended January 1, 2011, and December 31, 2011, respectively. Fiscal 2012 was comprised of 52 weeks ended December 26, 2012, as previously described. The first quarter of each fiscal year includes 16 weeks while the remaining quarters include 12 weeks each quarter.

Results of Operations

The 28-Week Period Ended July 10, 2013 as Compared to the 28-Week Period Ended July 14, 2012

The following discussion summarizes our operating results for the 28-week periods ended July 14, 2012 and July 10, 2013, including the results of operations and cash flows of Winn-Dixie after its March 9, 2012 acquisition date.

Net Sales

The following table summarizes our increase in comparable store sales between the 28-week period ended July 14, 2012 and the 28-week period ended July 10, 2013:


	28 weeks ended						Increase (Decrease)
	July 14, 2012			July 10, 2013			$			%
	(dollar amounts in millions)
Net sales	$	4,097.1		$	5,574.5		$	1,477.4
Other income		(28.9	)		(43.7	)		(14.8	)
Acquired Winn-Dixie stores(1)		—			(1,484.2	)		(1,484.2	)
Closed/new stores		(5.3	)		(13.3	)		(8.0	)
3 days ended July 14, 2012(2)		(90.8	)		—			90.8
3 days ended December 31, 2011(2)		28.4			—			(28.4	)

Comparable store sales	$	4,000.5		$	4,033.3		$	32.8			0.8	%

(1)

Winn-Dixie sales represent December 27, 2012 through March 8, 2013, which is comparable to the same preacquisition period in the prior fiscal year.

(2)

Amounts used to conform the prior year reported sales from a Saturday period close to a Wednesday period close.

The following table summarizes our increase in pro forma comparable store sales between the 28-week period ended July 14, 2012 and the 28-week period ended July 10, 2013:


	28 weeks ended						Increase (Decrease)
	July 14, 2012			July 10, 2013			$			%
	(dollar amounts in millions)
Net sales	$	4,097.1		$	5,574.5		$	1,477.4
Other income		(28.9	)		(43.7	)		(14.8	)
Acquired Winn-Dixie stores(1)		1,417.2			—			(1,417.2	)
Closed/new stores		(5.3	)		(13.3	)		(8.0	)
3 days ended July 14, 2012(2)		(90.8	)		—			90.8
3 days ended December 31, 2011(2)		28.4			—			(28.4	)

Pro forma comparable store sales	$	5,417.7		$	5,517.5		$	99.8			1.8	%

(1)

Winn-Dixie sales represent January 12, 2012 through March 9, 2012 comparable to the same post-acquisition period in fiscal 2013.

(2)

Amounts used to conform the prior year reported sales from a Saturday period close to a Wednesday period close.

Net sales for the 28 weeks ended July 10, 2013, increased as compared to the same period in the prior fiscal year due primarily to sales from acquired Winn-Dixie stores.

For the 28 weeks ended July 10, 2013, comparable store sales increased 0.8% as compared to the corresponding period in the prior fiscal year resulting from a 0.6% increase in average transaction size and a 0.2% increase in number of transactions.

The $14.8 million increase in other operating income was due primarily to other operating income from the acquired Winn-Dixie stores primarily from products and services that are not related to the sale of inventory (including, but not limited to, fees from lottery sales, revenue from recycling product packaging and fees related to customer money transfers).

Gross Profit

Gross profit was $1,508.6 million, or 27.1% of net sales, and $1,124.6 million, or 27.4% of net sales, for the 28 weeks ended July 10, 2013 and July 14, 2012, respectively. The $384.0 million increase in gross profit dollars was due primarily to the gross profit from the acquired Winn-Dixie stores. The gross profit as a percent of net sales decrease of 30 basis points is due primarily to pricing and promotion programs focused on driving sales.

Operating, General and Administrative Expenses

Operating, general and administrative expenses for the 28 weeks ended July 10, 2013 and July 14, 2012 was $1,308.3 million and $1,024.3 million, respectively. The $299.7 million increase for the 28 weeks ended July 10, 2013, as compared to the same period in the prior fiscal year was due primarily to costs related to the acquired Winn-Dixie stores, offset by a decrease in store labor and benefits in Winn-Dixie stores as these stores were integrated into the BI-LO store labor model, and income from the early termination of a software capital lease agreement.

The majority of corporate and support functions are in the process of being combined or restructured in order to provide integrated support to the combined store base. As the integration efforts are completed and one-time costs are incurred related to employee severance, retention, and relocation, we expect to experience additional reductions in certain corporate and support costs.

Merger and integration expense includes estimated employee severance costs of $3.0 million and $18.8 million, respectively, and professional fees and other costs of $10.1 million and $23.5 million, respectively, resulting from the headquarters relocation and the integration efforts. Severance resulting from the headquarters relocation will be paid as certain jobs are eliminated continuing through fiscal 2013.

Interest Expense

Interest expense for the 28 weeks ended July 10, 2013, and July 14, 2012 was $46.6 million and $39.5 million, respectively. The $7.1 million increase was attributable primarily to interest on $140 million of our senior secured notes that were issued in October 2012 and additional interest expense on the ABL facility. See “—Liquidity and Capital Resources,” “Description of Indebtedness—The ABL Facility” and “Description of Indebtedness—Our Senior Secured Notes.”

Income Tax (Benefit) Expense

Income tax (benefit) expense for the 28 weeks ended July 10, 2013 and July 14, 2012 was $(56.1) million and $2.2 million, respectively. The $58.3 million change is due primarily to our determination that approximately $159.6 million of our deferred tax assets previously subject to a valuation allowance is more likely than not realizable in either the current or future tax years as a result of 3 years of cumulative pre tax profit and management’s expectation of future profitability. This release of the valuation allowance is reflected as an approximate $76.9 million discrete deferred tax benefit recorded during the 28 weeks ended July 10, 2013, with the remaining deferred tax benefit recognized as a reduction of our effective income tax rate throughout the current fiscal year as such additional deferred tax assets are utilized to offset current expected taxable income. This amount was offset by increased state and federal taxes on taxable income. Our estimated effective tax rate for fiscal 2013, excluding the $76.9 million discrete deferred tax benefit, is 13.5%. We may not be able to fully offset federal or certain state taxable income with NOL carryforwards in the current or future years as the use of certain NOLs are limited.

We released the portion of the valuation allowance on our deferred tax assets for which there is sufficient positive evidence to conclude that such deferred tax assets will be realized. We maintain a valuation allowance against substantially all of our net deferred tax assets that are not currently more likely than not expected to be

realized due primarily to continued limitations on their use. The valuation allowance will be maintained until there is sufficient positive evidence to conclude that it is more likely than not that those net deferred tax assets will be realized.

We recognized deferred tax expense of $2.2 million during the 28 weeks ended July 14, 2012 resulting from a difference in the book and tax treatment of our trade name assets. This expense recognition did not have a cash effect.

Income (Loss) from Discontinued Operations

Loss (income) from discontinued operations was $(1.7) million and $1.2 million for the 28 weeks ended July 10, 2013 and July 14, 2012, respectively. We closed four stores during the 28 weeks ended July 10, 2013. Results of operations for three of these closed stores were classified as discontinued operations for all periods presented. Net sales from discontinued operations for the 28 weeks ended July 10, 2013 were $2.9 million and $7.2 million for the 28 weeks ended July 14, 2012. For the 28 weeks ended July 10, 2013, the loss on disposal of discontinued operations consisted primarily of $1.4 million of lease termination costs.

Net Income and Comprehensive Income

Net income was $208.0 million and $59.8 million for the 28 weeks ended July 10, 2013 and July 14, 2012, respectively, due to the items discussed above. Comprehensive income differs from net income for the 28 weeks ended July 10, 2013 due to the amortization of actuarial gains relating to the post-retirement benefit plan of Winn-Dixie.

Fiscal 2012 as Compared to Fiscal 2011

The following discussion summarizes our operating results for fiscal 2012 and fiscal 2011, including the results of operations and cash flows of Winn-Dixie from its March 9, 2012, acquisition date. As of December 26, 2012, we operated 689 stores compared to 207 stores as of December 31, 2011. The increase in stores was due to the acquisition of the Winn-Dixie stores on March 9, 2012.

Net Sales

The following table summarizes our increase in comparable store sales between fiscal 2011 and fiscal 2012:


							Increase (Decrease)
	Fiscal 2011			Fiscal 2012			$			%
	(dollar amounts in millions)
Net sales	$	2,779.2		$	8,632.9		$	5,853.6
Other income		(18.2	)		(63.3	)		(45.1	)
Acquired Winn-Dixie stores		—			(5,759.3	)		(5,759.3	)
Closed/new stores		(6.0	)		(0.2	)		5.8
3 days ended Dec. 31, 2011		(28.4	)					28.4

Comparable store sales (361 days)	$	2,726.7		$	2,810.0		$	83.4			3.1	%

The following table summarizes our increase in pro forma comparable store sales between fiscal 2011 and fiscal 2012:


							Increase (Decrease)
	Fiscal 2011			Fiscal 2012			$			%
	(dollar amounts in millions)
Net sales	$	2,779.2		$	8,632.9		$	5,853.6
Other income		(18.2	)		(63.3	)		(45.1	)
Acquired Winn-Dixie stores		6,830.1			1,347.4			(5,482.7	)
Closed/new stores		(18.4	)		(13.2	)		5.2
3 days ended Dec 31, 2011		(28.4	)		—			28.4

Pro forma comparable store sales (361 days)	$	9,544.4		$	9,903.7		$	359.4			3.8	%

Net sales increase was attributable primarily to sales from acquired Winn-Dixie stores and a 3.1% increase in BI-LO stores comparable store sales as compared to the prior fiscal year. Comparable store sales exclude sales from the acquired Winn-Dixie stores. Our comparable store sales for the prior fiscal year have been adjusted to reflect the current fiscal year change.

The 3.1% comparable store sales increase for BI-LO stores resulted from a 1.6% increase in average transaction size (driven by a 1.4% increase in average item value and a 0.2% increase in items per transaction) and a 1.5% increase in number of transactions. The BI-LO comparable store sales increase was due primarily to an increase in the average item value related to our product pricing and promotion initiatives, Food Lion (a competitor in certain markets in which we operate) store closures and our fuelperks! initiatives. In addition, our store remodeling initiative has contributed to the BI-LO stores sales increase, as BI-LO stores remodeled in the last year provided a comparable store sales increase of approximately 6.4% for fiscal 2012, compared with a 0.7% increase for the remainder of the BI-LO stores chain. 39 BI-LO store remodels were completed during fiscal 2012.

The acquired Winn-Dixie stores achieved a 4.0% comparable store sales increase as compared to the prior fiscal year, resulting from a 2.8% increase in average transaction size and a 1.2% increase in number of transactions. The Winn-Dixie comparable store sales increase was due primarily to our product pricing and promotion initiatives, as well as an increase in sales from our fuelperks! program and store remodels.

If the pro forma comparable store sales were included for 361 days of both years, pro forma comparable sales would be a 3.8% increase.

The $45.0 million increase in other operating income was due primarily to the acquired Winn-Dixie stores totaling $46.1 million, primarily from products and services that are not related to the sale of inventory (including, but not limited to, fees from lottery sales, revenue from recycling product packaging and fees related to customer money transfers).

Gross Profit

Gross profit was $2,350.4 million, or 27.2% of net sales, and $717.8 million, or 25.8% of net sales, for fiscal 2012 and fiscal 2011, respectively. The $1,632.6 million increase in gross profit dollars was due primarily to the gross profit from the acquired Winn-Dixie stores totaling $1,618.0 million. The gross profit excluding the acquired Winn-Dixie stores was $732.4 million, or 26.1% of net sales, as compared to $717.8 million, or 26.0% of sales, in the prior year due primarily to the increase in comparable store sales for the BI-LO stores from our merchandising initiatives. The gross profit rate also benefited from an adjustment to our merchandising plans and improved product mix, offset by increased costs for the BI-LO BONUSCARD rewards (due primarily to the expansion of our fuelperks! program in the Chattanooga market during the third quarter of fiscal 2011).

Operating, General and Administrative Expenses

Operating, general and administrative expenses for the 52 weeks ended December 26, 2012 and December 31, 2011 was $2,136.3 million and $621.6 million, respectively. The $1,515.0 million increase was primarily due to expenses of the acquired Winn-Dixie stores totaling $1,479.2 million and increases in merger and integration expense totaling $56.5 million partially offset by reductions in corporate and support cost and a reduction in bankruptcy related expenses.

Merger and integration expenses include estimated employee severance costs of $24.7 million and professional fees and other cost of $35.2 million.

Interest Expense

Interest expense was $76.9 million and $85.9 million in fiscal 2012 and fiscal 2011, respectively. The $9.0 million decrease was attributable primarily to the write-off of deferred financing costs totaling $17.4 million and a prepayment penalty of $5.8 million during fiscal 2011, partially offset by additional interest expense on the ABL facility and interest on $425 million of our senior secured notes issued in February 2011 and October 2012. During fiscal 2012, the write-off of deferred financing costs was $2.0 million.

Income Tax Expense

Income tax expense was $7.6 million and $4.1 million for fiscal 2012 and fiscal 2011, respectively.

For fiscal 2012, we recognized $3.6 million of state income tax expense due to expected taxable income generated within certain state jurisdictions. We are not able to fully offset the state taxable income with state NOL carryforwards as the use of the NOLs are limited. For fiscal 2011, we did not incur any income tax liability resulting from continuing operations.

We have established a full valuation allowance against substantially all of our net deferred tax assets. The valuation allowance will be maintained until there is sufficient positive evidence to conclude that it is more likely than not that the net deferred tax assets will be realized.

We recognized deferred tax expense of $4.2 and $4.1 million in fiscal 2012 and fiscal 2011, respectively, resulting from a difference in the book and tax treatment of our trade name assets. This expense recognition did not have a cash effect.

Loss from Discontinued Operations

Loss from discontinued operations was $26.5 million and $0.6 million for fiscal 2012, and fiscal 2011, respectively. The increase was due to the settlement of litigation related to Bruno’s Supermarkets, LLC, our former subsidiary, in the amount of approximately $27.1 million relating to Bruno’s withdrawal from its pension fund.

Net Income

Net income was $103.1 million and $5.7 million for fiscal 2012 and fiscal 2011, respectively, due to the items discussed above.

Comprehensive Income

Comprehensive income was $101.5 million and $5.7 million for fiscal 2012 and fiscal 2011, respectively, due to the items discussed above and changes in the post-retirement benefit obligation.

Fiscal 2011 as Compared to Fiscal 2010

The following discussion summarizes our operating results for fiscal 2011 as compared to fiscal 2010.

Net Sales

The following table summarizes our increase in comparable store sales between fiscal 2010 and fiscal 2011:


							Increase (Decrease)
	Fiscal 2010			Fiscal 2011			$			%
	(dollar amounts in millions)
Net sales	$	2,641.1		$	2,779.2		$	138.1
Other operating income		(17.1	)		(18.1	)		(1.0	)
Closed/new stores(1)		(6.6	)		—			6.6

Comparable store sales	$	2,617.4		$	2,761.1		$	143.7			5.5	%

(1)

Represents seven stores closed in the first quarter of fiscal 2010.

The $138.1 million increase in net sales was attributable to a 5.5% increase in comparable store sales ($143.7 million impact) due primarily to an increase in average transaction size. The comparable store sales increase was partially offset by a $6.6 million decrease due to seven store closings in the first quarter of fiscal 2010.

The 5.5% comparable store sales increase resulted from a 5.5% increase in average transaction size (driven by a 2.5% increase in items per transaction and a 3.0% increase in average item value). The number of transactions was flat from fiscal 2010 to fiscal 2011. Our comparable store sales benefited in 2011 from our merchandising initiatives including our fuelperks! program. This program was introduced in our Chattanooga market during the third quarter of fiscal 2011, and is now operating in all of our markets.

Our remodeling initiative also contributed to the sales increase, with 25 store remodels completed since June of 2010 (inception of the remodel program). The remodeled stores in the first year since grand reopening contributed 0.7% to our overall comparable store sales increase for fiscal 2011, with comparable store sales in the remodeled stores increasing 14.2% for fiscal 2011 and the remainder of the chain increasing 4.8% on a comparable store sales basis.

Gross Profit

Gross profit was $717.8 million, or 25.8% of net sales, and $685.2 million, or 25.9% of net sales for fiscal 2011 and fiscal 2010, respectively. The $32.6 million increase in gross profit dollars was due to the increase in net sales (gross profit effect of $35.8 million), partially offset by a $3.2 million rate impact due primarily to higher costs for our fuelperks! program, as well as higher distribution expenses (due primarily to higher fuel costs).

Operating, General and Administrative Expenses

Operating, general and administrative expenses for the 52 weeks ended December 31, 2011 and January 1, 2011 was $621.6 million and $616.2 million, respectively. The $5.4 million increase was primarily due to

expenses associated with our store and management incentive plan, overhead staff positions at our corporate office filled since the beginning of fiscal 2010, and higher credit and debit card fees (due to higher rates and higher sales volume), partially offset by reduction in depreciation and amortization expense due to certain assets becoming fully depreciated during the fiscal year and store labor efficiencies and favorable trends in our self-insured medical claims.

Interest Expense

Interest expense was $85.9 million and $62.4 million for fiscal 2011 and fiscal 2010, respectively. The $23.5 million increase was attributable primarily to one-time charges related to our February 2011 refinancing. Specifically, we incurred a $17.4 million charge on the write-off of deferred financing costs and original issue discount related to our previous debt facilities, as well as a $5.8 million prepayment penalty on the early payoff of our previous term loan.

Reorganization Gain

We recognized a $4.2 million reorganization gain in fiscal 2010. This gain resulted from a $14.1 million gain recognized on the discharge of liabilities and a $15.9 million gain attributable to lease rejections and assignments, partially offset by $21.1 million of professional fees and $4.7 million of lease rejection expense, in connection with our emergence from bankruptcy in fiscal 2010. The reorganization was completed in fiscal 2010, and accordingly, no reorganization gain or loss was recognized in fiscal 2011.

Income Tax Expense

For both fiscal 2011 and fiscal 2010, we did not incur any income tax liability resulting from current operations.

We recognized deferred tax expense of $4.1 million in fiscal 2011 and fiscal 2010 resulting from a difference in the book and tax treatment of our trade name asset. This expense recognition did not have a cash effect. In fiscal 2010, we also recognized a $0.9 million benefit related to a federal income tax carryback which had a cash effect (no such benefit in fiscal 2011).

Discontinued Operations

The results of non-operating BI-LO properties which were closed or sold in connection with our purchase by Lone Star in 2005 as well as any costs associated with our former Bruno’s subsidiary are classified as discontinued operations in our financial statements.

We reported $0.6 million of expense associated with discontinued operations in fiscal 2011 compared to a gain on discontinued operations of $7.5 million in fiscal 2010. The expense in fiscal 2011 related primarily to costs associated with Bruno’s. The gain in fiscal 2010 was due primarily to bankruptcy-related gains on lease rejections of store properties that were classified as discontinued operations.

Net Income

Net income was $5.7 million for fiscal 2011, compared to net income of $15.0 million for fiscal 2010, due to the items discussed above.

Quarterly Results of Operations

The following tables set forth selected unaudited quarterly consolidated statement of operations data for the six most recent quarters. The information for each of these quarters has been prepared on the same basis as the audited consolidated financial statements included in this prospectus and, in the opinion of management, includes all adjustments necessary for the fair presentation of the results of operations for such periods. This data should be read in conjunction with the historical audited consolidated financial statements and the unaudited condensed consolidated financial statements and the related notes included in this prospectus. These quarterly operating results are not necessarily indicative of our operating results for any future period.


	Quarters Ended
	April 21, 2012 (16 Weeks)			July 14, 2012 (12 Weeks)			October 6, 2012 (12 Weeks)			December 26, 2012 (12 Weeks)			April 17, 2013 (16 Weeks)			July 10, 2013 (12 Weeks)
	(In Millions of Dollars)
Statement of Operations Data:
Net sales	$	1,745.2		$	2,351.9		$	2,270.6		$	2,265.2		$	3,221.1		$	2,353.4
Gross profit(1)		479.1			645.5			616.3			609.5			883.9			624.7
Income from continuing operations		22.6			36.0			21.8			49.2			176.5			33.2
Income (loss) from discontinued operations		(0.1	)		1.2			(27.3	)		(0.3	)		(2.2	)		0.5
Net income (loss)	$	22.6		$	37.2		$	(5.5	)	$	48.9		$	174.3		$	33.7

Reconciliation of EBITDA and EBITDAR:
Net income (loss)	$	22.3		$	37.2		$	(5.3	)	$	48.9		$	174.4		$	33.6
Plus:
Depreciation and amortization expense(2)		20.6			23.7			23.6			30.2			36.3			28.2
Total interest expense		22.2			17.4			18.6			18.7			27.1			19.5
Income tax provision (benefit)		1.3			0.9			2.5			2.9			(66.7	)		10.6
(Income) loss from discontinued operations		0.1			(1.2	)		27.3			0.3			2.2			(0.5	)
EBITDA(3)		66.5			78.0			66.7			101.0			173.3			91.4
Plus:
Charges related to bankruptcy proceedings and corporate reorganization(4)		2.2			1.3			0.6			0.1			—			—
Loss from closed stores		0.4			0.6			0.6			0.6			0.6			0.2
(Gain) on assets disposals		(0.1	)		(0.1	)		(0.1	)		(0.6	)		(0.6	)		0.8
Impairment expense		—			—			—			—			—			—
Franchise taxes		0.2			0.1			0.1			0.2			0.1			0.2
Fees and expense reimbursement to our sponsor(5)		0.3			0.3			0.9			1.0			1.2			0.6
Merger and integration costs		23.8			18.6			11.7			5.8			8.0			5.1
Other nonoperating (income)		—			—			—			(10.3	)		(7.3	)		2.8
Adjusted EBITDA(3)		93.3			98.8			80.5			97.8			175.3			101.1
Plus:
Rent expense(6)		28.1			46.7			46.5			45.2			62.4			46.7
Adjusted EBITDAR(3)	$	121.4		$	145.5		$	127.0		$	143.0		$	237.7		$	147.8
Store Data:
Pro forma comparable store sales(7) increases (%)		3.1			3.5			4.1			4.5			3.0			0.1

(1)

Gross profit is defined as total revenues less merchandising costs, including warehousing and transportation expenses.

(2)

Includes depreciation and amortization related to acquired warehouse and transportation assets, which is a component of cost of sales on the condensed consolidated statements of operations.

(3)

See footnote 9 to “Summary—Summary Selected Historical and Pro Forma Financial and Other Data” for our definition of adjusted EBITDA and adjusted EBITDAR and why we consider them useful.

(4)

Includes legal and other costs incurred to defend litigation related to Bruno’s Supermarkets, LLC (a former subsidiary).

(5)

During fiscal 2012, $3.8 million of fees and expenses paid to our sponsor was included in the merger and integration costs.

(6)

Includes rent expense relating to acquired warehouse and transportation facilities and equipment.

(7)

Pro forma comparable store sales gives effect to the acquisition of Winn-Dixie as it if had taken place on the first day of fiscal 2011.

Liquidity and Capital Resources

Our primary liquidity needs on an ongoing basis are to fund our general working capital requirements and our capital expenditures. Currently, our primary capital resource is net cash flow generated from our operations and borrowing availability under the ABL facility.

As of July 10, 2013, we had $520.7 million of liquidity, comprised of $469.0 million of borrowing availability under the ABL facility and $51.7 million of cash and cash equivalents. As of July 10, 2013, we had $83.5 million of restricted cash held by the trustee for our senior secured notes, which is anticipated to be released upon purchases of permitted replacement assets as defined in the indenture governing our senior secured notes. See “Description of Indebtedness—Baldwin Sale/Leaseback.” We believe that cash generated from operations and borrowings under the ABL facility will be sufficient to meet our working capital, capital expenditures and financing requirements for the remainder of fiscal 2013 and beyond.

As indicated above, in connection with the acquisition of Winn-Dixie on March 9, 2012, we entered into the $700 million ABL facility with a five-year term to replace our prior $100 million revolving credit facility and to fund a portion of the acquisition price. At July 10, 2013, we had approximately $469.0 million of borrowing ability, net of $100.0 million of outstanding borrowings and $131.0 million in outstanding letters of credit under the ABL facility.

On February 3, 2011, and October 16, 2012, we issued $285.0 million and $140.0 million, respectively, of our senior secured notes due in 2019. We used the net proceeds from the February 3, 2011 notes and cash on hand to repay the $192.5 million balance of our previous term loan, pay a dividend of $76.0 million to our sponsor, pay $7.7 million of deferred financing costs associated with the refinancing and pay a prepayment penalty of $5.8 million on the early payment of our previous term loan. We used the net proceeds from the October 26, 2012 notes and cash on hand to pay a dividend of $145.0 million to our sponsor and to pay fees and expenses related to the offering.

Cash Flow Information

The 28-week Period Ended July 10, 2013 as Compared to the 28-Week Period Ended July 14, 2012

The table below sets forth certain condensed consolidated statements of cash flows data for the 28 weeks ended July 14, 2012 and July 10, 2013 (in millions):


	28 weeks ended
	July 14, 2012			July 10, 2013			Change
Cash provided by (used in):
Operating activities	$	200.6		$	170.5		$	(30.1	)
Investing activities	$	(493.3	)	$	(131.2	)(1)	$	362.1
Financing activities	$	307.4		$	(39.1	)(1)	$	(346.5	)

(1)

See Note 12 to the consolidated financial statements included elsewhere in this prospectus.

Operating activities

Net cash provided by operating activities for the 28 weeks ended July 10, 2013 and July 14, 2012 was due primarily to cash flows from operating income as a result of the acquired Winn-Dixie stores, offset by changes in working capital.

Investing activities

Net cash used in investing activities for the 28 weeks ended July 10, 2013 was due primarily to the $83.5 million of Baldwin Sale/Leaseback proceeds held by the trustee for our senior secured notes and $50.7 million of purchases of property and equipment. The cash that is held by the trustee for our senior secured notes will be released upon purchases of permitted replacement assets as defined in the indenture governing our senior secured notes.

Net cash used in investing activities for the 28 weeks ended July 14, 2012 was due primarily to the acquisition of Winn-Dixie for $416.7 million and the purchase of property and equipment for $76.8 million.

Financing activities

Net cash used in financing activities for the 28 weeks ended July 10, 2013 was due primarily to net repayments under the ABL facility and $22.6 million in payments on obligations under capital leases and other financing obligations, offset in part by $99.8 million of other financing proceeds related to the Baldwin Sale/Leaseback and $8.7 million in net proceeds from financed insurance policies.

Net cash used in financing activities for the 28 weeks ended July 14, 2012 was due primarily to the acquisition of Winn-Dixie, which was financed primarily by an additional capital contribution from Lone Star of $275.0 million and an initial draw on the ABL facility of $260.0 million, offset by decrease in cash overdraft of $29.4 million, $20.4 million in payments on obligations under capital leases and other financing obligations, and $17.8 million in deferred financing costs incurred in connection with the ABL facility.

Fiscal 2012 as Compared to Fiscal 2011

The following discussion summarizes information related to our cash flow for fiscal 2011 as compared to fiscal 2012. The table below sets forth certain consolidated statements of cash flows data for fiscal 2011 and fiscal 2012 (in millions):


	Fiscal
	2011			2012			Change
Cash provided by (used in):
Operating activities	$	89.9		$	277.7		$	187.8
Investing activities	$	(46.9	)	$	(555.0	)	$	(508.1	)
Financing activities	$	(16.8	)	$	282.2		$	299.0

Operating activities

The $187.8 million increase in cash provided by operating activities was due primarily to additional cash flows from improved operating income as a result of the acquired Winn-Dixie stores and net changes in working capital items.

Investing activities

The $508.1 million increase in net cash used in investing activities was due primarily to the acquisition of Winn-Dixie for $416.7 million, as well as higher capital spending in fiscal 2012 totaling $140.9 million, of which

$68.0 million was related to the BI-LO capital spending primarily for store remodels, with the remaining $72.9 million related to Winn-Dixie capital expenditures, primarily store remodel activity.

Financing activities

The acquisition of Winn-Dixie was financed primarily by an additional capital contribution from Lone Star of $275.0 million and an initial draw on the ABL facility of $260.0 million. In October 2012, we also issued an additional $140.0 million of our senior secured notes. Cash outflows during fiscal 2012 included $35.0 million in net repayments on the ABL facility, $17.3 million financing costs related to the ABL facility, $37.2 million payments on capital lease and other financing obligations and $305.0 million in distributions to our sponsor.

The financing cash activity in fiscal 2011 was related primarily to the February 2011 refinancing. During the first quarter of fiscal 2011, we issued $285.0 million of our senior secured notes. The proceeds from these notes were used to repay the $192.5 million balance of our previous term loan, pay a distribution of $76.0 million to Lone Star, and pay $7.7 million of financing costs associated with the refinancing. Additional cash outflows for financing activities in fiscal 2011 were related primarily to $21.5 million of capital lease and other financing obligations payments.

Capital Expenditures

For fiscal 2012 and fiscal 2011, capital expenditures were $140.9 million and $47.7 million, respectively. The $93.2 million increase in capital expenditures was related primarily to a $72.9 million increase in spending for Winn-Dixie and a $20.3 million increase for the BI-LO remodeling program. During fiscal 2012, 39 BI-LO store remodels and 7 Winn-Dixie store remodels were completed, and we opened two new Winn-Dixie stores.

In fiscal 2013, we expect capital expenditures to total approximately $130.0 million. Approximately $40.0 million is related to new and remodeled stores and approximately $90.0 million is related to technology and other capital goods.

Off-Balance Sheet Arrangements

Other than our operating leases and outstanding letters of credit, we are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

The table below illustrates our significant contractual obligations and other commercial commitments, based on year of maturity or settlement, as of December 26, 2012. These obligations and commitments do not include obligations under the PIK toggle notes, the C&S supply arrangement, the Baldwin Sale/Leaseback or the Delhaize transaction:


	Total		Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years
	(dollar amounts in millions)
Long-term debt(1)	$	425.0		—		—		—	$	425.0
Interest on long term debt(2)(2)		317.2		47.0		141.1		121.4		7.7
Capital lease obligations		151.3		42.5		59.2		28.7		20.9
Other financing obligations(3)		314.6		31.4		62.5		61.9		158.8
Operating lease obligations		1,371.8		237.7		404.9		284.5		444.7
Retirement Plans(4)		12.9		1.2		2.5		2.5		6.7
Other(5)		32.0		32.0		—		—		—

Total contractual obligations	$	2,624.8	$	391.8	$	670.2	$	499.0	$	1,063.8

(1)

The amounts in the table above are based on our prior capitalization, which was in place as of December 26, 2012. We estimate future interest payments based on interest rates and applicable margin at December 26, 2012. On September 20, 2013, we issued $475 million aggregate principal amount of our PIK toggle notes. The principal amount is payable on September 15, 2018. Total interest payments on the PIK toggle notes as of the date of issuance, are $40.4 million, $41.0 million, $41.0 million, $41.0 million and $41.0 million which are due during fiscal 2014, 2015, 2016, 2017 and 2018, respectively, based on the initial interest rate at closing. The foregoing interest payment amounts in respect of the PIK toggle notes are not included in the table above.

(2)

Reflects the interest rate of 9.25% on the senior secured notes and interest and fees on the ABL facility through the maturity of the notes, assuming $131.4 million of letters of credit, $150 million in outstanding borrowings and $418.6 million thereunder of unused commitment. Excludes amortization of debt issuance costs.

(3)

The other financing obligation amounts include interest but do not include principal amortization on land lease obligations that will not require future cash payments.

(4)

Payments for retiree plans are based on actuarial projections related to our post-retirement benefits. See Note 11 to the consolidated financial statements included elsewhere in this prospectus.

(5)

Include agreements to purchase goods and services made in the normal course of business that are enforceable and legally binding on us. Our purchase obligations consist predominantly of contracts to purchase certain inventory items. For a discussion of our supply agreements with C&S, see “Business—Sources of Supply.”

Critical Accounting Policies

Our financial statements are prepared in accordance with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. We have provided a description of all of our significant accounting policies in Note 1 to our audited consolidated financial statements included elsewhere in this prospectus. We believe that of these significant accounting policies, the following may involve a higher degree of judgment or complexity.

Fair Value Determination of Acquired Assets and Assumed Liabilities

The fair value estimate of the Winn-Dixie assets acquired and liabilities assumed and the allocation of the purchase price to the net assets acquired has been determined by management with the assistance of independent valuation specialists. We estimate the fair value of assets and liabilities as required, including intangible assets, based on various methods, including market prices, discounted cash flows, and other present value valuation techniques. The allocation of the purchase price to the net assets acquired and the fair value of assets and liabilities acquired requires management to use numerous estimates and assumptions.

Vendor Allowances

We receive allowances from many of the vendors whose products are sold in our stores. Allowances are received for a variety of merchandising activities, including placement of the vendor’s products in our advertising, placement of vendor products in prominent locations, introduction of new products, exclusivity rights in certain categories of products, and temporary price reductions offered by vendors. We also receive vendor funds associated with buying activities, such as volume purchase rebates and rebates for purchases made during specific periods.

We record a receivable for vendor allowances for which we have fulfilled our contractual commitments but have not received payment from the vendor. When payment for vendor allowances is received prior to fulfillment of contractual terms or before the programs necessary to earn such allowances are initiated, we record such amounts as “unearned vendor allowances” or “vendor funds received in advance,” respectively, which are classified within current and long-term liabilities. Once all contractual commitments have been met, we record vendor allowances as a reduction of the cost of the related inventory items. Accordingly, when the inventory is sold, the vendor allowance is recognized as a reduction of merchandise costs.

The amount and timing of recognition of vendor allowances, as well as the amount of vendor allowances remaining as “unearned vendor allowances” or “vendor funds received in advance” requires management judgment and estimates. Management determines these amounts based on estimates of current year purchase volume using forecasted and historical data and review of average inventory turnover.

Long-Lived Assets

We review our long-lived assets, such as property, plant and equipment and intangible assets subject to amortization, for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. When such events occur, we compare the carrying amount of the asset to our best estimate of the net undiscounted cash flows expected to result from the use and eventual disposition of the asset. If this comparison indicates that there is impairment, we record an impairment loss for the excess of net book value over the fair value of the impaired asset. We estimate the fair value based on the best information available, including prices for similar assets and the results of other valuation techniques.

Factors such as changes in economic conditions and changes in operating performance significantly affect our judgments and estimates related to the expected useful lives and cash flows of long-lived assets. Adverse changes in these factors could cause us to recognize a material impairment charge.

Intangible Assets

We report intangible assets in accordance with ASC Topic 350, “Intangibles—Goodwill and Other,” which requires that an intangible asset with indefinite useful economic life not be amortized, but instead be separately tested for impairment at least annually using a fair-value approach. Intangible assets subject to amortization are reviewed for impairment whenever events or circumstances indicate the carrying value of an asset may not be recoverable. The evaluation of possible impairment of intangible assets is affected by factors such as changes in economic conditions and changes in operating performance. These factors could cause us to recognize a material impairment charge as we assess the ongoing expected cash flows and carrying amounts of intangible assets.

Self-Insurance Reserves

We self-insure for certain insurable risks, primarily workers’ compensation, business interruptions, general liability, automobile liability and property losses, as well as employee medical benefits. We obtain insurance coverage for catastrophic property and casualty exposures, as well as risks that require insurance by law or contract. We estimate the liabilities related to self-insured programs with the assistance of an independent actuary. The accounting estimates for self-insurance liabilities include both known and incurred but not reported insurance claims and reflect certain actuarial assumptions and management judgments regarding claim reporting and settlement patterns, judicial decisions, legislation, economic conditions and the effect of our Chapter 11 filings. Unanticipated changes in these factors may materially affect our results of operations and financial position.

Inventory Valuation

We value inventories at the lower of cost or market. For a majority of grocery and general merchandise inventories, cost is determined using the retail method of accounting. Under the retail method of accounting, the

current cost of inventories is calculated by applying a cost-to-retail ratio to the current retail value of inventories. The cost of pharmacy inventories is determined on the FIFO basis. The cost of distribution center inventories is determined at average cost. The cost of fresh products is determined based on weighted average cost.

Our inventory balances consist primarily of finished goods. Inventory costs include the purchase price of the product and freight charges to deliver the product, and are net of certain consideration received from vendors.

For fresh products, physical inventory counts are taken periodically and at the end of the fiscal year. For nonperishable products, physical inventory counts are taken on a cycle basis. We record an estimated inventory shrinkage reserve for the period between each store’s last physical inventory and the balance sheet date.

Under the retail method, the valuation of inventories, and the resulting gross profits, is determined by applying a cost-to-retail ratio for various groupings of similar items to the retail value of inventories. Inherent in the retail inventory method calculations are certain management judgments and estimates which could impact the ending inventory valuation at cost, as well as the resulting gross profits. Our cost-to-retail ratios contain uncertainties as the calculation requires management to make assumptions and apply judgment regarding inventory mix, inventory spoilage and shrink.

Leases

We lease equipment and buildings under various operating and capital leases. Leases are classified as capital leases or operating leases based upon the criteria established by GAAP. For leases determined to be capital leases, an asset and liability are recognized at the lower of the fair value of the leased asset or the present value of the minimum lease payments during the lease term. Such assets are amortized using the straight-line method over the shorter of the lease term or the estimated useful life of the asset taking into account the residual value, with amortization included in depreciation and amortization expense. Leases that do not qualify as capital leases are classified as operating leases, and the related rental payments are expensed on a straight-line basis (taking into account rent escalation clauses and rent holiday periods at the inception of the lease) over the lease term. Payments made to us representing incentives to enter into a new lease are recorded as deferred rent income and amortized to income on a straight-line basis over the term of the lease. For purposes of expensing rental payments, the lease term commences when we become obligated under the terms of the lease agreement, and includes option renewal periods where failure to exercise such options would result in an economic penalty such that renewal appears, at the inception of the lease, to be reasonably assured.

Determining whether a lease is a capital or an operating lease requires judgment on various aspects, including the fair value of the lease asset, the economic life of the leased asset, whether or not to include renewal options in the lease term and determining an appropriate discount rate to calculate the present value of the minimum lease payments.

Income Taxes

Deferred income taxes represent the future net tax effects resulting from temporary differences between the financial statement and tax bases of assets and liabilities, including net operating loss, or NOL, carryforwards, using the enacted tax rates in effect for the year in which the differences are expected to be settled or realized. Valuation allowances are established when necessary to reduce deferred tax assets to the amount that will more likely than not be realized. The calculation of our tax liabilities requires management judgment and estimates, particularly as it relates to determination of valuation allowances.

Recent Accounting Pronouncements

In June 2011, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2011-05, which is an update to Topic 220, “Comprehensive Income”. The update eliminates the option of

presenting the components of other comprehensive income as part of the statement of changes in stockholders’ equity. Instead, comprehensive income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. The Company adopted the new standard by presenting the components of other comprehensive income in the Company’s Statement of Operations and Comprehensive Income.

In July 2012, the FASB issued ASU 2012-02, “Intangibles-Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment”. This ASU states that an entity has the option first to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. This allows for the same evaluation as described in ASU 2011-08 for “Intangibles—Goodwill and Other”. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if an entity’s financial statements for the most recent annual or interim period have not yet been issued. The Company’s adoption of ASU 2012-02 as of December 26, 2012, did not have any impact on the Company’s Consolidated Financial Statements.

Controls and Procedures

Subsequent to the completion of our financial statements for and as of the 28 weeks ended July 10, 2013, we identified a classification error related to the cash flow presentation of the Baldwin Sale/Leaseback. This error had no impact on net cash flow, and did not affect the accompanying balance sheets, statements of operations and comprehensive income, or statements of changes in membership interests. In connection with the error, a material weakness in our internal controls over financial reporting was identified based on a lack of sufficient financial presentation analysis. A “material weakness” is a deficiency in internal controls such that there is a reasonable possibility that a material misstatement of our financial statements will not be prevented or detected in a timely basis. Since the time the material weakness described above was identified, we have modified our processes to address the material weakness in internal controls. Specifically, we have modified the design of our internal accounting memorandums to enhance our financial presentation analysis. We expect that this material weakness will be remediated before the end of the 40-week period ending October 2, 2013. However, there is no guarantee that we will be able to successfully remediate this material weakness by such time or at all, or that additional material weaknesses will not be identified in the future.

Quantitative and Qualitative Disclosure About Market Risks

BUSINESS

Our Company

We are a leading supermarket operator with a strong history in the Southeastern United States and a non-union work force. As of July 10, 2013, we operated 685 stores serving many key metropolitan areas in Florida, Georgia, Alabama, Louisiana, Mississippi, South Carolina, North Carolina, and Tennessee under the “Winn-Dixie”, “BI-LO”, “Super BI-LO”, and “BI-LO at the Beach” supermarket banners. We believe we are the sixth largest conventional supermarket operator in the United States based on number of stores and the second largest conventional supermarket operator in the eight states in which we operate based on aggregate number of stores in these states. We strive to differentiate ourselves from our competitors by providing our customers with a value proposition that combines conveniently located and well-maintained stores (averaging 40,000-50,000 square feet), with a strong focus on customer service, high-quality food products, and prices that are competitive with other supermarket operators in our markets. For the fiscal year ended December 26, 2012, we generated approximately $8.6 billion of net sales, approximately $103.1 million of net income (including approximately $7.6 million of tax expense) and approximately $370.4 million of adjusted EBITDA. For the 28 weeks ended July 10, 2013, we generated approximately $5.6 billion of net sales, approximately $208.0 million of net income (including approximately $56.1 million of tax benefits) and approximately $276.4 million of adjusted EBITDA. For a reconciliation of adjusted EBITDA to net income and a discussion of why we consider it useful, see “Summary—Summary Selected Historical and Pro Forma Financial and Other Data.”

We have experienced substantial growth in recent years through a combination of organic operating initiatives, supported by our operational improvements, and acquisitions. We have achieved strong financial results during this period, as evidenced by the following:

•

Through July 10, 2013, we have achieved 18 consecutive quarters of positive pro forma comparable store sales growth.

•

We have achieved average pro forma comparable store sales growth of 3.1% over the last six consecutive quarters.

•

We have increased our net income and adjusted EBITDA from fiscal year 2008 when we had a net loss of approximately $88.8 million and adjusted EBITDA of approximately $142.4 million, to net income and adjusted EBITDA of approximately $103.1 million and $370.4 million, respectively, for fiscal 2012. For a reconciliation of adjusted EBITDA to net income and a discussion of why we consider it useful, see “Summary—Summary Selected Historical and Pro Forma Financial and Other Data.”

We operate a network of attractive, well-maintained stores and seek to locate our stores in high-traffic areas that are in close proximity to residential neighborhoods. We operate our business as a single unit with a single management team, but we operate under different banners in different markets. We generate revenues by selling an assortment of grocery products, including dry and canned groceries, frozen items, produce, dairy, meat and seafood, bread and baked goods, and other fresh product offerings. In addition, a majority of our stores include pharmacies.

anticipate we will incur modest additional costs through completion of integration. Consistent with our strategy of reducing operating costs and reinvesting these savings in the business to stimulate customer traffic, we are investing a portion of these cost savings in merchandising and pricing initiatives to drive sales.

Approximately 83% of our stores are located in areas where, based on market share data compiled by Metro Market Studies, we rank as the number one or number two conventional supermarket operator. We believe our strong market position is the result of a long operating history, strong brand recognition, innovative marketing campaigns and a merchandising strategy that caters to the needs of local communities. When customers choose conventional supermarket operators, such as BI-LO and Winn-Dixie, over supercenters and warehouse clubs, we believe they do so based on their desire for an enhanced food shopping experience, including convenience, higher quality food items, compelling promotional value and overall service. We believe we have successfully defended our leading market positions, as evidenced by our positive pro forma comparable store sales growth for 18 consecutive quarters through the second quarter of fiscal 2013. The following table shows our market position among conventional supermarket operators in the top eight major metropolitan markets we serve, as defined by our number of stores.


Market	Banner	Conventional Supermarket Operator Rank(1)		# of Stores(2)
Miami, FL	Winn-Dixie		2		83
Greenville/Spartanburg/Anderson, SC	BI-LO		1		46
Jacksonville, FL	Winn-Dixie		2		44
Tampa-St. Petersburg, FL	Winn-Dixie		3		36
Orlando, FL	Winn-Dixie		2		31
Charlotte, NC	BI-LO		3		27
New Orleans, LA	Winn-Dixie		2		26
Chattanooga, TN	BI-LO		1		23

(1)

Source: Metro Market Studies April 2013. Greenville/Spartanburg/Anderson data is weighted based on store count.

(2)

Does not reflect the disposition of seven leased stores to Publix Super Markets, Inc. expected to close in the fourth quarter of fiscal 2013. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Events.”

We are committed to providing our customers with a superior shopping experience, through a focus on delivering “Savings without Sacrifice,” which emphasizes our conveniently located stores, great customer service

and high-quality fresh food offerings at competitive prices. We support our customer value with our loyalty programs, which provide cardholders with instant discounts and promotions on items throughout the store and other rewards.

Our loyalty programs now include over 15 million active card holders, with 76.5% of our net sales effected with one of our loyalty cards during the first 28 weeks of fiscal 2013. Our loyalty card holders shop with us more often and spend more than non-card holders. In the first 28 weeks of fiscal 2013, the average dollar value for loyalty card holder transactions was 176% higher than the average dollar value of non-card holder transactions. These programs provide us with valuable customer data which we use to identify our customers’ shopping patterns, preferences and demographics. This data allows us to customize merchandising and promotions, develop targeted marketing initiatives, and optimize inventory management.

We believe our loyalty card programs are enhanced by their connection to our fuelperks! program. In order to participate in fuelperks!, customers must use their BONUSCARD or Customer Rewards Card. The fuelperks! program was fully implemented throughout all banners by the end of 2012. Currently, approximately 3.0 million households participate in our fuelperks! program.

We believe that our BONUSCARD, Customer Rewards Card, fuelperks! and $4/$10 generic Rx program have fostered increased customer loyalty, which we believe has been partially responsible for our strong financial results.

Our Competitive Strengths

We believe the following key competitive strengths contribute to our success:

•

expected population growth above the national average;

•

a business-friendly environment with low relative operating costs; and

•

an established competitive landscape, including relative saturation of supercenters.

offering attractive tax incentives for businesses that build in or relocate to these states. We believe the Southeast also offers an attractive labor market for us, with lower average wage rates than the national average and a generally non-union work force. Unlike the employees of many supermarket operators in other regions of the U.S., none of our employees are covered by a collective bargaining agreement.

Supported by fuelperks!, our loyalty card programs now include over 15 million active card holders. The average dollar value of loyalty card transactions was 176% greater than the average dollar value of transactions by non-card holders in the first 28 weeks of fiscal 2013. We use our loyalty card programs to track customer sales transaction data in a frequent shopper database, which enables us to target our promotions to specific customer groups. Supported by these initiatives, we have experienced positive pro forma comparable store sales growth for 18 consecutive quarters through the second quarter of fiscal 2013. Additionally, our last six quarters comparable store sales growth on a two year stack basis averaged 6.6%, significantly outpacing that of our peers, which averaged 1.7% over this timeframe based on publicly available information.

Strong Free Cash Flow Generation and Minimal Contingent Liabilities. Our business model relies on controlling costs, combined with a disciplined approach to capital expenditures and working capital controls to drive strong operating profits and free cash flow. We have few closed store lease liabilities and, as a non-union operator, unlike many of our competitors in the grocery industry, we benefit from a lack of burdensome and often underfunded multi-employer pension plan obligations. We believe our cash flow generation is a competitive advantage that will allow for strong operational and financial flexibility.

•

18 consecutive quarters of positive pro forma comparable store sales growth;

•

the expansion, prior to our Winn-Dixie acquisition, of BI-LO’s adjusted EBITDA margins, which increased from 5.6% in fiscal 2010 to 6.0% in fiscal 2011. For a reconciliation of adjusted EBITDA margin and a discussion of why we consider it useful, see “Summary—Summary Selected Historical and Pro Forma Financial and Other Data”;

•

an expansion of our store base by 478 operating stores since the beginning of fiscal 2011, through the identification and execution of the Winn-Dixie acquisition; and

•

the realization of significant cost savings and synergies from the acquisition of Winn-Dixie.

Our Strategy

We plan to pursue strategies that will allow us to maintain our strong financial performance and further expand our market share and store base, including:

prices and they are generally more profitable to us than their branded counterparts. Private label products represented 16.9% of our sales volume and 20.8% of our unit volume for the first 28 weeks of fiscal 2013. We employ a multi-tiered private label strategy, through which we seek to satisfy the needs of customers seeking premium, standard, or value products.

The U.S. Supermarket Landscape

According to Progressive Grocer, sales at supermarkets increased 3.1% in 2012 to $602.6 billion. This growth was partially driven by moderate food retail price inflation. The Consumer Price Index (CPI) for food at home increased 1.3% in 2012, down from a 6.0% increase in 2011. Over the past five years, CPI for food at home has grown by approximately 3% annually, and the U.S. Department of Agriculture is forecasting food at home inflation of 1.5% to 2.5% in 2013 and 2.5% to 3.5% in 2014.

According to Progressive Grocer, conventional supermarkets accounted for 67% of total supermarket sales in 2012, having grown their share from 65% of total U.S. supermarket sales in 2009. The U.S. grocery industry also includes supercenters, convenience stores, alternative format stores, including wholesale clubs, dollar or deep discount stores, and online grocers. Conventional supermarkets continue to serve as the predominant outlet for food retail sales. Supercenters, which experienced significant growth in grocery sales in the late 1990’s and early 2000’s, represented 25% of food retail sales in 2012. In addition, natural / organic stores and dollar stores have seen significant growth in number of stores. Conventional supermarket operators are executing a variety of strategies in order to compete more effectively and maintain market share. Several conventional supermarket operators are experimenting with new formats by increasing services, including the addition of pharmacies, gasoline pumps, and other ancillary services in an effort to increase customer traffic. Other common themes among grocery retailers are reducing costs of operations, renewing focus on customer service, and offering specialized marketing programs to increase customer loyalty.

Employees

As of September 6, 2013, we employed approximately 58,000 employees, of whom approximately 20,000 are employed on a full-time basis and 38,000 on a part-time basis. Approximately 97% of our employees are supermarket personnel. None of our employees are covered by a collective bargaining agreement. Management considers employee relations to be good. We value our employees and believe that employee loyalty and enthusiasm are key elements of our operating performance.

Competition

We operate in a highly competitive industry generally characterized by high inventory turnover and narrow profit margins. We compete based on product quality, variety and price, as well as location, service, convenience and store condition. We compete directly with national, regional and local supermarket chains in addition to independent supermarkets. We also compete with supercenters and other non-traditional supermarket retailers such as dollar-discount, drug, convenience, natural / organic and warehouse club stores. Beyond food retailers, we also face competition from restaurants and fast-food chains due to consumers purchasing and consuming food away from home. The number and type of our competitors vary by market area. Our primary competitors include Publix Supermarkets, Inc., Walmart, Inc., Food Lion, LLC, Ingles Markets Inc. and Kroger Co. We believe the competitive landscape in our markets is well established.

We expect our competition to continue to apply pricing and other competitive pressures as they strive to grow their market share in our market areas. Some of our larger competitors may have an advantage over us through stronger buying power and more significant capital resources. See “Risk Factors—Risks Related to Our Business—We operate in a highly competitive industry with low profit margins, and actions taken by our competitors can negatively affect our results of operations.”

Merchandising

Our supermarkets provide a wide variety of high quality nationally advertised food and non-food products, local specialties and private label items for customers seeking premium products, products comparable to national brands or value brands. In addition, we offer services such as full-service in-store butchers, home meal replacement items, delicatessens, bakeries, organic products, produce departments, floral departments, greeting cards and a wide variety of health and beauty care items. We believe our merchandising strategy has created strong brand recognition in the markets in which we operate. Additionally, we drive customer loyalty through our loyalty programs, which provide incentives through price discounts and special promotions, including discounts on gasoline prices at certain gas stations in our fuelperks! network. These loyalty programs also provide us with valuable customer data. Through the accumulation of this information, we are able to identify our customers’ shopping patterns, preferences and demographics, and optimize our merchandising and inventory management.

We seek to maintain a reputation for friendly service, quality merchandise and customer value and community involvement. We employ various advertising and promotional strategies to reinforce the quality and value of our products. We promote these attributes using all of the traditional advertising vehicles, including radio, television, direct mail and newspapers.

Sources of Supply

We obtain the products sold in our stores and the raw materials used in our food preparation operations from a number of sources. C&S is our largest supplier, providing approximately 22% of our retail merchandise during the 28-week period ended July 10, 2013. Approximately 3,000 different vendors and third party food manufacturers delivered the remaining approximately 78% of our retail merchandise for the 28-week period ended July 10, 2013. See “Risk Factors—Risks Related to Our Business—We rely on a principal supplier for a substantial portion of our retail merchandise.” C&S supplies grocery, bakery, meat, deli, produce, dairy, floral, frozen and other retail merchandise for all of our store locations.

We believe that our inventory is available in sufficient quantities to adequately meet near term customer demand. As with any supermarket, many brands have high consumer recognition. Though we may be able to find alternate suppliers for a particular product type, we would likely experience negative customer response if we were unable to supply a particular brand of product. In addition to supplying a significant percentage of our retail merchandise, C&S provides distribution and delivery services to our stores. Our retail products are delivered by C&S primarily from warehouses that are either subleased to C&S from us or owned by C&S. These distribution facilities comprise the C&S distribution centers for our stores.

On May 10, 2013, we entered into the C&S supply arrangement, under which C&S agreed to provide inventory supply services, including warehouse, transportation and inventory procurement, maintenance and purchasing services, for both the BI-LO and Winn-Dixie brand stores and, subject to certain exceptions, certain stores that we may acquire in the future. Under the C&S supply arrangement, C&S provides products to us at prices based on manufacturer’s prices, market conditions, availability and the aggregate volume of items that we purchase. We remain responsible for certain fixed and variable costs relating to the operation of the warehouses and transportation network. The C&S supply arrangement requires us to exclusively purchase retail merchandise, other than direct store delivery items and pharmaceutical drugs, from C&S for resale at substantially all of our stores. In connection with the C&S supply arrangement, we have licensed the use of six warehouses to C&S for the term of the C&S supply arrangement. The C&S supply arrangement, when fully implemented, is expected to reduce our capital lease balance by approximately $23 million and is expected to reduce our inventory by approximately $186 million (based upon inventory balances as of July 10, 2013). We estimate that, after full implementation, the new arrangements with C&S will result in cost reductions of approximately $35 million per year, consisting of reductions in the cost of inventory and supplies. We anticipate that these benefits will be realized on a run-rate basis by the end of fiscal year 2014. The term of the C&S supply arrangement is eight years.

Trademarks

We utilize various trademarks and service marks in our business. We actively enforce and defend our rights related to our intellectual property portfolio, which management believes is an important way to establish and protect our brands in a competitive environment. Including the BI-LO, Super BI-LO, Southern Home, and Winn-Dixie trademarks, we own approximately 60 trademarks that are registered in the United States Patent and Trademark Office. Trademarks are generally renewable on a 10 year cycle.

Government Licenses and Regulation

Our stores require a variety of government issued licenses and permits that are renewed on a periodic basis. Payment of a fee is generally the only condition to maintaining such licenses and permits. We believe we have all material licenses and permits necessary to conduct our business.

We are subject to regulation by a variety of governmental authorities, including federal, state and local agencies that regulate trade practices, building standards, labor, health and safety matters, such as the U.S. Food and Drug Administration, the U.S. Department of Agriculture and the Occupational Health and Safety Administration. We are also subject to the oversight of government agencies that regulate the distribution and sale of alcoholic beverages, pharmaceuticals, tobacco products, milk and other agricultural products and food items. We believe that our locations are in material compliance with such laws and regulations. See “Risk Factors—Risks Related to Our Business—Changes in laws, rules and regulations affecting our industry could adversely affect our results of operations.”

Environmental Matters

We are subject to federal, state and local environmental laws that apply to property ownership, property development, store operations and related support and distribution operations. We may be subject to certain environmental regulations or obligations regardless of whether we lease or own stores or land or whether environmental conditions were created by the owner, a prior tenant of the premises or us.

We believe that our expenditures for compliance with federal, state, and local environmental laws and regulations have not had a material effect on our capital expenditures, operating results or competitive position. However, it is possible that our environmental investigations might not reveal all potential environmental liabilities or might underestimate the severity of certain potential environmental problems. It is also possible that future environmental laws and regulations or new interpretations of existing environmental laws will impose

material environmental liabilities on us, or that properties that we own or lease will be adversely affected by hazardous substances, including those associated with other nearby properties or the actions of unrelated third parties. The costs to defend any future environmental claims, perform any future environmental remediation, satisfy any environmental liabilities or respond to changed environmental conditions could have a material adverse effect on our business, financial condition, results of operations, cash flows and ability to service our debt.

We believe we are in material compliance with applicable environmental requirements. We also maintain a pollution liability insurance policy to cover clean-up costs and third party damages resulting from certain releases of hazardous materials at our currently owned and leased locations, as well as several historic properties. However, there can be no assurance that our insurance will be adequate or available to cover all costs, or that changes in existing requirements or their enforcement or discovery of previously unknown conditions will not result in significant costs in the future.

Properties

As of July 10, 2013, we operated 685 stores located in Florida, South Carolina, Alabama, Louisiana, Georgia, North Carolina, Tennessee and Mississippi. The following table shows the number of stores we operate in each state:


	STORE COUNT(1)
Florida		328
South Carolina		125
Alabama		68
Louisiana		51
Georgia		43
North Carolina		35
Tennessee		21
Mississippi		14

Total		685

(1)

With the exception of our stores that are leased on a month-to-month basis or that are owned (as discussed below), our stores are leased with expiration dates ranging from October 2013 to June 2032. The majority of our leases have one or more renewal options in five-year increments. We believe our stores are well maintained. Since 2007, 46% of our stores have been remodeled. We continue to be obligated to pay rent under leases for 21 Winn-Dixie and BI-LO locations where we no longer operate, with lease expiration dates ranging from October 2013 to November 2023. We have entered into subleases with respect to three of these 21 locations to reduce our associated costs.

In addition, we lease offices and distribution facilities in South Carolina (Greenville), Florida (Jacksonville, Orlando, Miami and Pompano), Alabama (Montgomery) and Louisiana (Hammond) under leases with expiration dates ranging from June 2016 to February 2026. We sublease a portion of our Greenville, South Carolina distribution facilities to C&S pursuant to the C&S supply arrangement. See “—Sources of Supply.” During the period of implementation of the C&S supply arrangement, we expect to enter into licenses with C&S for the use of a portion of our distribution facilities for the term of the agreement for purposes of serving us under the C&S supply arrangement for the term of the agreement. We believe we have adequate facilities and space for our current and future activities at our administrative offices and our distribution facilities.

We own stores located in Florida (Tallahassee, St. Augustine, and Miami) and Louisiana (Baton Rouge and Walker). We also own a shopping center located in Marathon, Florida in which one of our stores is located. On September 13, 2013, we agreed to enter into a sale leaseback transaction whereby we will sell these properties and, immediately thereafter, lease back the six store locations. The transaction is expected to close in the fourth quarter of fiscal 2013. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Recent Events—Florida and Louisiana Store Sale Leaseback.”

We own parcels of undeveloped real estate in South Carolina, Florida, Virginia, Kentucky, Mississippi, North Carolina and Tennessee.

Legal Proceedings

We are subject to various legal proceedings and claims, either asserted or unasserted, which arise in the ordinary course of business that we believe are incidental to the operation of our business. We are also subject to a limited number of environmental claims. While the outcome of these claims cannot be predicted with certainty, our management does not believe that the outcome of any of these legal matters will have a material adverse effect on our consolidated results of operations, financial position or cash flows.

In January 2012, eight complaints challenging the proposed merger between BI-LO, LLC, and Winn-Dixie Stores, Inc., were filed by plaintiffs seeking to represent a class of Winn-Dixie shareholders. Seven complaints were filed in the Circuit Court of the Fourth Judicial District in and for Duval County, Florida. The eighth case, which was filed in the United States District Court for the Middle District of Florida, has been dismissed. The cases filed in state court have been consolidated, a lead plaintiff has been appointed, and the lead plaintiff has filed an amended complaint. The plaintiffs in the consolidated case generally allege, among other things, that the consideration agreed to in the merger agreement was inadequate and unfair to Winn-Dixie shareholders, that the proposed proxy statement contained materially misleading disclosures or omissions regarding the proposed transaction, and that the members of Winn-Dixie’s Board of Directors breached their fiduciary duties in approving the merger agreement and issuing a proxy statement. The plaintiffs also allege that those alleged breaches of fiduciary duty were aided and abetted by Winn-Dixie and the entities affiliated with BI-LO named in the amended consolidated complaint. The plaintiffs seek rescission or rescissory damages. The case will now move into the discovery and class certification phases. We believe that we have valid defenses and we intend to vigorously defend against the claims. The litigation is at an early stage and there is no basis to determine the ultimate outcome or range of potential loss, if any. We have tendered this matter to our insurance program, which we believe will provide defense and indemnification coverage for all or a portion of our defense expenses and any future losses in excess of our $5 million insurance deductible that are associated with this matter. Accordingly, we have not recorded a loss estimate at July 10, 2013.

MANAGEMENT

The following table shows information for our sole director, director nominees and executive officers as of September 26, 2013.


Name	Age	Title
R. Randall Onstead, Jr.	57	President, Chief Executive Officer, Director Nominee
Brian Carney	53	Executive Vice President, Chief Financial Officer
D. Mark Prestidge	54	Executive Vice President, Chief Operating Officer
Lawrence A. Stablein	55	Executive Vice President, Chief Merchandising Officer
Bradley P. Boggess	40	Director
Richard L. Davis	61	Director Nominee
John Fleming	55	Director Nominee
Samuel D. Loughlin	41	Chairman of the Board Nominee, Director Nominee
Michael O. Moore	63	Director Nominee
Kyle S. Volluz	44	Director Nominee
David West	56	Director Nominee
Grant Wilbeck	32	Director Nominee

Executive Officers

R. Randall Onstead, Jr.—Mr. Onstead has served as our President and Chief Executive Officer since March 2012. He has also served as President and Chief Executive Officer of Winn-Dixie Stores, Inc., a subsidiary of BI-LO since March 2012. He previously served as BI-LO Holding’s Interim Chief Executive Officer and President from October 2008 to February 2009 and as a director of BI-LO Holding from February 2009 to March 2012. Mr. Onstead has over 33 years of experience in the retail food industry. He is the former Chairman and Chief Executive Officer of Randall’s Food Markets, Inc., a Houston-based supermarket chain. After Randall’s, Mr. Onstead became a Managing Director of Chapman Partners, EEC, a private investment-banking firm, and became President of Onstead Investments, L.P. Later he became President and Chief Executive Officer of Garden Ridge Corp., a Houston-based crafts and decor retailer with 44 stores in 13 states, and then President of Dominick’s Finer Foods, based in Oak Brook, IL. Mr. Onstead has served as a member of our Advisory Board since 2008.

As our President and Chief Executive Officer, Mr. Onstead brings a deep understanding of our business, industry, operations and strategic plan to the board of directors. Mr. Onstead’s other senior leadership and more than 33 years of experience in the retail food industry also enables him to provide valuable insight and guidance to the board on our industry as a whole. In addition, Mr. Onstead’s investment-banking and investment experience assists the board in capital markets and other financial matters. Mr. Onstead’s board service also provides a direct open channel of communication between the board and senior management.

Brian Carney—Mr. Carney has served as our Chief Financial Officer and Executive Vice President since October 2005. Prior to joining us, he spent eight years as Executive Vice President and Chief Financial Officer of Jo-Ann Stores and eight years as Senior Vice President and Chief Financial Officer for Revco Drug Stores. He also spent seven years at Arthur Andersen. Mr. Carney is also a member of the board of directors of Citi-Trends, Inc., a publicly-traded apparel retailer. Mr. Carney served as our Chief Financial Officer and Executive Vice President at the time of our reorganization under Chapter 11 of the United States Bankruptcy Code.

D. Mark Prestidge—Mr. Prestidge has served as our Executive Vice President and Chief Operations Officer since January 2013. He joined the company with 36 years of experience in leadership roles with such companies as The Kroger Co., where he served as President of the Delta Division from 2006 to 2012 and Vice President, Operations, Southwest Division from 2004 to 2006. Mr. Prestige also held leadership positions with Tom Thumb, where he served as President from 1996 to 2001, and Randall’s Food Markets, Inc., where he served as Senior Vice President of Operations from 1998 to 2001.

Lawrence A. Stablein—Mr. Stablein has served as our Executive Vice President and Chief Merchandising Officer since March 2012. Mr. Stablein guides our overall merchandising and marketing efforts, as well as Own Brands, Pharmacy, Pricing, and Supply Chain & Logistics groups. Prior to joining our company, Mr. Stablein ran his own independent consulting company, L.A.S. Management Ltd., beginning in 2006. Mr. Stablein previously served as Executive Vice President Merchandising, Ontario with Loblaw Companies Ltd. from 2004 to 2006, Executive Vice President, Marketing & Merchandising with Albertsons from 2000 to 2004, Senior Vice President, Marketing with Jewel Osco (a division of Albertsons) from 1997 to 2000 and Senior Vice President, Marketing & Formats with American Stores from 1995 to 1997. Mr. Stablein served as a member of our Advisory Board from 2009 to 2012.

Directors

Bradley P. Boggess—Mr. Boggess has served as a member of our board of directors since September 2013. Mr. Boggess has been a member of our Advisory Board since 2011. Mr. Boggess has been a Director of Hudson Americas, LLC, an affiliate of ours and Lone Star since June 2011. His responsibilities include identifying investment opportunities, managing acquisition processes, and driving portfolio company performance. Mr. Boggess’s asset management responsibilities include Lone Star’s operating companies that include grocery, restaurants, and building products. Prior to joining Hudson Americas, Mr. Boggess worked as a turnaround and restructuring advisor with AlixPartners, a leading management consulting and turnaround services firm, from May 2007 to June 2011. Mr. Boggess is a former Armor Officer in the United States Army. Mr. Boggess is also a member of the board of directors of Del Frisco’s Restaurant Group, Inc., Lone Star Steakhouse and Continental Building Products.

Mr. Boggess’s background as a management consultant, turnaround advisor and private equity executive in a wide range of industries, including the retail industry, allows him to assist the board in understanding and addressing the wide variety of issues it faces. Mr. Boggess specifically advised BI-LO and Winn Dixie during his consulting career and has deep institutional knowledge of our company and the supermarket industry. His responsibilities for Lone Star’s companies, including our company, also provide Mr. Boggess with a deep working knowledge of our business and operations.

Director Nominees

Richard L. Davis—Mr. Davis will become a director upon the listing of our common stock. Mr. Davis has served as a member of our Advisory Board since 2011. Mr. Davis’s 40 year business career has been devoted to managing and developing various businesses in retail, printing services and the restaurant and entertainment industries. Mr. Davis was the founder and owner of Main Street Crossing, a restaurant and live entertainment venue, JoeAuto, a chain of auto repair shops, Extreme Logic, a software training company and Night-Rider Overnight Copy Service, a printing business. Mr. Davis was the Chief Executive Officer of CCG Venture Partners from 1992 to 2010. Mr. Davis is also a member of the board of directors of Del Frisco’s Restaurant Group, Inc.

Mr. Davis’ extensive experience in business development across a wide range of industries will allow him to provide insight to the board of directors regarding developing and implementing strategies for growing our business. His service on our Advisory Board also provides Mr. Davis with working knowledge of our business and operations that will be important to the development of the board following the completion of this offering.

John Fleming—Mr. Fleming will become a director upon the listing of our common stock. Mr. Fleming has been a member of our Advisory Board since 2012. Mr. Fleming served in a number of executive roles with Wal-mart Stores, Inc., a global retail operator of 69 banners, from 2000 to 2010. Most recently, Mr. Fleming served as Executive Vice President, Chief Merchandising Officer for Wal-Mart U.S. from 2007 to 2010. Mr. Fleming also served as Executive Vice President, Chief Marketing Officer for Wal-Mart U.S. and Chief Executive Officer and Chief Operating Officer of Walmart.com. Prior to joining Wal-Mart, Mr. Fleming served in various roles for Dayton Hudson, Marshall Field’s, including as Senior Vice-President, Merchandising.

Mr. Fleming’s extensive experience in retail and merchandising across a number of formats will allow him to provide insight to the board of directors regarding developing and implementing strategies for growing sales, improving supply chain efficiencies and reducing costs. He will also bring valuable experience regarding customer strategy, insight and communications. His service on our Advisory Board also provides Mr. Fleming with working knowledge of our business and operations that will be important to the development of the board following the completion of this offering.

Samuel D. Loughlin—Mr. Loughlin will become a director and Chairman of the Board upon the listing of our common stock. Mr. Loughlin has been a member of our Advisory Board since 2011. Mr. Loughlin is currently a Managing Director of Lone Star U.S. Acquisitions, LLC, an affiliate of ours and Lone Star, where he focuses on originations initiatives. Previously, from 2008 to 2011, he served in various capacities at Hudson Americas, LLC, an affiliate of ours and Lone Star, with responsibility for its retail and restaurant operating companies, in addition to leading teams in special originations initiatives. Mr. Loughlin joined Hudson Americas in 2008 and focused on asset management, origination and monetization strategies of a number of assets. Mr. Loughlin has more than 14 years of finance and legal experience, including mergers and acquisitions, financing, private equity investment, originations and asset management transactions. Prior to joining Hudson Americas, Mr. Loughlin was a Partner of CCG Venture Partners, a private equity firm with real estate, operating company and securities holdings, where he was responsible for legal oversight, deal structuring, asset evaluation, acquisitions and sales. Previously, Mr. Loughlin was an attorney in the Business and Corporate Securities Group at Vinson & Elkins LLP, where he supported clients in venture capital and mezzanine financing transactions, private and public securities offerings, mergers and acquisitions, management buyouts and debt financing transactions. Mr. Laughlin is also chairman of the board of directors of Del Frisco’s Restaurant Group, Inc.

Mr. Loughlin has significant experience with the strategic, financial and operational requirements facing companies in the retail and related industries, allowing him to guide the board in analyzing, shaping, and overseeing our execution of important operational and policy issues. His responsibilities for Lone Star’s retail companies, including our company, and his service on our Advisory Board also provide Mr. Loughlin with a working knowledge of our business and operations that will be important to the development of the board following the completion of this offering.

Michael O. Moore—Mr. Moore will become a director upon the listing of our common stock. Mr. Moore has been a member of our Advisory Board since 2012. Mr. Moore currently serves as Executive Vice President, Chief Financial Officer and Assistant Secretary of Ruby Tuesday, Inc., a national owner, operator or franchisor of casual dining restaurants, a position he has held since April 2012. Prior to joining Ruby Tuesday, Mr. Moore was employed with Sun Capital Partners as Executive Vice President and Chief Financial Officer of Pamida Stores from February 2009 to March 2012 and as Interim Chief Financial Officer of Kellwood, Inc. from November 2008 to February 2009. Prior to his tenure with Sun Capital Partners, Mr. Moore served as Executive Vice President and Chief Financial Officer of Advanced Auto Parts from December 2005 to February 2008. Additionally, prior to December 2005, among other positions, Mr. Moore served as Executive Vice President and Chief Financial Officer of The Cato Corporation and as Senior Vice President and Chief Financial Officer of Bloomingdales.

Mr. Moore brings a significant level of financial and accounting expertise to the Board developed during his more than 30 year career. Mr. Moore’s wealth of public company experience provides valuable insight regarding public company reporting matters, as well as insight into management’s day-to-day duties and responsibilities. His service on our Advisory Board also provides Mr. Moore with working knowledge of our business and operations that will be important to the development of the board following the completion of this offering.

Kyle S. Volluz—Mr. Volluz will become a director upon the listing of our common stock. Mr. Volluz has been a Director with Hudson Americas, LLC, an affiliate of ours and Lone Star, since 2010, with responsibility for the management of the Legal Department. In such capacity, Mr. Volluz oversees all legal issues impacting operating companies that are affiliates of Lone Star within North America, as well as other corporate investments

for which Hudson Americas provides asset management services in North America. In particular, Mr. Volluz has been actively involved in the negotiation and closing of several of our lending transactions, acquisitions, and asset sales since joining Hudson Americas in 2009. Prior to joining Hudson Americas, Mr. Volluz was Senior Vice President and Director of Legal Services for Goldman Sachs Specialty Lending Group, an affiliate of Goldman, Sachs & Co., a position he held from 2005 to 2009. Previously, Mr. Volluz was an attorney with Baker Botts LLP and Thompson & Knight LLP, where he supported clients in various types of commercial banking transactions, mergers and acquisitions, private and public securities offerings, and debt financing transactions.

Mr. Volluz’s knowledge of our company allows him to bring a well-informed perspective to the board of directors regarding our operations and the associated legal risks. His extensive experience with capital market transactions, both involving our company and other affiliates of Lone Star Fund, also allows him to make valuable contributions with respect to our capital structure and financing and investing activities. His legal background also provides valuable insight to the board regarding issues we may face.

David West—Mr. West will become a director upon the listing of our common stock. Mr. West has been a member of our Advisory Board since 2011. Mr. West has served as the President of Ridgetop Investments, LLC, a privately held investment company that invests in real estate, oil & gas, distressed debt, public securities and small operating companies, since 2006. From 1998 to 2006, Mr. West was a principal with Lone Star where he served as President of Lone Star U.S. and directed all investment and asset management activities in the Americas. Prior to joining Lone Star, Mr. West spent one year at L.J. Melody and Company where he arranged debt and equity for large real estate transactions. His professional experience also includes 15 years with G.E. Real Estate, an affiliate of G.E. Capital, where he most recently served as Senior Vice President/Territory Manager for the Central and Southwest Territory of the United States. Mr. West served as the Chairman of the Board of U.S. Restaurant Properties from 2001 to 2005. He has also served on the Board of several of privately owned companies.

Mr. West has substantial investment and asset management experience, allowing him to advise the board in its analysis and consideration of significant investment and other long-term financial planning matters. Mr. West’s real estate background is also of great importance to the board because of the impact real estate matters can have on our business. In addition, Mr. West’s experience on other public and private company boards of directors provides valuable insight regarding corporate governance and other related issues.

Grant Wilbeck—Mr. Wilbeck will become a director upon the listing of our common stock. Mr. Wilbeck has been a member of our Advisory Board since 2012. Mr. Wilbeck has served as Director of Lone Star U.S. Acquisitions, LLC, an affiliate of ours and Lone Star, since 2013, where he focuses on origination and underwriting activities related to corporate private equity and debt investments. Previously, from 2007 to 2013, he served in various capacities at Hudson Americas, LLC, an affiliate of ours and Lone Star, with asset management responsibility across all retail and restaurant operating companies focusing on operational performance, capital structure and acquisition opportunities. Prior to joining Hudson Americas, LLC, Mr. Wilbeck was at APS Financial Corp. where he was a research analyst focused on distressed debt and special situations. Mr. Wilbeck currently serves as a director of several privately-held companies owned or controlled by Lone Star.

Mr. Wilbeck brings broad expertise in financial management to the board of directors. His extensive experience in the financial markets also allows him to make valuable contributions with respect to our capital structure and financing and investing activities. His prior service on our Advisory Board also provides Mr. Wilbeck with a working knowledge of our business and operations.

There are no family relationships among any of our directors, director nominees or executive officers.

Director Compensation

Historically, we have not paid any compensation to our directors for their services as directors. However, we intend to pay compensation to independent directors following the completion of this offering. We expect to pay an annual retainer of $70,000 per year to each independent director for his or her services, with an additional annual fee of $5,000 for service as the chairman of the board or as chairperson of a committee of the board. In addition, we expect to pay our independent directors an additional fee of $2,500 for each meeting attended in person and $200 for each meeting attended telephonically. We also expect independent directors to receive an annual equity grant. Such cash fees are expected to be paid quarterly in arrears.

Board of Directors

Our certificate of incorporation will provide that upon completion of this offering our board of directors will initially be divided into three classes of directors, with the classes to be as nearly equal in number as possible. The members of each class will initially serve for a three-year term. As a result, one-third of our board of directors will be elected each year, and Messrs. Boggess, Loughlin and Wilbeck will be class I directors, initially up for election in 2014, Messrs. Onstead, Volluz and West will be class II directors, initially up for election in 2015, and Messrs. Davis, Fleming and Moore will be class III directors, initially up for election in 2016. This staggered board structure will be phased out beginning with our 2017 annual meeting, and nominated directors will thereafter be elected for a term expiring at the next annual meeting. See “Description of our Capital Stock—Provisions of Our Certificate of Incorporation and Bylaws to be Adopted and Delaware Law That May Have an Anti-Takeover Effect—Classified Board of Directors.”

Before the completion of this offering, our board of directors will establish an audit committee, a compensation committee and a nominating and corporate governance committee, each of which will operate pursuant to a charter that will be adopted by our board of directors. Upon the closing of this offering, the composition and functioning of all of our committees will comply with all applicable requirements of the Sarbanes-Oxley Act of 2002, the SEC rules and regulations and the rules of the stock exchange on which we apply to list.

Following this offering, Lone Star will continue to control more than 50% of the voting power of our common stock in the election of directors. Accordingly, we intend to avail ourselves of the “controlled company” exception available under stock exchange rules which eliminates certain requirements, such as the requirements that a company have a majority of independent directors on its board of directors, that compensation of the executive officers be determined, or recommended to the board of directors for determination, by a majority of the independent directors or a compensation committee comprised solely of independent directors, and that director nominees be selected, or recommended for the board of directors’ selection, by a majority of the independent directors or a nominations committee comprised solely of independent directors. In the event that we cease to be a controlled company, we will be required to comply with these provisions within the transition periods specified in the applicable rules. These exemptions do not modify the independence requirements for our audit committee, and we intend to comply with the applicable requirements of the SEC and the stock exchange on which we apply to list with respect to our audit committee within the applicable time frame.

Audit Committee

The primary responsibilities of our audit committee will be to oversee the accounting and financial reporting processes of our company, as well as our affiliated and subsidiary companies, and to oversee the internal and external audit processes. The audit committee will also assist the board of directors in fulfilling its oversight responsibilities by reviewing the financial information provided to stockholders and others, and the system of internal controls established by management and the board of directors. The audit committee will oversee the independent auditors, including their independence and objectivity. However, the committee members will not act as professional accountants or auditors, and their functions are not intended to duplicate or substitute for the activities of management and the independent auditors. The audit committee will be empowered to retain independent legal counsel and other advisors as it deems necessary or appropriate to assist it in fulfilling its responsibilities, and to approve the fees and other retention terms of the advisors.

The audit committee will be comprised of three members, Messrs. Moore, Davis and Wilbeck, with Mr. Moore serving as chair. Our board of directors has determined that each of and is independent, as defined under and required by the federal securities laws and the rules. Our board of directors has determined that Mr. Moore qualifies as an audit committee financial expert under the federal securities laws and that each member of the audit committee has the financial sophistication required under rules. The rules of the SEC and require us to have a fully independent audit committee within one year of the date of the effectiveness of the registration statement of which this prospectus is a part and the listing of our common stock, respectively.

Compensation Committee

The primary responsibilities of our compensation committee will be to periodically review and approve the compensation and other benefits for our employees, officers and independent directors. This will include reviewing and approving corporate goals and objectives relevant to the compensation of our executive officers in light of those goals and objectives, and setting compensation for these officers based on those evaluations. Our compensation committee will also administer and have discretionary authority over the issuance of stock awards under our equity incentive plan.

The compensation committee may delegate authority to review and approve the compensation of certain of our employees to certain of our executive officers, including with respect to awards made under our equity incentive plan. Even where the compensation committee does not delegate authority, our executive officers will typically make recommendations to the compensation committee regarding compensation to be paid to our employees and the size of grants of stock option, restricted stock and other forms of stock-based compensation.

The compensation committee will be comprised of three members, Messrs. Boggess, Davis and West, with Mr. Boggess serving as chair. For so long as we are a controlled company, we are not required to have a compensation committee comprised of independent directors under stock exchange rules. The board has nonetheless determined that is independent under rules.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee will oversee all aspects of our corporate governance functions. The committee will make recommendations to our board of directors regarding director candidates and assist our board of directors in determining the composition of our board of directors and its committees. The nominating and corporate governance committee will be comprised of three members, Messrs. Loughlin, Moore and Volluz, with Mr. Loughlin serving as chair. For so long as we are a controlled company, we are not required to have a nominating and governance committee comprised of independent directors under stock exchange rules. The board has nonetheless determined that is independent under rules.

Code of Conduct and Ethics

Our board of directors will adopt a code of conduct and ethics that establishes the standards of ethical conduct applicable to all directors, officers and employees of our company, including our principal executive, financial and accounting officers. The code will address, among other things, conflicts of interest, compliance with disclosure controls and procedures and internal control over financial reporting, corporate opportunities and confidentiality requirements. The audit committee will be responsible for applying and interpreting our code of conduct and ethics in situations where questions are presented to it. We expect that any amendments to the code or any waivers of its requirements applicable to our principal executive, financial or accounting officer or controller will be disclosed on our website at www.bi-lo.com by following the links to . Our website is not part of this prospectus.

Compensation Committee Interlocks and Insider Participation

Our compensation committee will be comprised of Messrs. Boggess, Davis and West. None of our executive officers currently serves or has served during the last completed fiscal year, as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our board of directors. For a description of any transactions between us and members of the compensation committee, and entities affiliated with such members, see the transactions described under the section entitled “Certain Relationships and Related Party Transactions.”

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Overview

This Compensation Discussion and Analysis provides an overview of our executive compensation program and explains our compensation philosophy, objectives and design. The compensation provided to our chief executive officer, our chief financial officer, and our three other most highly compensated executive officers during fiscal year 2012, or collectively, the named executive officers, is set forth in detail in the tables and narratives that follow this section.

Our named executive officers for fiscal 2012 are:

•

R. Randall Onstead Jr., Chief Executive Officer;

•

Brian P. Carney, Chief Financial Officer;

•

Lawrence A. Stablein, Chief Merchandising Officer;

•

D. Mark Prestidge, Chief Operating Officer; and

•

Michael D. Byars, former President of BI-LO, LLC, who terminated employment effective March 1, 2013.

The Company does not directly employ any individuals. All of our named executive officers, with the exception of Mr. Byars, are employed and compensated by BI-LO Holding, LLC (“BI-LO”), a direct, wholly-owned subsidiary of the Company. Mr. Byars was employed by our indirect, wholly-owned subsidiary, BI-LO, LLC.

Our board of directors has final oversight and responsibility with respect to the compensation provided to the employees of BI-LO and BI-LO, LLC. After this offering, we expect that the compensation of our executive officers will be determined by our compensation committee.

Executive Compensation Objectives and Philosophy

Our primary executive compensation objective has been to attract and retain top talent from within a highly competitive global marketplace to maximize value to our equity holder. We seek to recruit and retain individuals who have demonstrated a high level of expertise and who are market leaders in the grocery industry. We believe that the compensation paid to our executives is competitive in this marketplace. While we do not formally benchmark the compensation of our executives to any particular group of peer companies, we regularly review publicly available information regarding executive compensation in the grocery industry to assess whether our executives are generally compensated at competitive levels. During fiscal year 2012 we did not engage a compensation consultant to provide services with respect to the determination of named executive officer compensation.

Compensation Program

In fiscal 2012, our compensation program was a cash-based program, composed of annual base salary, annual cash incentive compensation and long-term cash incentive compensation. Historically, BI-LO has not maintained an equity-based incentive compensation program.

We anticipate that upon completion of this offering, our compensation program will be composed of three principal components:

•

annual base salary;

•

annual cash-based incentive compensation; and

•

long-term equity-based incentive compensation (as discussed in further detail under “2013 Stock Incentive Plan”).

We anticipate that we will set base salaries for our executives at levels sufficient to attract and retain talent and provide a fixed level of income, which would enable them to focus on short-term execution objectives. In addition, we will use variable cash and equity incentives using both short and long-term incentive compensation plans to ensure a performance-based delivery of pay that closely aligns our named executive officers’ compensation with stockholders’ interests, which would enable them to focus on long-term sustained performance of the Company. After the completion of this offering, and periodically from time to time thereafter, our compensation committee will review our compensation program and may alter or adjust some or all of its components based on various factors, including compensation levels within our industry, corporate performance and individual performance of our named executive officers.

Elements of Compensation

Salary

Base salaries for named executive officers are determined by our board of directors and reflect each executive’s level of experience, responsibilities and expected future contributions to our success, as well as market competitiveness. Base salary levels were initially determined in connection with the arms-length negotiation of each executive officer’s employment agreement. For fiscal year 2012, Messrs. Onstead, Carney, Stablein, Prestidge and Byars were paid annual base salaries of $950,000, $650,000 (increased from $425,000, effective March 9, 2012), $650,000, $475,000 and $575,000, respectively.

Following the completion of this offering, we expect that our compensation committee will conduct a review of each named executive officer’s base salary on an annual basis or at such time as responsibilities change, and we expect that our compensation committee will consider factors such as individual and Company performance, base salaries of executives at similarly situated companies and the competitive environment in our industry in determining whether salary adjustments are warranted.

Cash-Based Annual Incentive Compensation

Effective March, 9, 2012, BI-LO implemented an Annual Incentive Plan, or the AIP, for certain corporate-level employees of BI-LO and its subsidiaries. For the remainder of fiscal year 2012 (or, more specifically, March 9, 2012-December 26, 2012), all participants, including our named executive officers other than Mr. Byars, were potentially eligible to receive an annual performance-based cash bonus equal to a target percentage of their annual salary (100% for each of the named executive officers who participated in the AIP). Mr. Carney’s potential bonus under the AIP was pro-rated for the portion of fiscal year 2012 that the AIP was in place, as he was also eligible for a pro-rated bonus under a legacy BI-LO bonus plan, or the Legacy Plan, for the portion of fiscal year 2012 prior to the implementation of the AIP. Mr. Prestidge’s potential bonus under the AIP was pro-rated for the portion of the fiscal year that he was employed by BI-LO. Mr. Byars was eligible for a bonus under the Legacy Plan and not under the AIP.

Fiscal 2012 AIP

The performance goals under the AIP for fiscal 2012 were (1) adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA, (40% weighting), (2) same-store sales rate (40% weighting), and (3) individual performance, evaluated on a subjective basis (20% weighting). At the end of the year, Mr. Onstead made recommendations with respect to each executive officer’s individual performance bonus payout (other than his own) based upon each such executive’s overall performance and contributions over the prior year. Mr. Onstead’s recommendations were reviewed by our board of directors, which retains final discretion in determining the amount of any bonuses actually paid.

Under the AIP, a participant receives a payout of $0 if the minimum threshold performance levels are not achieved, a payout of 50% of the target payout if minimum threshold performance levels are achieved, a payout of 100% of the target payout if target performance levels are achieved, and a maximum payout of 200% of the target payout if maximum performance levels are achieved, with linear interpolation used to determine payouts

for performance levels between threshold and target and target and maximum. Further, unless BI-LO achieves the threshold performance level of adjusted EBITDA for a performance period, the payout related to individual performance may not exceed the target payout level.

For fiscal year 2012, the specific performance targets and actual results for the quantitative measures were as follows:


Measure	Threshold	Target	Maximum	Actual
Adjusted EBITDA¹	$286.5 million	$301.6 million	$331.7 million	$353.5 million
Same Store Sales Rate	1.8%	2.8%	4.5%	3.7%

(1)

Adjusted EBITDA for purposes of our AIP is calculated as follows: Earnings before interest, taxes, depreciation and amortization, adjusted to reclassify capital lease expenses for certain store leases as operating rent to simulate the store level operating economics of the business. For 2012, adjusted EBITDA also excluded certain one-time gains, including a self-insurance reserve adjustment and settlement proceeds related to a Visa/Mastercard class action proceeding. Our definition of adjusted EBITDA for purposes of our AIP is calculated differently than the adjusted EBITDA presented in “Summary—Selected Historical and Pro Forma Financial and Other Data” and in the instruments governing our indebtedness.

For fiscal year 2012, with respect to each of the named executive officer’s individual performance, performance was judged to be superior and the payout with respect to that portion of the AIP was at the maximum level. In making its determination, the board of directors noted that adjusted EBITDA performance exceeded the AIP maximum performance measure.

Pursuant to their employment agreements, Messrs. Onstead, Carney and Stablein were entitled to guaranteed minimum bonus payments for fiscal year 2012 equal to 25% of their base salaries. Notwithstanding, based on actual performance, these executives earned well above the guaranteed amount.

Legacy Plan

Mr. Carney participated in the Legacy Plan for the portion of fiscal year 2012 prior to the implementation of the AIP. Mr. Byars participated in the Legacy Plan for all of fiscal year 2012. Under the Legacy Plan, Messrs. Carney and Byars were potentially eligible to receive an annual performance-based cash bonus equal to a target percentage of their annual salary (100% for each), with Mr. Carney’s potential bonus pro-rated for the portion of fiscal year 2012 that he participated in the Legacy Plan.

The performance goals under the Legacy Plan were (1) adjusted EBITDA (50% weighting) and (2) total company sales (50% weighting). Under the Legacy Plan, a participant receives a payout of $0 if the minimum threshold performance levels are not achieved, a payout of 85% of the target payout if minimum threshold performance levels are achieved, a payout of 100% of the target payout if target performance levels are achieved, and a maximum payout of 210% of the target payout if maximum performance levels are achieved.

For fiscal year 2012, the specific performance targets and actual results were as follows:


Measure	Threshold	Target	Maximum	Actual
Adjusted EBITDA	$136.2 million	$151.4 million	$170.3 million	$156.7 million
Total Company Sales	$2,763.4million	$2,835.7 million	2,906.6 million	$2,810.4 million

Cash Incentive Bonus Amounts Earned for Fiscal 2012

Based on the results summarized above, the board of directors approved the following bonus payouts for fiscal year 2012:


Name	AIP		Legacy Plan		Total
R. Randall Onstead Jr.	$	1,757,850		—	$	1,757,850
Brian P. Carney	$	1,058,480	$	94,523	$	1,153,003
Lawrence A. Stablein	$	1,202,739		—	$	1,202,739
D. Mark Prestidge	$	666,438		—	$	666,438
Michael D. Byars		—	$	582,187	$	582,187

Cash-Based Long-Term Incentive Compensation

LSF Southeastern Grocery Holdings, LLC, or LSF, our sole equity holder, maintains, and is obligated for all payments with respect to, the Executive Incentive Pool Plan, or the IPP, for certain corporate-level employees of BI-LO and its subsidiaries, including BI-LO, LLC, which IPP was effective March 9, 2012. On September 19, 2013, the IPP was amended, with the IPP being assumed by the Company, and on September 24, 2013, the IPP was further amended, with the IPP being assumed by LSF. Under the IPP, participants are granted pool units entitling them, subject to the terms of the IPP, to a potential cash payout upon a monetization event, as described in further detail below.

During fiscal year 2012, the board of directors made the following grants to the named executive officers under the IPP: Mr. Onstead—200,000 pool units, Mr. Carney—80,000 pool units, Mr. Stablein—80,000 pool units, Mr. Prestidge—60,000 pool units and Mr. Byars—35,000 pool units. In determining grant amounts for named executive officers the board of directors considered each executive’s level of experience, responsibilities and expected future contributions to our success. The total number of pool units authorized under the IPP is 1,000,000, and the total number of pool units outstanding as of this offering is 688,856.

Generally, the pool units become 50% vested three years after the grant date and 50% vested only upon the occurrence of a vesting monetization event (as defined under “—Potential Payments Upon Termination or Change in Control”), in each case, subject to continued employment and the terms and conditions of the IPP. 50% of the pool units held by Messrs. Carney and Byars, however, vested on March 9, 2012, because these executives were participating in a prior transaction bonus program and waived their rights under the prior program in connection with their participation in the IPP. There was no payout associated with this vesting. The remaining 50% of these individual’s pool units will vest only upon the occurrence of a vesting monetization event, subject to continued employment and the terms and conditions of the IPP. In addition, the pool units, to the extent then unvested, become 100% vested on a vesting monetization event, subject to the terms and conditions of the IPP, if such event occurs prior to March 9, 2017, subject to continued employment.

The value of a participant’s pool units is determined as of the closing date of each monetization event relative to that participant’s interest in the incentive pool (relative to the total number of units authorized under the IPP) and amount of profits credited to the incentive pool based upon the Company’s internal rate of return of the Company’s direct and indirect equity holders as of immediately prior to this offering in connection with such monetization event. To the extent prior payments have been made under the IPP, such payments are subtracted when determining payouts under subsequent monetization events. Upon any given monetization event, the incentive pool will not be credited with any amounts and no payouts will be made unless the Company’s internal rate of return is at least 15% and, when combined with any prior monetization event, the monetization event results in a return to the Company’s direct and indirect equity holders as of immediately prior to this offering of at least their beginning equity value. There were no payouts under the IPP in fiscal year 2012.

The amount of Company profits that are credited to the incentive pool upon a monetization event is summarized below.


Aggregate CD Cash Received(1) or ME Value(2), as Applicable, Required to Achieve Cumulative IRR of:		Percentage of the Incremental CD Profit Amount(1) or ME Profit Amount(2), as Applicable, to be Credited as CD Participation Amount(1) or ME Participation Amount(2), as Applicable(3)
Negative to 0%		0.0%
0% up to 5%		3.0% of excess over 0%
Over 5% up to 10%		4.0% of excess over 5%
Over 10% up to 15%		5.0% of excess over 10%
Over 15% up to 17.5%		6.0% of excess over 15%
Over 17.5% up to 20%		7.0% of excess over 17.5%
Over 20% up to 22.5%		9.0% of excess over 20%
Over 22.5% up to 25%		11.0% of excess over 22.5%
Over 25%		15.0% of excess over 25%

(1)

Upon a monetization event that is a cash distribution (as defined under “—Potential Payments Upon Termination or Change in Control”) and that occurs prior to any of the other types of monetization events, the incentive pool will be credited with an amount equal to the CD Participation Amount. The “CD Participation Amount” is a portion of the excess of (i) the sum of such cash distribution actually distributed by the Company to the Company’s current direct and indirect equity owners as of immediately prior to this offering (the “CD Cash Received”) plus all prior cash distributions (plus all prior ME Value Received (see footnote (2), below), if any), over (ii) a Beginning Equity Value (as defined in the IPP), as increased from time to time pursuant to the IPP (such excess, the “CD Profit Amount”). To determine such portion, the Company will calculate a cumulative internal rate of return (“Cumulative IRR”) with respect to the CD Cash Received in such current cash distribution and all prior cash distributions (the “Aggregate CD Cash Received”). Notwithstanding the table above, the incentive pool will not be credited with any amounts unless and until the Cumulative IRR equals or exceeds 15% but once the Cumulative IRR equals or exceeds 15% then, the CD Participation Amount or ME Participation Amount, as applicable, will be determined pursuant to the table above.

(2)

Upon a monetization event other than a cash distribution, the incentive pool will be credited with the ME Participation Amount. The “ME Participation Amount” will mean a portion of the excess of (i) the sum of the net cash proceeds (and the fair market value of other consideration received at the time of the monetization event as determined in the Company’s discretion) from the event causing the monetization event actually received by the Company’s direct and indirect equity holders as of immediately prior to this offering (the “ME Value Received”) plus all prior Aggregate CD Cash Received, over (ii) the Beginning Equity Value (such excess, the “ME Profit Amount”). To determine such portion, the Company will calculate a Cumulative IRR with respect to the ME Value Received and the Aggregate CD Cash Received (the “Aggregate ME Value”). Notwithstanding the table above, the incentive pool will not be credited with any amounts unless and until the Cumulative IRR equals or exceeds 15%. Once the Cumulative IRR equals or exceeds 15% then, the CD Participation Amount or ME Participation Amount, as applicable, will be determined pursuant to the table above. Notwithstanding the foregoing, in the event the Cumulative IRR is greater than or equal to 25%, the aggregate amount credited as ME Participation Amount will not be less than $85,000,000.

(3)

In the chart above, the percentage in the right-hand column in any particular row is applied only to the portion of the CD Profit Amount or ME Profit Amount, as applicable, attributable to the incremental Cumulative IRR reflected in the left-hand column of such row.

Pursuant to the terms of the IPP described above, including the payment matrix, the named executive officers who participate in the IPP became entitled to the following payments from LSF under the IPP in connection with the issuance of our PIK toggle notes and the approximately $458 million distribution to Lone Star on September 20, 2013: Mr. Onstead – $4,213,189, Mr. Carney – $1,685,276, Mr. Stablein – $1,685,276, Mr. Prestidge – $1,263,957 and Mr. Byars – $368,654. This offering is not expected to trigger any payments under the IPP. A secondary

offering by Lone Star could potentially trigger a payment under the IPP, subject to the terms of the IPP described above.

All Other Compensation

We provide our named executive officers with health and welfare benefits, qualified retirement benefits, limited perquisites and severance benefits that are intended to be part of a competitive compensation program.

We do not have any pension plans or non-qualified deferred compensation plans.

Perquisites and Other Personal Benefits

The employment agreements with Messrs. Onstead, Carney, Stablein and Prestidge provide for certain benefits, including reimbursement of relocation costs of up to $75,000 incurred in connection with each executive’s transfer to Jacksonville, Florida, reimbursement for commuter and temporary housing benefits until November 9, 2012 and up to $150,000 if the executive suffers a loss on the sale of his home (in connection with relocation). Mr. Byars was also entitled to similar relocation benefits.

Following the completion of this offering, we expect to continue from time to time to provide limited perquisites and other personal benefits to our executives consistent with the compensation practices within our industry.

Severance and Change of Control Arrangements

During fiscal year 2012, the named executive officers were eligible for severance benefits and other termination-related benefits under certain termination scenarios as set forth in their employment agreements, and in the case of the IPP, upon a monetization event, as described in greater detail below under “—Potential Payments Upon Termination of Change of Control.” We believe these termination and change of control arrangements are standard in our industry and are intended to attract and retain qualified executives.

Mr. Byars terminated employment on March 1, 2013. See “—Potential Payments Upon Termination or Change in Control” for a discussion of the payments he received in connection with his termination.

Clawback

Pursuant to the terms of the AIP, the board of BI-LO may require reimbursement to BI-LO of bonuses paid to any participant, where (i) the payment was predicated in whole or in part upon the achievement of certain financial results that were subsequently the subject of a material restatement, and (ii) a lower bonus payment would have been made to the Participant based upon the restated financial results. Under the AIP, BI-LO may also seek reimbursement of bonuses paid to participants in other circumstances involving fraud or misconduct by the participant where the board of BI-LO determines that such fraud or misconduct caused substantial harm to BI-LO even in the absence of a subsequent restatement of BI-LO’s financial statements.

Under the employment agreements with each of Messrs. Onstead, Carney, Stablein and Prestidge, if the executive has committed fraud, embezzlement, a felony or a misdemeanor involving dishonesty, in each case that relates to BI-LO, or Misconduct, or if BI-LO’s financial statements are restated as a result of an audit by a nationally recognized auditing firm and the executive’s AIP, IPP, or other compensation, employee benefit or vesting was based upon such financial statements, then the board of BI-LO will generally have the right to (i) require reimbursement of any AIP or IPP payment or other compensation, benefit or award paid to the executive within 2 years of any such restatement as a result of such financial statements that were restated; (ii) reinstatement of risk of forfeiture and vesting schedule of any IPP award or other compensation, benefit or award that was vested based on such incorrect financial statements (and recoupment of any gains already realized

if such awards or benefits were sold, transferred, disposed of, paid out, or otherwise reduced to cash); (iii) require recoupment of any AIP or IPP benefit or other compensation, benefit or award paid within 2 years of any such Misconduct; (iv) forfeit any vested or unvested IPP benefits or other compensation, benefits or awards previously granted to the executive within 2 years of any such Misconduct; and/or (v) recoup any gains the executive has previously realized from any such AIP, IPP benefit, or other compensation, benefit or award within 2 years of any such Misconduct, in each case only to the extent such Misconduct resulted in an excess benefit or unjust enrichment to the executive or resulted in damages or costs and expenses to BI-LO or its affiliates.

Tax Deductibility

We have considered the potential future effects of Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code, on the compensation paid to our named executive officers. Section 162(m) places a limit of $1 million on the amount of compensation that a publicly held corporation may deduct in any one year with respect to its chief executive officer and each of the next three most highly compensated executive officers (other than its chief financial officer). In general, certain performance-based compensation approved by stockholders is not subject to this deduction limit. As we are not currently publicly-traded, we have not previously taken the deductibility limit imposed by Section 162(m) into consideration in making compensation decisions. We expect that following the consummation of this offering, we will adopt a policy that, where reasonably practicable, we will seek to qualify the variable compensation paid to our named executive officers for an exemption from the deductibility limits of Section 162(m). However, we may authorize compensation payments that do not comply with the exemptions in Section 162(m) when we believe that such payments are appropriate to attract and retain executive talent.

Summary Compensation Table

The following table sets forth information regarding compensation earned by our named executive officers and paid by their respective employers during the fiscal year ended December 26, 2012:


Name and Principal Position	Year		Salary($)(1)		Bonus($)(2)		Non-Equity Incentive Plan Compensation($)(3)		All Other Compensation ($)		Total ($)
R. Randall Onstead Jr. Chief Executive Officer		2012		998,955		237,500	$	1,520,350		21,794		2,778,600
Brian P. Carney Chief Financial Officer		2012		610,144		162,500		990,503		64,393		1,827,540
Lawrence A. Stablein Chief Merchandising Officer		2012		678,437		162,500		1,040,239		113,292		1,994,468
D. Mark Prestidge Chief Operating Officer		2012		360,792		—		666,438		137,947		1,165,177
Michael D. Byars Former President of BI-LO, LLC		2012		567,525		—		582,187		136,001		1,285,713

(1)

Messrs. Onstead, Stablein and Prestidge commenced employment with BI-LO effective March 9, 2012. Messrs. Carney and Byars were employed by BI-LO or BI-LO, LLC for the entire fiscal year. Mr. Byars terminated employment on March 1, 2013.

(2)

Reflects guaranteed portion of bonus payments under the AIP as discussed above under “Compensation Discussion and Analysis—Cash-Based Annual Incentive Compensation.”

(3)

Reflects performance-based bonus payments under the AIP and the Legacy Plan as discussed above under “Compensation Discussion and Analysis—Cash-Based Annual Incentive Compensation ,” less the guaranteed bonus payments under the AIP included in the “Bonus” column for Messrs. Onstead, Carney and Stablein.

(4)

Amounts in this column are detailed in the table below:


Name	Company-paid Group Life Insurance($)		Relocation($)(a)		Other($)(b)		Total All Other Compensation ($)
R. Randall Onstead Jr.		3,438		18,356		—		21,794
Brian P. Carney		1,393		63,000		—		64,393
Lawrence A. Stablein		1,445		111,847		—		113,292
D. Mark Prestidge		587		135,097		2,263		137,947
Michael D. Byars		—		133,062		2,939		136,001

(a)

Includes reimbursement of relocation costs and commuter and temporary housing benefits, and, for Messrs. Carney, Stablein and Prestidge reimbursement of $12,500, $24,000 and $46,515, respectively, in connection with a loss on the sale of a home (related to relocation).

(b)

For Mr. Prestidge, reflects reimbursement of certain COBRA-related payments due in connection with his job transition from his prior employer to BI-LO. For Mr. Byars, reflects auto allowance.

Grants of Plan-Based Awards in 2012

The following table provides information regarding grants of plan-based awards to each of our named executive officers during the fiscal year ended December 26, 2012. No equity-based compensation awards were granted to the named executive officers.


				Estimated Future Payouts Under Non- Equity Incentive Plan Awards
Name	Award Type			Threshold ($)		Target ($)		Maximum ($)
R. Randall Onstead Jr.		AIP	(1)		475,000		950,000		1,900,000
		IPP	(2)		—		*		—
Brian P. Carney		AIP	(1)		264,286		528,571		1,057,143
		Legacy Plan	(3)		39,698		79,396		158,791
		IPP	(2)		—		*		—
Lawrence A. Stablein		AIP	(1)		325,000		650,000		1,300,000
		IPP	(2)		—		*		—
D. Mark Prestidge		AIP	(1)		180,082		360,165		720,330
		IPP	(2)		—		*		—
Michael D. Byars		Legacy Plan	(3)		287,500		575,000		1,150,000
		IPP	(2)		—		*		—

(1)

As discussed above under “Compensation Discussion and Analysis—Cash-Based Annual Incentive Compensation,” each of the named executive officers, other than Mr. Byars, was potentially eligible to receive an annual performance-based cash bonus under the AIP equal to a target percentage of their annual salary (100% for each of the named executive officers). Mr. Carney’s potential bonus was pro-rated for the portion of fiscal year 2012 that the AIP was in place, as he was also eligible for a pro-rated bonus under the Legacy Plan for the portion of fiscal year 2012 prior to the implementation of the AIP. Mr. Prestidge’s potential bonus was pro-rated for the portion of the fiscal year that he was employed by BI-LO. Under the AIP, a participant receives a payout of $0 if the minimum threshold performance levels are not achieved, a payout of 50% of the target payout if minimum threshold performance levels are achieved, a payout of 100% of the target payout if target performance levels are achieved, and a maximum payout of 200% of the target payout if maximum performance levels are achieved, with linear interpolation used to determine payouts for performance levels between threshold and target and target and maximum.

(2)

The IPP is discussed in detail above under “Compensation Discussion and Analysis—Cash-Based Long-Term Incentive Compensation.” Target, threshold and maximum amounts cannot be reasonably determined as of the grant date as the value of awards under the IPP upon the occurrence of a monetization event or

certain cash distributions is contingent on a number of factors, including the sales proceeds or cash distributions and the Cumulative IRR earned on such events. As result, the amount, if any, that is contributed to the IPP is not determinable until a monetization event or certain cash distributions occur and certain financial objectives are met. LSF maintains, and is obligated for all payments with respect to, the IPP.

(3)

As discussed above under “Compensation Discussion and Analysis—Cash-Based Annual Incentive Compensation,” Mr. Carney participated in the Legacy Plan for the portion of fiscal year 2012 prior to the implementation of the AIP and Mr. Byars participated in the Legacy Plan for all of fiscal year 2012. Under the Legacy Plan, Messrs. Carney and Byars were potentially eligible to receive an annual performance-based cash bonus equal to a target percentage of their annual salary (100% for each, however, Mr. Carney’s potential bonus was pro-rated for the portion of fiscal year 2012 that he participated in the Legacy Plan. Under the Legacy Plan, a participant receives a payout of $0 if the minimum threshold performance levels are not achieved, a payout of 85% of the target payout if minimum threshold performance levels are achieved, a payout of 100% of the target payout if target performance levels are achieved, and a maximum payout of 210% of the target payout if maximum performance levels are achieved.

Narrative Disclosure to the Summary Compensation Table and Grants of Plan-Based Awards Table

Employee Agreements

Mr. Onstead. Pursuant to his employment agreement, effective on March 9, 2012, Mr. Onstead’s base salary was initially set at $950,000. His salary may be increased at the board’s discretion. In addition, pursuant to the employment agreement, Mr. Onstead is entitled to participate in the AIP with a target bonus payment equal to 100% of his base salary, in accordance with the terms of the AIP (with a guaranteed minimum bonus for fiscal 2012 of 25% of base salary). Mr. Onstead is also eligible to participate in the IPP. Mr. Onstead is generally eligible to participate in the same employee benefit plans and programs offered to other employees of BI-LO. Mr. Onstead’s employment agreement also provides for certain perquisites, including reimbursement of relocation costs of up to $75,000 incurred in connection with his transfer to Jacksonville, Florida, reimbursement for commuter and temporary house benefits until November 9, 2012 and up to $150,000 if Mr. Onstead suffers a loss on the sale of his home in Houston, Texas.

Mr. Carney. Prior to March 9, 2012, Mr. Carney was party to an employment agreement with BI-LO, LLC. In connection with entering into a new employment agreement with BI-LO, effective on March 9, 2012, the prior agreement was terminated. Under the new agreement, Mr. Carney’s base salary was initially set at $650,000 (his salary was $425,000 under the prior agreement). His salary may be increased at the board’s discretion. In addition, pursuant to the employment agreement, Mr. Carney is entitled to participate in the AIP with a target bonus payment equal to 100% of his base salary, in accordance with the terms of the AIP (with a guaranteed minimum bonus for fiscal 2012 of 25% of base salary). Mr. Carney is also eligible to participate in the IPP. Mr. Carney is generally eligible to participate in the same employee benefit plans and programs offered to other employees of BI-LO. Mr. Carney’s employment agreement also provides for certain perquisites, including reimbursement of relocation costs of up to $75,000 incurred in connection with his transfer to Jacksonville, Florida, reimbursement for commuter and temporary housing benefits until November 9, 2012 and up to $150,000 if Mr. Carney suffers a loss on the sale of his home in Greer, South Carolina.

Mr. Stablein. Pursuant to his employment agreement, effective on March 9, 2012, Mr. Stablein’s base salary was initially set at $650,000. His salary may be increased at the board’s discretion. In addition, pursuant to the employment agreement, Mr. Stablein is entitled to participate in the AIP with a target bonus payment equal to 100% of his base salary, in accordance with the terms of the AIP (with a guaranteed minimum bonus for fiscal 2012 of 25% of base salary). Mr. Stablein is also eligible to participate in the IPP. Mr. Stablein is generally eligible to participate in the same employee benefit plans and programs offered to other employees of BI-LO. Mr. Stablein’s employment agreement also provides for certain perquisites, including reimbursement of relocation costs of up to $75,000 incurred in connection with his transfer to Jacksonville, Florida, reimbursement

for commuter and temporary house benefits until November 9, 2012 and up to $150,000 if Mr. Stablein suffers a loss on the sale of his home in Naperville, Illinois.

Mr. Prestidge. Pursuant to his employment agreement, effective on March 9, 2012, Mr. Prestidge’s base salary was initially set at $475,000. His salary may be increased at the board’s discretion. In addition, pursuant to the employment agreement, Mr. Prestidge is entitled to participate in the AIP with a target bonus payment equal to 100% of his base salary, in accordance with the terms of the AIP. Mr. Prestidge is also eligible to participate in the IPP. Mr. Prestidge is generally eligible to participate in the same employee benefit plans and programs offered to other employees of BI-LO. Mr. Prestidge’s employment agreement also provides for certain perquisites, including reimbursement of relocation costs of up to $75,000 incurred in connection with his transfer to Jacksonville, Florida, reimbursement for commuter and temporary house benefits until November 9, 2012 and up to $150,000 if Mr. Prestidge suffers a loss on the sale of his home in Germantown, Tennessee.

Mr. Byars. Pursuant to his second amended and restated employment agreement, effective on March 9, 2012, Mr. Byars’ base salary was initially set at $575,000. In addition, pursuant to the employment agreement, Mr. Byars was entitled to participate in the AIP and the IPP. Mr. Byars terminated employment with BI-LO, LLC on March 1, 2013.

Potential Payments Upon Termination or Change in Control

The information below describes certain compensation and benefits to which our named executive officers are entitled in the event their employment is terminated under certain circumstances. As explained below and summarized in the table that follows this section, each of our named executive officers, other than Mr. Byars, would have been entitled to such compensation and benefits assuming a termination of employment had occurred on December 26, 2012. Mr. Byars terminated employment on March 1, 2013. A discussion of what he received upon termination follows the table.

Employment Agreements with Messrs. Onstead, Carney, Stablein and Prestidge

Pursuant to each of their employment agreements, upon a termination without cause or a resignation for good reason, not as a result of death or disability and that occurs prior to a monetization event (as defined in the IPP and described below), each of the executives is entitled to receive, in addition to accrued benefits and any earned but unpaid AIP payment for the year preceding the year in which termination occurs, (i) a pro-rata AIP payment for the year of termination, based on actual performance for the year of termination and the number of full months worked in the year of termination, (ii) a payment equal to 200% of base salary plus 100% of target bonus under the AIP for the year of termination, payable over 12 months (the “severance payment”), and (iii) continued health coverage for the executive and his spouse and covered dependents for two years. Upon a termination without cause or a resignation for good reason that occurs within 24 months following a monetization event, the severance payment shall be made in a lump sum.

Upon termination due to death or disability, each of the executives is entitled to receive, in addition to accrued benefits and any earned but unpaid AIP payment for the year preceding the year in which termination occurs, a pro-rata AIP payment for the year of termination, based on actual performance for the year of termination and the number of full months worked in the year of termination. Further, if such termination occurs prior to the first anniversary of the effective date of the applicable employment agreement, each of the executives is also entitled to (i) a payment equal to 100% of base salary (less disability insurance payments), payable over 12 months, and (ii) continued health coverage for the executive and his spouse and covered dependents for 1 year.

All benefits payable upon a termination, other than accrued benefits, are conditioned upon the executive’s execution of a separation agreement and general release of claims in favor of BI-LO and its affiliates and ongoing compliance with restrictive covenants contained in the employment agreement.

Upon termination for any other reason, the executives are not entitled to any severance or other termination benefits, but only to payment of his accrued compensation through the date of termination.

“Cause” generally means (i) a material breach of the employment agreement by the executive; (ii) intentional misconduct as an officer or employee of BI-LO or a material violation by the executive of material written policies of BI-LO or specific written directions of the persons to whom the executive reports and under whose direction the executive is subject; (iii) a material breach of any fiduciary duty which the executive owes to BI-LO in his capacity as an employee or officer; (iv) the conviction or plea of guilty or no contest by the executive with respect to (A) a felony or (B) embezzlement, dishonesty, a crime involving moral turpitude, or intentional and actual fraud; (v) the habitual use of illicit drugs or other illicit substances or the addiction to licit drugs or other substances; or (vi) an unexplained absence from work for more than 10 consecutive days in any 12 month period.

“Good reason” is generally deemed to exist if: (i) there is a material diminution in title and/or duties, responsibilities, or authority, or reporting relationship of the executive to whom the executive reports and under whose direction the executive is subject; (ii) after the executive’s relocation to Jacksonville, Florida (or, if BI-LO so elects, to Greenville, South Carolina), BI-LO requires the executive to move to another location of BI-LO or any of its affiliates, and the distance between the executive’s former residence and new job site is at least 50 miles greater than the distance between the executive’s former residence and former job site; (iii) there is a failure or refusal or default by BI-LO to perform any material obligation under the employment agreement; or (iv) there is a reduction in the executive’s then base salary or AIP target amount, other than a reduction which is part of a general cost reduction affecting at least 90% of similarly situated employees and which does not exceed ten percent 10% of the executive’s then base salary and AIP target amount in the aggregate when combined with any such prior reductions.

Incentive Pool Plan

As discussed above under “Compensation Discussion and Analysis—Cash-Based Long-Term Incentive Compensation”, pursuant to the IPP, pool units become 50% vested three years after the grant date and 50% vested only upon the occurrence of a vesting monetization event, in each case, subject to continued employment and the terms and conditions of the IPP. As described above, 50% of the pool units held by Messrs. Carney and Byars vested on March 9, 2012. The remaining 50% of these individual’s pool units will vest only upon the occurrence of a vesting monetization event, subject to continued employment and the terms and conditions of the IPP. In addition, the pool units become 100% vested on a vesting monetization event, subject to the terms and conditions of the IPP, if such event occurs prior to March 9, 2017, subject to continued employment.

Further, participants who are not otherwise vested in their pool units, and who are terminated from employment because of death, disability, termination without cause, or resignation for good reason will be 50% vested in their pool units (and are not eligible for additional vesting with respect upon a monetization event). If there were no monetization event that results in pool units vesting by March 9, 2017, any participant not then employed by the Company or its subsidiaries or who subsequently ceases to be employed prior to a monetization event, forfeits any previously vested pool units; provided that, if the termination of employment is because of death, disability, a termination without cause, or a resignation for good reason, then these foregoing will not apply until the later of March 9, 2017 or one year after such termination of employment.

Generally, for purposes of the IPP, a monetization event occurs when:

•

the Company is converted, merged, consolidated or reorganized into or with another corporation or other legal person and, immediately after such conversion, merger, consolidation, or reorganization, less than a majority of the combined voting power of the then-outstanding equity securities of such corporation or other legal person immediately after such transaction are held in the aggregate by the holders of voting securities of the Company immediately prior to such transaction;

•

(A) the equityholders of the Company sell, transfer or exchange more than 50% of the combined voting power of the then-outstanding equity securities of the Company to an unrelated third party, or (B) the Company or its subsidiaries sell, transfer or exchange more than 50% in value of their aggregate assets to any other entity or other legal person, and less than a majority of the combined voting power of the then-outstanding equity securities of such entity or person immediately after such sale are held in the aggregate by the holders of voting securities of the Company immediately prior to such sale;

•

a firm commitment underwritten public offering occurs that is registered under the Securities Act of 1933, as amended, of the equity interests of the Company, a subsidiary or a respective successor entity where either (A) the members’ interest in the voting securities of the Company, a subsidiary or a respective successor entity, as applicable, is reduced to below 50% as a result of such public offering or (B) the Company determines, in its sole and absolute discretion, that such public offering constitutes a monetization event for purposes of the IPP; or

•

the Company pays dividends or distributions (whether pursuant to a regular dividend, extraordinary dividend, non-dividend distribution, redemption, recapitalization, or otherwise) (a “cash distribution”). In turn, a vesting monetization event is any of the events described in the subsections that is not a cash distribution, provided that at the time of such event, the Cumulative IRR of the Company’s direct and indirect equity holders as of immediately prior to this offering is at least 15% and, when combined with any prior monetization event, results in a return to such direct and indirect equity holders of the Company of at least their beginning equity value.

The determination of payments under the IPP (which occur only upon certain monetization events) is described above under “Compensation Discussion and Analysis—Cash-Based Long-Term Incentive Compensation.”

Potential Payments Table

The table below sets forth the estimated value of the potential payments to each of our named executive officers, other than Mr. Byars, assuming the executive’s employment had terminated on December 26, 2012. Mr. Byars terminated employment on March 1, 2013. A discussion of what he received upon termination follows the table.


		R. Randall Onstead Jr.		Brian P. Carney		Lawrence A. Stablein		D. Mark Prestidge
Termination Without Cause or for Good Reason	Cash Severance	$	2,850,000	$	1,950,000	$	1,950,000	$	1,425,000
	Pro-rata AIP		1,757,850		1,058,480		1,202,739		666,438
	Health/Medical		22,772		29,028		26,050		28,139
	IPP		—		—		—		—

	Total:	$	4,630,622	$	3,037,508	$	3,178,789	$	2,119,577


Monetization Event	Cash Severance		—		—		—		—
	Pro-rata AIP		—		—		—		—
	Health/Medical		—		—		—		—
	IPP		*		*		*		*

	Total:		*		*		*		*


Death/Disability	Cash Severance	$	950,000	$	650,000	$	650,000	$	475,000
	Pro-rata AIP		1,757,850		1,058,480		1,202,739		666,438
	Health/Medical		11,386		14,514		13,025		14,069
	IPP		—		—		—		—

	Total:	$	2,719,236	$	1,722,994	$	1,865,764	$	1,155,507

The IPP is discussed in detail above under “Compensation Discussion and Analysis—Cash-Based Long-Term Incentive Compensation.” The value of IPP pool units as of a hypothetical monetization event occurring on December 26, 2012 cannot be reasonably determined as the value of awards under the IPP upon the occurrence of a monetization event or certain cash distributions is contingent on a number of factors, including the sales proceeds or cash distributions and the Cumulative IRR earned on such events. As result, the amount, if any, that is contributed to the IPP is not determinable until a monetization event or certain cash distributions occur and certain financial objectives are met. LSF maintains, and is obligated for all payments with respect to, the IPP.

Termination of Employment Following Fiscal Year 2012

On March 1, 2013, Mr. Byars terminated employment with BI-LO, LLC. Mr. Byars became entitled to receive a payment of $1,260,577 (equal to a cash severance amount of $1,150,000 and a pro-rata annual bonus payment of $110,577 for the first quarter of fiscal year 2013) in connection with his termination of employment, payable in accordance with his release and separation agreement. Mr. Byars will also receive 18 months of continued health benefits. Mr. Byars retained the portion of his IPP units that were vested as of his termination of employment and forfeited the right to any of the units that were unvested as of his termination of employment.

Executive Incentive Pool Plan

As discussed above, under “—Compensation Discussion & Analysis—Cash-Based Long-Term Incentive Compensation” and “—Potential Payments Upon Termination or Change in Control,” LSF maintains, and is obligated for all payments with respect to, the IPP, which was effective as of March 9, 2012, for certain corporate-level employees of BI-LO and its subsidiaries. Under the IPP, participants are granted pool units entitling them, subject to the terms of the IPP, to a potential cash payout upon a monetization event. The total number of pool units authorized under the IPP is 1,000,000, and the total number of pool units outstanding as of the date hereof is 688,856.

The IPP was developed to reward the creation of long-term value through a monetization event, as described under “—Potential Payments Upon Termination or Change in Control,” and to motivate certain executive employees of BI-LO and its subsidiaries to put forth maximum efforts toward the continued growth, profitability and success of our company by providing incentives to such individuals through cash bonus payments. Our board of directors or a designated committee of the board administers the IPP and has total and exclusive responsibility to control, operate, manage and administer the IPP in accordance with its terms.

The vesting of awards, valuation of awards upon a monetization event, treatment of awards upon a termination of employment and other material terms of the IPP are described above under “—Compensation Discussion and Analysis—Cash-Based Long-Term Incentive Compensation” and “—Potential Payments Upon Termination or Change in Control.”

2013 Stock Incentive Plan

Prior to completion of this offering, we will adopt the 2013 Plan. The purpose of the 2013 Plan is to promote and closely align the interests of our employees and non-employee directors and our stockholders by providing stock-based compensation and other performance-based compensation. The objectives of the 2013 Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to participants and to optimize the profitability and growth of our company through incentives that are consistent with our goals and that link the personal interests of participants to those of our stockholders. The 2013 Plan allows for the grant of stock options, both incentive stock options and “non-qualified” stock options; stock appreciation rights, or SARs, alone or in conjunction with other awards; restricted stock and restricted stock units, or RSUs; and incentive bonuses, which may be paid in cash or stock or a combination thereof.

The following description of the 2013 Plan is not intended to be complete and is qualified in its entirety by the complete text of the 2013 Plan, which has been filed as an exhibit to the registration statement of which this prospectus is a part. Stockholders are urged to read the 2013 Plan in its entirety. Any capitalized terms which are used in this summary description but not defined here or elsewhere in this registration statement have the meanings assigned to them in the 2013 Plan.

Administration

The 2013 Plan is administered by the compensation committee of the board of directors, or in the absence of the compensation committee, the board of directors itself. The compensation committee has broad authority, subject to the provisions of the 2013 Plan, to administer and interpret the 2013 Plan. All decisions and actions of the compensation committee are final.

Stock Subject to 2013 Plan

The maximum number of shares that may be issued under the 2013 Plan is equal to , subject to certain adjustments in the event of a change in the Company’s capitalization. Shares of common stock issued under the 2013 Plan may be either authorized and unissued shares or previously issued shares acquired by the Company. On termination or expiration of an unexercised option, SAR or other stock-based award under the 2013 Plan, in whole or in part, the number of shares of common stock subject to such award will again become available for grant under the 2013 Plan.

Stock Options

All stock options granted under the 2013 Plan will be evidenced by a written agreement with the participant, which provides, among other things, whether the option is intended to be an incentive stock option or a non-qualified stock option, the number of shares subject to the option, the exercise price, exercisability (or vesting), the term of the option, which may not generally exceed ten years, and other terms and conditions. Subject to the express provisions of the 2013 Plan, options generally may be exercised over such period, in installments or otherwise, as the compensation committee may determine. The exercise price for any stock option granted may not generally be less than the fair market value of the common stock subject to that option on the grant date. The exercise price may be paid in cash or such other method as determined by the compensation committee, including an irrevocable commitment by a broker to pay over such amount from a sale of the shares issuable under an option, the delivery of previously owned shares and withholding of shares deliverable upon exercise. Other than in connection with a change in the Company’s capitalization, we will not, without stockholder approval, reduce the exercise price of a previously awarded option, and, at any time when the exercise price of a previously awarded option is above the fair market value of a share of common stock, we will not, without stockholder approval, cancel and re-grant or exchange such option for cash or a new award with a lower (or no) exercise price.

Stock Appreciation Rights

SARs may be granted alone or in conjunction with all or part of a stock option. Upon exercising a SAR, the participant is entitled to receive the amount by which the fair market value of the common stock at the time of exercise exceeds the exercise price of the SAR. This amount is payable in common stock, cash, or a combination of common stock and cash, at the compensation committee’s discretion.

Restricted Stock and RSUs

The compensation committee may award restricted stock and RSUs. Awards of restricted stock consist of shares of stock that are transferred to the participant subject to restrictions that may result in forfeiture if specified conditions are not satisfied. RSUs result in the transfer of shares of cash or stock to the participant only after specified conditions are satisfied. The compensation committee will determine the restrictions and

conditions applicable to each award of restricted stock or RSUs, which may include performance vesting conditions.

Incentive Bonuses

Each incentive bonus will confer upon the participant the opportunity to earn a future payment tied to the level of achievement with respect to one or more performance criteria established for a specified performance period. The compensation committee will establish the performance criteria and level of achievement versus these criteria that will determine the threshold, target and maximum amount payable under an incentive bonus, which criteria may be based on financial performance and/or personal performance evaluations. Payment of the amount due under an incentive bonus may be made in cash or shares, as determined by the compensation committee.

Performance Criteria

The compensation committee may specify certain performance criteria which must be satisfied before stock options, SARs, restricted stock, RSUs, and incentive bonuses will be granted or will vest. The performance goals may vary from participant to participant, group to group, and period to period.

Transferability

Awards generally may not be sold, transferred for value, pledged, assigned, or otherwise alienated or hypothecated by a participant other than by will or the laws of descent and distribution, and each option or SAR may be exercisable only by the participant during his or her lifetime.

Amendment and Termination

The board of directors has the right to amend, alter, suspend or terminate the 2013 Plan at any time, provided certain enumerated material amendments may not be made without stockholder approval. No amendment or alteration to the 2013 Plan or an award or award agreement will be made that would impair the rights of the holder, without such holder’s consent, however, no consent will be required if the compensation committee determines in its sole discretion and prior to the date of any change in control that such amendment or alteration either is required or advisable in order for us, the 2013 Plan or the award to satisfy any law or regulation or to meet the requirements of or avoid adverse financial accounting consequences under any accounting standard, or is not reasonably likely to significantly diminish the benefits provided under such award, or that any such diminishment has been adequately compensated. The 2013 Plan will be adopted by the board of directors and the Company’s sole equityholder in connection with this offering and will automatically terminate, unless earlier terminated by the board of directors, 10 years after approval by the board of directors.

PRINCIPAL STOCKHOLDERS

The following table presents information concerning the beneficial ownership of the shares of our common stock as of September 26, 2013, assuming our corporate conversion had been effective as of such date, by (1) each person known to us to beneficially own more than 5% of the outstanding shares of our common stock, (2) each of our directors and named executive officers and (3) all of our directors and executive officers as a group. The table also contains information about beneficial ownership, as adjusted, to reflect the sale of common stock in this offering assuming:

•

shares of common stock outstanding as of ; and

•

no exercise of the underwriters’ option to purchase additional shares of common stock.

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power over securities. Except in cases where community property laws apply or as indicated in the footnotes to this table, we believe that each stockholder identified in the table possesses sole voting and investment power over all shares of common stock shown as beneficially owned by the stockholder. Shares of common stock subject to options and warrants that are exercisable or exercisable within 60 days of September 26, 2013 are considered outstanding and beneficially owned by the person holding the options for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless indicated below, the address of each individual listed below is c/o Southeastern Grocers, LLC, 5050 Edgewood Court, Jacksonville, Florida 32254.


	Shares Beneficially Owned Prior to this Offering					Shares Beneficially Owned After this Offering Assuming No Exercise of Underwriters’ Option				Shares Beneficially Owned After this Offering Assuming Full Exercise of Underwriters’ Option
Name of Beneficial Owner	Shares of Common Stock		Percentage of Total Outstanding Common Stock (%)			Shares of Common Stock		Percentage of Total Outstanding Common Stock (%)		Shares of Common Stock		Percentage of Total Outstanding Common Stock (%)
5% Stockholders
LSF Southeastern Grocery Holdings, LLC(1)				100	%				%				%

Named Executive Officers
R. Randall Onstead, Jr.		—		—			—		—		—		—
Brian P. Carney		—		—			—		—		—		—
Lawrence A. Stablein		—		—			—		—		—		—
D. Mark Prestidge		—		—			—		—		—		—
Michael D. Byars		—		—			—		—		—		—

Directors and Director Nominees
Bradley P. Boggess		—		—			—		—		—		—
Richard L. Davis

Southeastern Grocers, LLC S-1