UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended April ~~October 4~~23, ~~2003~~2005

Commission File Number 000-32825

FRESH BRANDS, INC.

(Exact name of registrant as specified in its charter)

Wisconsin	39-2019963
WISCONSIN	39-2019963
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
2215 Union Avenue
Sheboygan, Wisconsin	53081
(Address of principal executive offices)	(Zip Code)

2215 Union Avenue Sheboygan, Wisconsin	53081
(Address of principal executive offices)	(Zip Code)

Telephone number, including area code: (920) 457-4433

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934, during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to filing requirements for the past 90 days.

Yes X No ~~_____~~

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes X No ~~_____~~

APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

As of ~~November~~June 141, ~~2003~~2005, 4,~~986~~931,~~123~~934 shares of Common Stock, $0.05 par value, were issued and outstanding.

FRESH BRANDS, INC.

FORM 10-Q INDEX

	~~PAGE NUMBER~~	PAGE NUMBER
PART I FINANCIAL INFORMATION
PART I	FINANCIAL INFORMATION
Item 1. Financial Statements
Item 1.	Financial Statements
~~Condensed Consolidated Balance Sheets~~	3Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Earnings	4
	Condensed Consolidated Statements of Operations	4
~~Condensed Consolidated Statements of Cash Flows~~	5Condensed Consolidated Statements of Cash Flows	5
~~Notes to Condensed Consolidated Financial Statements~~	6Notes to Condensed Consolidated Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial
Item 2.	Management's Discussion and Analysis of Financial
~~Condition and Results of Operations~~	10Condition and Results of Operations	12
Item 3. Quantitative and Qualitative Disclosures
Item 3.	Quantitative and Qualitative Disclosures
~~about Market Risk~~	18about Market Risk	20
Item 4. Procedures and Controls	18
Item 4.	Procedures and Controls	21
PART II OTHER INFORMATION
PART II	OTHER INFORMATION
Item 3. Defaults upon Senior Securities	19
Item 2.	Changes in Securities and Use of Proceeds	21
Item 5. Other Items	19
Item 6.	Exhibits	22
Item 9. Exhibits and Reports on Form 8-K	19
Signatures		23
Signature	20

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

FRESH BRANDS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

CONDENSED CONSOLIDATED BALANCE SHEETS(unaudited)

(In thousands, except share and per share data)
Assets	April 23, 2005			January 1, 2005
Current assets:
Cash and equivalents	$	6,117		$	5,870
Receivables, net of allowance for doubtful accounts		15,380			16,098
Inventories		33,869			38,172
Other current assets		6,084			7,038
Deferred income taxes		5,074			5,059

Total current assets		66,524			72,237

Capital sublease receivables		28,133			28,629
Property and equipment		31,830			34,299
Property under capital leases		38,908			39,463
Goodwill		21,455			21,455
Other assets		6,647			6,896

Total assets	$	193,497		$	202,979

Liabilities and Shareholders' Investment

Current liabilities:
Accounts payable	$	27,336		$	32,196
Accrued liabilities		16,971			17,619
Current portion of revolving credit facility		5,000			5,000
Current maturities of capital lease obligations		2,979			2,899
Current maturities of long-term debt		2,883			2,968

Total current liabilities		55,169			60,682

Capital lease obligations		70,461			71,322
Revolving credit facility		12,600			15,300
Other long-term debt		5,891			6,394
Deferred income taxes		634			602
Other noncurrent liabilities		458			480
Minority interests		423			580
Shareholders' investment:
Common stock, $0.05 par value, authorized 20,000,000 shares,
issued 8,750,342 shares as of April 23, 2005 and January 1, 2005		438			438
Additional paid-in capital		15,575			15,575
Retained earnings		76,927			76,715
Treasury stock at cost, 3,818,408 shares as of April 23, 2005 and
3,822,928 shares as of January 1, 2005		(45,079	)		(45,109	)

Total shareholders' investment		47,861			47,619

Total liabilities and shareholders' investment	$	193,497		$	202,979

(In thousands)
Assets	October 4, 2003			December 28, 2002
Current assets:
Cash and equivalents	$	11,570		$	14,250
Receivables, net		17,754			14,267
Inventories		37,764			36,268
Land and building held for resale		4,976			7,601
Current receivable under capital subleases		1,271			584
Other current assets		3,821			2,961
Deferred income taxes		4,291			4,291
Total current assets		81,447			80,222
Noncurrent receivable under capital subleases		27,461			22,332
Property and equipment, net		31,902			28,229
Property under capital leases, net		24,649			13,635
Goodwill, net		20,280			20,280
Other noncurrent assets, net		7,542			6,475
Total assets	$	193,281		$	171,173
Liabilities and Shareholders' Investment
Current liabilities:
Accounts payable	$	37,693		$	34,475
Accrued salaries and benefits		6,584			6,276
Accrued insurance		3,153			3,064
Other accrued liabilities		5,004			5,379
Current obligations under capital leases		2,208			1,898
Current maturities under revolving line of credit		26,650			--
Current maturities of long-term debt		316			316
Total current liabilities		81,608			51,408
Long-term obligations under capital leases		53,279			36,965
Long-term debt		554			3,504
Long-term debt under revolving line of credit		--			22,700
Deferred income taxes		1,114			1,114
Shareholders' investment:
Common stock		438			438
Additional paid-in capital		15,574			15,527
Retained earnings		84,928			82,030
Treasury stock		(44,214	)		(42,513	)
Total shareholders' investment		56,726			55,482
Total liabilities and shareholders' investment	$	193,281		$	171,173

See notes to consolidated financial statements.

See notes to condensed consolidated financial statements.

FRESH BRANDS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS(unaudited)

(In thousands, except per share data)
	For the 16-weeks ended
	April 23, 2005		April 24, 2004
Net sales	$	197,658	$	196,386
Cost of products sold		153,128		154,079

Gross profit		44,530		42,307
Selling and administrative expenses		39,029		37,358
Repositioning and impairment charges		--		1,315
Depreciation and amortization		3,683		3,689

Operating income (loss)		1,818		(55	)
Interest expense		1,433		1,372
Minority interest in earnings (losses) of consolidated
franchises		38		(50	)

Income (loss) from continuing operations before income tax		347		(1,377	)
Income tax provision (benefit)		135		(681	)

Income (loss) from continuing operations		212		(696	)
Loss from discontinued operations, net of tax		--		(862	)
Cumulative effect of change in accounting principle		--		(136	)

Net income (loss)	$	212	$	(1,694	)

Earnings (loss) per basic share:
Income (loss) from continuing operations	$	0.04	$	(0.14	)
Loss from discontinued operations		--		(0.17	)
Cumulative effect of change in accounting principle		--		(0.03	)

Earnings (loss) per basic share	$	0.04	$	(0.34	)

Earnings (loss) per diluted share:
Income (loss) from continuing operations	$	0.04	$	(0.14	)
Loss from discontinued operations		--		(0.17	)
Cumulative effect of change in accounting principle		--		(0.03	)

Earnings (loss) per diluted share	$	0.04	$	(0.34	)

Weighted average shares and equivalents outstanding:
Basic		4,930		4,912
Diluted		4,930		4,912

(In thousands, except per share data)
	For the 12-weeks ended				For the 40-weeks ended
	October 4, 2003		October 5, 2002		October 4, 2003		October 5, 2002
Net sales	$	152,614	$	141,860	$	492,456	$	472,920
Cost of products sold		123,204		113,560		395,026		379,060
Gross profit		29,410		28,300		97,430		93,860
Selling, general and administrative
expenses		25,213		23,702		81,827		78,063
Depreciation and amortization		2,372		1,829		6,884		5,885
Operating income		1,825		2,769		8,719		9,912
Interest expense (net)		704		425		1,738		1,323
Earnings before income taxes		1,121		2,344		6,981		8,589
Provision for income taxes		437		901		2,722		3,323
Net earnings	$	684	$	1,443	$	4,259	$	5,266
Earnings per share – basic	$	0.14	$	0.28	$	0.84	$	1.02
Earnings per share – diluted	$	0.14	$	0.28	$	0.84	$	1.00
Weighted average shares and
equivalents outstanding:
Basic		5,026		5,143		5,041		5,161
Diluted		5,058		5,207		5,074		5,249
Cash dividends paid per share of common	$	0.09	$	0.09	$	0.27	$	0.27
stock

See notes to condensed consolidated financial statements.

FRESH BRANDS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(In thousands)
	For the 16-weeks ended
	April 23, 2005			April 24, 2004
Cash flows from operating activities:
Net income (loss)	$	212		$	(1,694	)
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for doubtful accounts		685			1,115
Depreciation and amortization		3,683			3,757
Provisions for store closures		--			1,315
Minority interest		38			(50	)
Deferred income taxes		17			(29	)
Cumulative effect of change in accounting principles		--			136
Changes in assets and liabilities:
Receivables, net		33			(748	)
Inventories		4,303			2,384
Other current assets		1,067			(33	)
Accounts payable		(4,860	)		(4,477	)
Accrued liabilities		(671	)		(126	)

Net cash flows provided by operating activities		4,507			1,550

Cash flows from investing activities:
Capital expenditures		(483	)		(2,153	)
Sale of assets and other		--			--
Expenditures for land and buildings under development		--			(2,050	)
Proceeds from sale of land and buildings under development		--			6,430
Receipt under capital subleases		454			365

Net cash flows provided by (used in) investing activities		(29	)		2,592

Cash flows from financing activities:
Net change in revolver activity		(2,700	)		5,450
Capital lease obligation payments		(781	)		(754	)
Consolidated franchise debt payments		(512	)		(548	)
Other debt payments		(73	)		(120	)
Deferred financing costs		--			(512	)
Distributions to minority interests		(195	)		(132	)
Other financing activities		30			45

Net cash flows provided by (used in) financing activities		(4,231	)		3,429

Cash and equivalents:
Net change		247			7,571
Cash of consolidated franchises at beginning of period		--			115
Balance, beginning of period		5,870			1,323

Balance, end of period	$	6,117		$	9,009

Supplemental cash flow disclosures:
Interest paid	$	(1,382	)	$	(1,381	)
Income taxes refunded		910			1,500

(In thousands)
	For the 40-weeks ended
	October 4, 2003			October 5, 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	4,259		$	5,266
Adjustments to reconcile net earnings to net cash provided
by operating activities:
Depreciation and amortization		6,884			5,885
Changes in assets and liabilities:
Receivables, net		(3,487	)		(2,737	)
Inventories		(1,496	)		1,128
Other current assets		1,250			(3,964	)
Accounts payable		3,218			(3,547	)
Accrued liabilities		68			3,452
Net cash flows provided by operating activities		10,696			5,483
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(10,577	)		(10,002	)
Receipt of principal amounts under capital subleases		887			405
Other-proceeds from asset sales		33			24
Net cash flows used in investing activities		(9,657	)		(9,573	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment for acquisition of treasury stock		(2,375	)		(1,843	)
Principal payments on capital lease obligations		(1,657	)		(895	)
Payment of cash dividends		(1,361	)		(1,394	)
Net change in revolver activity		1,250			9,050
Exercise of stock options		644			772
Principal payments on long-term debt		(250	)		(265	)
Other financing activities		30			89
Net cash flows provided by (used in) financing activities		(3,719	)		5,514
CASH AND EQUIVALENTS:
Net change		(2,680	)		1,424
Balance, beginning of period		14,250			11,501
Balance, end of period	$	11,570		$	12,925
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid	$	1,835		$	2,071
Income taxes paid		2,059			2,447

See notes to condensed consolidated financial statements.

FRESH BRANDS, INC.~~NOTES~~ NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(1) Basis of Presentation

The condensed consolidated financial statements included herein have been prepared by us without audit. Although certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States ~~of America~~ have been condensed or omitted, we believe that the disclosures are adequate to make the information presented not misleading. The interim ~~financial~~ financial statements furnished with this report reflect all adjustments (consisting of a ~~normal~~ normal recurring nature), which are, in the opinion of management, necessary for a fair ~~presentation~~ statement of the results for the interim periods presented. ~~These~~It ~~condensed consolidated~~is ~~financial~~suggested ~~statements~~that ~~should~~these financial statements be read in conjunction with the ~~consolidated~~ financial statements and the notes thereto included in our ~~annual report on~~ Form 10-K for the fiscal year ended ~~December~~January 281, ~~2002~~2005. ~~Additionally, it should be noted that certain prior year amounts have been reclassified to conform to the current year presentation.~~

Annually, our fiscal year ends on the Saturday closest to December 31. ~~Our~~As such, the current fiscal year isand ~~a 53-week~~the ~~period while our~~ prior fiscal year ~~was~~are aboth 52-week ~~period~~periods. Consistent with ~~2002~~2004, our first quarter of ~~2003~~2005 ~~was~~is comprised of 16-weeks and the second, third, and ~~third~~fourth quarters ~~consist of~~are ~~12-weeks~~comprised ~~each. Our fourth quarter~~ of ~~2003 will consist of 13-weeks but typically consists of~~ 12-weeks, ~~as it did in 2002~~each.

~~(2) Stock-Based~~ Certain ~~Compensation~~ 2004 amounts have been reclassified to conform to the presentation for 2005.

~~We have~~(2) ~~stock~~Consolidation option plans which are fully described in our annual report on Form 10-K for the fiscal year ended December 28, 2002. We account for our stock-based compensation plans using the intrinsic value method, under the principles prescribed by the Accounting Principles Board’s Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations. For stock options granted, no employee compensation cost is reflected in the our results of ~~operations for the third quarter and year-to-date of 2003~~ orCertain ~~2002,~~Franchisees ~~as all options granted under our plans had an exercise price equal to the market value of the underlying common stock on the grant date.~~

WeIn ~~have~~December ~~adopted~~2003, the ~~disclosure-only~~FASB ~~provisions~~issued ofrevised ~~FASB~~Interpretation ~~Statement~~ No. ~~123,~~46 (~~“Statement No.~~FIN ~~123”~~46R), “Consolidation ~~Accounting~~of ~~for~~Variable ~~Stock~~Interest ~~Based~~Entities ~~Compensation,~~– asan ~~amended~~interpretation ~~by FASB~~of ~~Statement~~‘Accounting Research Bulletin No. ~~148,~~51.’” ~~Accounting~~FIN ~~for~~46R ~~Stock-Based~~is ~~Compensation-Transition~~intended ~~and~~to ~~Disclosure.~~clarify the ~~Accordingly,~~application noof ~~compensation~~the ~~cost~~majority ~~has~~voting ~~been~~interest ~~recognized~~requirement inof ~~our~~ARB ~~results~~No. of51, ~~operations for~~“Consolidated ~~the~~Financial ~~third~~Statements,” ~~quarter and year-~~to~~-date~~ ofcertain ~~2003~~entities ~~and~~in ~~2002~~which ~~for~~the ~~stock~~equity ~~options~~investors ~~granted~~do ~~under~~not ~~our~~have ~~stock~~the ~~option~~characteristics ~~plans.~~of ~~Had~~a ~~compensation~~controlling ~~cost~~financial ~~for~~interest ~~stock~~or ~~options~~do ~~granted~~not ~~been~~have ~~determined~~sufficient ~~based~~equity onat ~~the~~risk ~~fair~~for ~~value on~~ the ~~grant~~entity ~~date~~to ~~for~~finance ~~awards~~its ~~consistent~~activities ~~with~~without anadditional ~~alternative~~subordinated ~~method~~financial ~~prescribed~~support byfrom ~~Statement~~other Noparties. ~~123,~~These ~~our~~entities ~~net~~are ~~income~~deemed ~~and~~to ~~earnings~~be ~~per~~variable ~~share~~interest ~~for~~entities (VIEs) ~~the~~under ~~third quarter~~FIN ~~and~~46R. ~~year-to-date~~The ~~2003~~controlling ~~and~~financial ~~2002~~interest ~~would~~in ~~have~~a ~~reflected~~VIE ~~the~~may ~~pro~~be ~~forma~~achieved ~~amounts~~through ~~indicated~~arrangements ~~below:~~that do not involve voting interests.

In the past, we have provided credit enhancements to certain of our franchisees in the form of lease and sublease arrangements and loan guarantees. As a result, we completed an evaluation of the financial arrangements with our franchisees and concluded that we are required to consolidate certain of these franchisees, primarily as a result of our loan guarantees to these entities. We adopted the requirement to consolidate these entities as of January 4, 2004. Prior to 2004, we recorded our exposure to losses through these credit enhancement arrangements through our provisions for bad debts. The cumulative-effect adjustment of $136,000 represents the difference between consolidating these entities as January 4, 2004 and the allowance for doubtful accounts that was provided for these franchisees at that date.

(In thousands, except per share data)
	For the 12-weeks ended				For the 40-weeks ended
	October 4, 2003		October 5, 2002		October 4, 2003		October 5, 2002
Net earnings
As reported	$	684	$	1,443	$	4,259	$	5,266
Deduct: Total stock-based
compensation expense determined
under fair value based method, net
of tax		102		132		331		439
Pro forma	$	582	$	1,311	$	3,928	$	4,827
Earnings per share-basic
As reported	$	0.14	$	0.28	$	0.84	$	1.02
Pro forma	$	0.12	$	0.25	$	0.78	$	0.94
Earnings per share-diluted
As reported	$	0.14	$	0.28	$	0.84	$	1.00
Pro forma	$	0.12	$	0.25	$	0.77	$	0.92

There are currently 18 franchise entities consolidated under FIN 46R. The following table reflects the summarized results of operations for the consolidated franchise entities for the quarterly periods.

(3) Other Current Assets

(In thousands)
	For the 16-weeks ended
	April 23, 2005			April 24, 2004
Retail sales of consolidated franchise entities	$	38,016		$	32,534


Operating losses of consolidated franchise entities	$	(517	)	$	(109	)
Interest expense of consolidated franchise entities		412			368

Net losses of consolidated franchise entities		(929	)		(477	)

Less: Minority interest in earnings (losses)		38			(50	)

Net impact on consolidated income from continuing operations before	$	(967	)	$	(427	)
income taxes

(In thousands)
	October 4, 2003		December 28, 2002
Prepaid expenses	$	2,816	$	1,364
Receivables under capital subleases		1,271		1,082
Retail systems and supplies for resale		1,005		1,099
Other current assets	$	5,092	$	3,545

The following table reflects the summarized balance sheet amounts for the consolidated entities as of April 23, 2005 and January 1, 2005.

(4) Segment Reporting

(In thousands)
	Balances at April 23, 2005			Balances at January 1, 2005
Current assets	$	11,983		$	11,721
Property and equipment, net		6,605			7,094
Property under capital leases, net		11,896			11,986
Goodwill		1,175			1,175
Other noncurrent assets		184			285

Total assets	$	31,843		$	32,261

Accounts payable to Fresh Brands	$	9,666		$	9,784
Other current liabilities		6,277			6,592
Capital lease obligations to Fresh Brands		12,425			12,415
Notes payable to Fresh Brands		2,138			1,609
Other long-term debt		5,534			5,960
Minority interests		423			580
Accumulated deficits		(4,620	)		(4,679	)

Total liabilities and shareholders' investment	$	31,843		$	32,261

~~Our~~The ~~operations~~balances ~~are~~payable ~~classified into two segments, wholesale and retail. Our wholesale business derives its revenues primarily from the sale of groceries, produce, dairy, meat and other products~~ to ~~our~~Fresh ~~franchised~~Brands ~~supermarkets and independent supermarket customers. We also supply these products to our corporate supermarkets, but those revenues and corresponding cost of sales~~ are eliminated in consolidation ~~for accounting purposes~~. WeSubstantially ~~supply~~all ~~grocery, frozen~~of ~~food, produce and general merchandise and health and beauty care to our~~the ~~supermarkets~~other ~~through two distribution centers in Sheboygan, Wisconsin. We also provide our supermarkets with fresh, frozen and processed meats, eggs, dairy and deli items through a third~~long-~~party~~term ~~distribution~~debt ~~facility~~of inthese ~~Milwaukee,~~consolidated ~~Wisconsin.~~franchise ~~Additionally,~~entities ~~we distribute bakery and deli items made in our Platteville, Wisconsin centralized production facility. Our retail revenue~~ is ~~generated~~guaranteed by ~~our 29 corporate supermarkets selling products,~~Fresh ~~including products purchased from our wholesale segment, to retail consumers~~Brands.

~~Summarized financial~~(3) ~~information~~Retail ~~for the third quarter and year-to-date periods of 2003 and 2002~~Repositioning ~~concerning~~Reserve ~~each of our reportable segments is shown in the following tables:~~

(In thousands)
	For the 12-weeks ended						For the 40-weeks ended
Net Sales	October 4, 2003			October 5, 2002			October 4, 2003			October 5, 2002
Wholesale	$	115,919		$	107,516		$	376,251		$	358,281
Intercompany		(40,342	)		(35,387	)		(127,911	)		(120,063	)
Wholesale net sales		75,577			72,129			248,340			238,218
Retail		77,037			69,731			244,116			234,702
Total net sales	$	152,614		$	141,860		$	492,456		$	472,920
	For the 12-weeks ended						For the 40-weeks ended
Operating Income	October 4, 2003			October 5, 2002			October 4, 2003			October 5, 2002
Wholesale		2,554			2,308			9,827			7,792
Retail		(729	)		461			(1,108	)		2,120
Total operating income	$	1,825		$	2,769		$	8,719		$	9,912

We estimate repositioning and termination expenses associated with the closure, replacement, or disposal of stores in accordance with SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” The following table reflects the changes in the retail repositioning reserve for the 16 weeks ended April 23, 2005.

(5) Guarantees

(In thousands)
	Balance January 1, 2005		Provision (Benefit)			Usage		Balance April 23, 2005
Lease costs	$	2,783	$	(200	)	$	44	$	2,539
Severance costs		200		--			162		38

Total	$	2,983	$	(200	)	$	206	$	2,577

AtThe ~~October~~benefit 4,in ~~2003~~the ~~and~~first ~~December~~quarter ~~28, 2002, we provided approximately $15.4 million and $15.0 million, respectively,~~ of ~~guarantees~~2005 ofrepresents ~~loans~~the ~~from~~adjustment ~~third parties~~ to ~~some~~the ofestimated ~~our~~liability ~~franchisees.~~for ~~The~~one ~~total~~ of ~~these~~the ~~loans~~closed asstores ofbased ~~October~~on 4,the ~~2003~~expected ~~and~~terms ~~December~~of ~~28,~~settlement ~~2002,~~for ~~was~~that ~~approximately $22~~obligation.6 ~~million~~The ~~and~~provisions ~~$23.3~~(benefit) ~~million,~~were ~~respectively.~~charged ~~While~~(credited) ~~the~~to ~~nature of~~ our ~~business~~ ~~results~~operating insegments ~~guarantees from time to time, we determined that it was not necessary~~as tofollows: ~~record a related liability as of either October 4, 2003 or December 28, 2002.~~

(6) Long-Term Debt

(In thousands)
	For the 16-weeks ended
	April 23, 2005			April 24, 2004
Operating segments:
Wholesale	$	(200	)	$	1,315

~~As of October~~ (4,) ~~2003, our borrowings were approximately $26.7 million under our unsecured~~Discontinued ~~bank~~Operations revolving credit agreement. Because this agreement expires on April 30, 2004, we have classified this debt as short-term and have provided a separate line item for amounts outstanding under this facility. We are currently exploring a new, replacement or extended credit agreement with various financial institutions, including our existing banks, and expect to have a new, replacement or extended credit agreement in place prior to April 30, 2004.

~~Our~~Discontinued ~~revolving~~operations ~~credit~~include ~~agreement~~the ~~includes~~operating ~~several~~results ~~financial~~of ~~covenants,~~stores ~~including one~~ that ~~requires~~ ~~our~~we ~~“fixed~~have ~~charge~~closed ~~coverage” ratio to exceed 1.20:1. Our fixed charged ratio is defined as (i) EBITDA,~~ or ~~earnings~~sold ~~before~~where ~~interest,~~we ~~taxes, depreciation and~~no ~~amortization~~longer ~~(as~~have ~~defined~~continuing ininvolvement ~~our revolving credit agreement) minus cash dividends minus income taxes paid and minus capital expenditures,~~ in ~~each~~those ~~case~~specific for the most recent four quarters divided by (ii) the sum of our (a) interest expense for the most recent four quarters, (b) current maturities of long-term debt and (c) net current obligations under capital leasesmarkets. AsThese ofoperations ~~October~~include ~~4, 2003, we were not in technical~~one ~~compliance~~store ~~with~~closed ~~this covenant ratio. We are currently working with our banks to receive a waiver of this deficiency or an amendment to our revolving credit agreement that would lower this ratio so that we would be~~ in ~~compliance.~~December ~~Although we believe that the following potential consequences are unlikely~~2003, ~~because~~five westores ~~are~~closed ~~not~~ in ~~technical~~May ~~compliance with our revolving credit agreement~~2004, ~~our banks technically could (i) refuse to lend us additional amounts under our revolving credit agreement~~ and~~/or~~ ~~(ii)~~one ~~require~~store ussold ~~to repay the entire~~in ~~amount~~August ~~owed thereunder prior to the April 30,~~ 2004 ~~expiration~~that ~~date~~we ofno ~~the~~longer ~~revolving credit agreement~~supply.

The following table reflects the components of discontinued operations:

(In thousands)
	For the 16-weeks ended April 24, 2004
Sales	$	12,865

Loss from operations	$	(1,412	)
Income tax provision (benefit)		(550	)

Loss from discontinued operations	$	(862	)

(75) ~~New~~ Stock-Based ~~Accounting~~Compensation ~~Pronouncements~~

~~During~~We ~~the~~account ~~first~~for ~~quarter of 2003, we adopted Emerging Issues Task Force Issue (“EITF”) No. 02~~stock-~~16,~~based ~~“Accounting~~compensation byplans aunder ~~Customer~~the ~~(including~~intrinsic avalue ~~Reseller)~~method ~~for~~in ~~Certain Consideration~~accordance ~~Received~~with ~~from a Vendor.” This EITF establishes that cash consideration received from a vendor is presumed to be a reduction in~~ the ~~prices~~recognition ~~of the vendor’s products or services~~ and ~~should,~~measurement ~~therefore,~~principles beof ~~characterized~~Accounting asPrinciples aBoard ~~reduction~~Opinion ~~in cost of products sold~~No. ~~when~~25, ~~recognized~~“Accounting ~~in the reseller’s income statement unless (a) it is a payment~~ for ~~assets~~ orStock ~~services~~Issued ~~delivered~~ to ~~the~~Employees” ~~vendor,~~and inrelated ~~which case the cash consideration should be~~interpretations ~~characterized as revenue or other income as appropriate when recognized in the reseller’s income statement, or~~ (b)“APB itOpinion ~~is a reimbursement of costs, in which case the cash consideration should be characterized as a reduction of that cost when recognized in the reseller’s income statement~~25”). ~~Applying~~We ~~the~~have ~~provisions~~recorded ofno ~~EITF~~compensation ~~No.~~expense ~~02-16 resulted~~ in ~~the reclassification of certain of~~ our ~~vendor~~2005 ~~rebates~~or ~~and advertising revenue received~~2004 incondensed ~~excess~~consolidated ofstatements ~~related advertising costs. The reclassification~~ of ~~these items reduced cost of products sold and, correspondingly, increased selling, general and administrative expense by $0~~operations.9 ~~million and $0.8 million for the third quarter of 2003 and 2002, respectively, and by $3.2 million and $3.0 million year-to-date for 2003 and 2002, respectively.~~

We have adopted ~~Financial~~the ~~Accounting~~disclosure ~~Standards~~requirements ~~Board~~of ~~(“FASB”)~~SFAS ~~Interpretation~~ No. ~~45,~~ ~~“Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others, an interpretation of FASB Statements No~~123. 5,Had 57we ~~and~~determined ~~107 and a rescission of FASB Interpretation No. 34”~~compensation ~~(“FIN~~cost ~~45”).~~based ~~FIN 45 elaborates~~ on the ~~disclosures~~fair tovalue ~~be made by a guarantor in its interim and annual financial statements about its obligations under guarantees issued. FIN 45 also clarifies that a guarantor is required to recognize,~~ at ~~inception~~the ofgrant ~~a guarantee,~~date ~~a liability~~ for ~~the~~stock ~~fair~~options ~~value~~under ofSFAS ~~the obligation undertaken~~No. ~~The initial recognition and measurement provisions were applicable to guarantees issued or modified after December 31~~123, ~~2002. While the nature of~~ our net ~~business~~earnings ~~results~~(loss) inwould ~~the~~have ~~issuance~~been ~~of certain~~reduced ~~guarantees~~(increased) ~~from time~~ to ~~time,~~ the ~~adoption~~following ofpro ~~FIN~~forma ~~45 did not have a material~~amounts ~~impact~~below: ~~on our financial statements for the quarter or year to date ended October 4, 2003.~~

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51” (“FIN 46”). FIN 46 addresses the consolidation of entities whose equity holders have either (a) not provided sufficient equity at risk to allow the entity to finance its own activities or (b) do not possess certain characteristics of a controlling financial interest. FIN 46 requires the consolidation of these entities, known as variable interest entities (“VIEs”), by the primary beneficiary of the entity. The primary beneficiary is the entity, if any, that is subject to a majority of the risk of loss from the VIE’s activities, entitled to receive a majority of the VIE’s residual returns, or both. Prior to the adoption of FIN 46, a company generally included another entity in its consolidated financial statements only if it controlled the entity through voting interests. FIN 46 applies immediately to variable interests in VIEs created or obtained after January 31, 2003. As amended by FASB Staff Position (“FSP”) No. FIN 46-6, FIN 46 is effective for variable interests in a VIE created before February 1, 2003 at the end of the first interim or annual period ending after December 15, 2003 (i.e., the end of our fiscal 2003).

(In thousands)
	For the 16-weeks ended
	April 23, 2005			April 24, 2004
Net earnings (loss)
As reported	$	212		$	(1,694	)
Less: Stock-based compensation expense under fair value
based method, net of related tax effects		(57	)		(84	)

Pro forma	$	155		$	(1,778	)

Earnings (loss) per share-diluted
As reported	$	0.04		$	(0.34	)
Pro forma	$	0.03		$	(0.36	)

~~We believe~~(6) ~~that~~Long-term ~~FASB~~Debt ~~is in the process of modifying~~ and~~/or clarifying certain provisions of~~ ~~FIN~~Guarantees 46 and that certain FSPs relating to FIN 46 are being deliberated. These modifications and FSPs, when finalized, could impact our analysis of the applicability of FIN 46 to the potential consolidation of our franchisees into our consolidated financial statements. We currently believe that FIN 46 could require us to consolidate our results with those of some or all of our franchisees and that such a consolidation would likely have a material impact on our consolidated financial statements.

~~We,~~Long-term ~~along~~debt ~~with~~at ~~several~~April ~~other~~23, ~~grocery~~2005 ~~retail~~ and ~~wholesale~~January ~~companies~~1, ~~are~~2005 ~~members~~consisted of ~~a cooperative that purchases certain grocery products. We are evaluating whether this cooperative is a VIE under~~ the ~~provisions~~following: ~~of FIN 46 and, if so, whether we are the primary beneficiary. We currently believe that consolidation will not be required for this cooperative as a result of our adoption of FIN 46.~~

(In thousands)
	Balances at April 23, 2005			Balances at January 1, 2005
Revolving credit facility	$	17,600		$	20,300
Consolidated franchisee debt		8,171			8,686
Other notes payable, 3.0% interest		603			676

		26,374			29,662
Less amounts classified as current maturities:
Consolidated franchisee debt maturities		(2,638	)		(2,725	)
Other notes payable maturities		(245	)		(243	)
Current portion of revolving credit facility		(5,000	)		(5,000	)

Long-term debt	$	18,491		$	21,694

In March 2004, we entered into a secured $40,000,000 revolving credit facility that replaced our former unsecured revolving credit facility. The new credit facility is secured by substantially all of our assets. The availability under the revolving credit facility is based on a borrowing base formula equal to the sum of 80% of eligible accounts receivable, 60% of eligible inventory, and 60% of eligible owned real estate, less outstanding letters of credit. As of April 23, 2005, net of outstanding letters of credit of $8,676,000, our available borrowings were $31,324,000 and our outstanding borrowings were $17,600,000. While the entire facility remains available for us to borrow, we have classified $5,000,000 of the April 23, 2005 balance as current based on our expectations to continue to reduce our borrowings under the facility over the next year. Our borrowings throughout 2005 will vary based on operating cash flows and the timing of capital expenditures, term debt repayments and seasonal working capital requirements. The revolving credit facility matures March 18, 2007.

The interest rate on borrowings under the revolving credit facility is based, at our option, on either a defined base rate or the London Interbank Offered Rate (LIBOR) plus applicable margins based on a senior debt to cash flow ratio. At April 23, 2005, our borrowing rates were LIBOR plus 2.00% (4.88%) or base plus 0.50% (6.25%). Commitment fees, ranging from 0.25% to 0.50% per annum, are payable on the average daily unused balance of the revolving credit facility. The revolving credit facility contains various financial covenants including, among others, a fixed charge coverage ratio, a total senior debt cash flow leverage ratio, and a paid sublease ratio. In addition, the revolving credit facility limits our ability to obtain additional debt and incur other liabilities including capital lease obligations, prohibits us from guaranteeing additional franchisee bank debt, prohibits the payment of cash dividends, and limits our ability to repurchase common stock. At April 23, 2005, we were in compliance with all financial covenants and terms of our revolving credit facility.

The consolidated franchisee debt consists primarily of 15 bank term loans that have interest rates ranging from 3.75% to 7.35% and aggregate monthly principal payments of approximately $100,000. The loans mature at various dates between November 25, 2005 and July 31, 2008. Fresh Brands, Inc. has guaranteed $7,013,000 of the consolidated franchisee debt.

In addition to the guaranteed loans of the consolidated franchisees, we have guaranteed 16 bank loans of other franchisees and certain of their affiliates. These guarantees were made to support the business growth of the franchise and our wholesale operations. The guarantees are for the term of the respective loan agreements. Under these guarantees, we generally would be required to make the loan payments if the franchisee defaults on a payment. Generally, the guarantees are secured by corporate indemnification agreements and personal guarantees of the franchisee owner and are substantially collateralized with equipment and inventory, and in certain cases, with buildings. At April 23, 2005 these additional franchise loan balances were $6,059,000 and our guarantees of those loans were $5,182,000. Fresh Brands has issued a $4,000,000 letter of credit in support of its guarantees of both the consolidated franchise and other franchise loans.

Interest expense consisted of the following:

(In thousands)
	For the 16-weeks ended
	April 23, 2005			April 24, 2004
Interest-on capital lease obligations	$	727		$	635
Interest on long-term debt		273			271
Amortization of deferred issuance costs		60			--
Interest on debt of consolidated franchisees		412			368
Other		(39	)		98

Interest expense	$	1,433		$	1,372

(7) Segment Reporting

Our operations are classified into three segments: wholesale, corporate retail and franchise retail. Our wholesale business derives its revenues primarily from the sale of grocery products to our corporate and franchised supermarkets and independent supermarket customers. We supply these products to our supermarkets through two distribution centers in Sheboygan, Wisconsin and through a third-party distribution facility in Milwaukee, Wisconsin. Additionally, we distribute bakery and deli items made in our Platteville, Wisconsin centralized production facility. As of April 23, 2005 our corporate retail business consists of our 20 owned supermarkets and 2 convenience stores. Our retail revenue is generated by our corporate supermarkets selling grocery products to retail consumers. The 18 consolidated franchise stores comprise the franchise retail segment.

Summarized financial information for the first quarters of 2005 and 2004 concerning our reportable segments is shown in the following tables:

(In thousands)
	For the 16-weeks ended
	April 23, 2005			April 24, 2004
Net sales

Wholesale	$	140,689		$	146,810
Corporate Retail		79,721			86,191
Franchise Retail		38,016			32,534
Intersegment eliminations:
Sales to corporate retail		(41,546	)		(52,587	)
Sales to franchise retail		(19,222	)		(16,562	)

Total net sales	$	197,658		$	196,386


	For the 16-weeks ended
	April 23, 2005			April 24, 2004
Income (loss) from continuing
operations before income tax

Wholesale	$	3,826		$	830
Corporate Retail		(1,491	)		(776	)
Franchise Retail		(517	)		(109	)

Total operating income (loss)		1,818			(55	)
Interest expense		1,021			1,004
Interest expense of consolidated
franchises		412			368
Minority interest in earnings (losses)
of consolidated franchises		38			(50	)

Income (loss) from continuing
operations before income tax	$	347		$	(1,377	)

During the second quarter of 2004, in connection with our change in management and the shift in our operational focus to our wholesale operations, we reevaluated our approach to reporting the results of our operating segments and decided to no longer allocate wholesale operating profits to our retail segment. This approach is consistent with how our management reviews the results of operations for our operating units. As a result of this change, we also reassessed the allocation of goodwill that arose in connection with the Dick’s Supermarkets acquisition and allocated $11,495,000 of goodwill to our wholesale segment. Prior year segment information has been restated to conform to the current presentation

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

General

As of ~~October~~April 423, ~~2003~~2005, we ~~operated~~owned 2920 supermarkets and two convenience stores and franchised an additional 73 79 supermarkets. This compares to 2729 owned supermarkets and 7374 franchised supermarkets as of ~~October~~ 5April 24, ~~2002~~2004. ~~Twenty-one~~Eleven of our corporate supermarkets ~~operated~~operate under the ~~Piggly~~ Piggly Wiggly® banner, 8and nine of them ~~are~~operate ~~operated~~ under the Dick’s® Supermarkets ~~banner~~ ~~and~~banner. ~~all~~All of our franchised supermarkets ~~operated~~operate under the Piggly Wiggly banner. We are ~~the~~ the primary supplier to all ~~102~~of these supermarkets and also serve as a wholesaler to a number of smaller, independently operated supermarkets and convenience stores. All of our supermarkets and other wholesale customers are located in Wisconsin, ~~and~~ northern Illinois and northeastern Iowa.

Our operations are classified into ~~two~~three segments,: wholesale, corporate retail and franchise retail. Our wholesale business derives its revenues primarily from the sale of groceries~~, produce, dairy, meat~~ and other products to our corporate and franchised supermarkets and independent retail customers. We also supply these products to our corporate supermarkets, but those revenues and corresponding cost of sales are eliminated in consolidation for accounting purposes. We supply grocery, frozen food, produce, general merchandise and health and beauty care to our supermarkets through two distribution centers in Sheboygan, Wisconsin. ~~We also provide our supermarkets with dairy, fresh, frozen~~ and ~~processed meats, eggs and deli items~~ through a third-party distribution facility in Milwaukee, Wisconsin. Additionally, we distribute items made in our Platteville, Wisconsin centralized bakery/deli production facility to our corporate supermarkets, franchisees, and independent customers.

Our corporate retail business consists of 20 corporate-owned supermarkets ~~which~~and ~~operate~~two ~~under~~convenience stores. ~~the~~Our ~~Piggly Wiggly~~convenience stores include fuel stations and ~~Dick’s~~are ~~Supermarkets~~located ~~banners~~on properties adjacent to our stores. We earn our retail revenue by selling products purchased from our wholesale segment and other merchandise to retail consumers. Compared to our wholesale segment, our corporate retail segment ~~typically~~ generates higher gross profit margins, but has higher operating ~~and administrative~~ expenses.

As discussed in the notes to the condensed consolidated financial statements, we were required to consolidate the financial statements of certain of our franchise entities in our consolidated financial statements as of January 4, 2004 even though we have no equity interests in these franchises. There are currently 18 franchise entities that comprise our franchise retail segment. Similar to our corporate retail segment, our franchise retail segment generates higher gross profit margins, but has higher operating expenses compared to our wholesale segment.

Results of Operations

The following ~~table~~tables ~~sets~~set forth certain selected items from our ~~Consolidated~~results ~~Statements~~ of ~~Earnings~~operations ~~as a percentage of net sales and the variance in the percentages~~ for ~~the third~~ first quarter ~~and year-to-date periods~~ of ~~2003~~2005 compared to the ~~third~~first quarter ~~and year-to-date periods~~ of ~~2002.~~ 2004:

	Percent of net sales		Variance	Percent of net sales		Variance
(In thousands, except percentages)
	For the 12-weeks ended		Oct 4, 2003	For the 40-weeks ended		Oct. 4, 2003
			For the 16-weeks ended
	October 4, 2003	October 5, 2002	vs. Oct 5, 2002	October 4, 2003	October 5, 2002	vs. Oct. 5, 2002
			April 23, 2005			April 24, 2004
Net sales	~~100.0%~~	~~100.0%~~	~~N/A~~$	~~100.0%~~197,658	~~100.0%~~	~~N/A~~$	196,386
Retail net sales	50.5%	49.2%	1.3 %	49.6%	49.6%	0.0 %
Gross profit(1)				44,530			42,307
Wholesale net sales	49.5%	50.8%	(1.3)%	50.4%	50.4%	0.0 %
Operating income (loss)				1,818			(55	)
Gross profit	19.3%	19.9%	0.6 %	19.8%	19.8%	0.0 %
Interest expense				1,433			1,372
Selling, general &
Minority interest in earnings of consolidated franchisees				38			(50	)
admin expenses	16.5%	16.7%	(0.2)%	16.6%	16.5%	0.1 %
Income (loss) from continuing operations before income
Depreciation &
taxes				347			(1,377	)
amortization	1.6%	1.3%	0.3 %	1.4%	1.2%	0.2 %
Income tax provision (benefit)				135			(681	)
Operating income	1.2%	2.0%	(0.8)%	1.8%	2.1%	(0.3)%
Income (loss) from continuing operations				212			(696	)
Earnings before income
Loss from discontinued operations, net of tax				--			(862	)
taxes	0.7%	1.7%	(1.0)%	1.4%	1.8%	(0.4)%
Cumulative effect of change in accounting principle				--			(136	)
Net earnings	0.5%	1.0%	(0.5)%	0.9%	1.1%	(0.2)%
Net income (loss)			$	212		$	(1,694	)
Net sales by segment:
Wholesale segment			$	140,689		$	146,810
Corporate retail segment				79,721			86,191
Franchise retail segment				38,016			32,534
Intersegment eliminations:
Sales to corporate retail				(41,546	)		(52,587	)
Sales to franchise retail				(19,222	)		(16,562	)
Net sales			$	197,658		$	196,386
Operating income (loss) by segment:
Wholesale segment			$	3,826		$	830
Corporate retail segment				(1,491	)		(776	)
Franchise retail segment				(517	)		(109	)
Operating income (loss)			$	1,818		$	(55	)
Comparable store sales increases:
Corporate stores				0.3	%		4.5	%
Consolidated franchise stores				(2.2	%)		7.5	%
Other franchise stores(2)				2.1	%		1.5	%
Combined corporate and franchised stores(2)				0.9	%		3.2	%

10(1) Our gross profits may not be comparable to others in our industry because some entities may include all of the costs related to their distribution network in cost of products sold and others exclude all or a portion of such costs from gross profit, instead including them in an operating expense category such as selling and administrative expenses. Our cost of products sold includes product costs and the production labor in our bakery/deli production facility. Other costs, including purchasing and receiving costs, inspection costs, warehousing costs, internal transfer costs, and other costs of our distribution network are included in our selling and administrative expenses.

~~Net~~(2) ~~Sales~~While franchised store sales are not recorded as revenue by us, we believe they are important in understanding our financial performance because their sales volumes generate additional wholesale sales volume and franchise fees and they are indicative of the financial health of our franchise base and the effectiveness of our in-store value proposition.

~~Information regarding~~13 ~~our net sales for the third quarter and year-to-date periods ended October 4, 2003 and October 5, 2002 is set forth in the following table:~~

(In thousands)
	For the 12-weeks ended				For the 40-weeks ended
	October 4, 2003		October 5, 2002		October 4, 2003		October 5, 2002
Retail net sales	$	77,037	$	69,731	$	244,116	$	234,702
Wholesale net sales		75,577		72,129		248,340		238,218
Total sales	$	152,614	$	141,860	$	492,456	$	472,920

Wholesale segment

Net sales for our 12- and 40- week periods ended October 4, 2003 were both records, representing increases of 7.6% and 4.1%, respectively, compared to the same periods in 2002. These increases were due primarily to the factors listed in “Retail Net Sales” and “Wholesale Net Sales” below. Due to the difficult economic climate, intense competition in our markets and the length of time since our last successful acquisition, we do not expect to meet our goal of increasing our net sales by 15% in 2003 from 2002.

(In thousands, except percentages)
	For 16-weeks ended
	April 23, 2005			April 24, 2004
Sales	$	140,689		$	146,810
Gross profit		18,096			15,510
Gross margin		12.9	%		10.6	%
Selling and administrative expenses		13,001			12,260
As a percent of sales		9.3	%		8.3	%
Repositioning and other impairment charges		--			1,315
As a percent of sales		--			0.9	%
Depreciation and amortization		1,269			1,105
As a percent of sales		0.9	%		0.8	%
Operating income	$	3,826		$	830
Operating margin		2.7	%		0.6	%

~~Comparable~~Wholesale ~~store~~ sales ~~for~~decreased ~~franchised~~$6.1 ~~and~~million, ~~corporate~~or ~~retail stores increased~~ 4.32%, ~~for~~during the ~~third quarter of 2003 and 1.1% for the~~ first ~~three~~quarter ~~quarters~~ of ~~2003~~2005 compared to the same ~~periods in~~first ~~2002. Comparable store sales represent sales of all corporate and franchised stores that were open throughout the third~~ quarter ~~and year to date periods~~ of ~~2003 and 2002~~2004. The ~~increases~~ indecrease ~~comparable~~primarily ~~store~~reflects ~~sales during~~ the ~~third~~impact ~~quarter~~ of ~~2003~~closing ~~were primarily due to~~one ~~higher~~franchise ~~sales~~store ~~at replacement~~ and ~~remodeled~~five corporate ~~and~~stores ~~franchised~~during ~~supermarkets,~~first ~~the closing~~two ofquarters ~~competitive stores in several~~ of ~~our~~2004 ~~markets~~ and ~~special promotional efforts in~~selling ~~several~~one ~~market~~corporate ~~areas.~~store ~~These increases were partially offset for the year to date period of 2003 by competitive openings~~ in ~~four~~August ~~of our markets in the first and second quarter~~2004.

~~Retail~~ Wholesale operating ~~Net~~income ~~Sales~~increased from $0.8 million in 2004 to $3.8 million in 2005 and the operating margin increased from 0.56% in 2004 to 2.72% in 2005. The increases are primarily attributable to the following:

~~Our total~~• ~~retail~~Increased ~~net~~gross ~~sales~~profits ~~for~~due to less promotional funding in the ~~12-~~first ~~and~~quarter ~~40-~~of ~~week~~2005 ~~periods~~compared ~~ended~~to ~~October~~the 4,first ~~2003~~quarter ~~increased 10~~of 2004.5% ~~and~~In ~~4.0%~~2004, ~~respectively,~~our ~~compared~~gross toprofits ~~the~~were ~~same~~reduced ~~periods~~by inapproximately ~~2002~~$1.2 ~~These~~million ~~increases~~due to the significant promotional activities that were ~~due~~ ~~primarily~~increased to: help increase retail sales at our corporate and franchise stores.

• ~~The~~A ~~January~~$1.3 ~~2003~~million ~~opening~~lease ofexit ~~our~~charge ~~new~~related ~~market~~to ~~corporate~~the ~~Piggly~~closure ~~Wiggly~~of ~~Fresh~~one ~~MarketCircle®~~franchise store in ~~Kenosha,~~March ~~Wisconsin~~2004.

• For the ~~The~~first ~~August~~quarter ~~2003~~of ~~opening~~2005, our provision for potentially uncollectible franchise receivables was $0.7 million compared to $1.1 million for the first quarter of ~~our~~2004. During ~~replacement~~the ~~corporate~~first ~~Piggly~~quarter ~~Wiggly~~of ~~Fresh~~2004, ~~MarketCircle®~~we facilitated the closure of one franchise store that resulted in ~~Sheboygan,~~the ~~Wisconsin~~$1.3 ~~This~~million ~~50,000~~lease ~~square~~exit ~~foot~~charge ~~corporate~~noted ~~store~~previously ~~features~~and ~~our~~a substantial portion of the $1.1 million provision for uncollectible franchise receivables. During the first quarter ~~combination~~of ~~Pig~~2005, ~~Stop~~we ~~fuel~~facilitated the closure of two additional underperforming franchise stores and ~~convenience~~also ~~store~~facilitated the sale of two additional franchise stores to a new franchise operator. These transactions resulted in a majority of the $0.7 million provision for potentially uncollectible franchise receivables in the first quarter of 2005. We continue to review all remaining underperforming stores to determine appropriate actions to be taken for those locations that are not meeting our performance expectations. We expect to facilitate the closure of two additional franchise stores in the second quarter of 2005.

•14 ~~The opening of our new market 50,000 square foot corporate store in Racine, Wisconsin in September 2003.~~

•Corporate Theretail September 2003 purchase and consolidation of a Menasha, Wisconsin competitive store with our existing Piggly Wiggly storesegment

Our first new Dick’s Supermarket store continues under construction in Maquoketa, Iowa. This new store represents our first entry into the Iowa market. The new store is expected to open in early 2004. It will feature a gas station, car wash and convenience store.

(In thousands, except percentages)
	For 16-weeks ended
	April 23, 2005			April 24, 2004
Sales	$	79,721		$	86,191
Gross profit		18,199			19,864
Gross margin		22.8	%		23.0	%
Selling and administrative expenses		17,998			18,791
As a percent of sales		22.6	%		21.8	%
Depreciation and amortization		1,692			1,849
As a percent of sales		2.1	%		2.1	%
Operating loss	$	(1,491	)	$	(776	)
Operating margin		(1.9	)%		(0.9	)%

11 Corporate retail store sales decreased $6.5 million, or 7.5%, during the first quarter of 2005 compared to the first quarter of 2004. The decrease was primarily the result of the conversion of two corporate stores last September to franchise ownership. As a result, those stores are now included in the franchise retail segment.

~~Wholesale~~ Corporate retail ~~Net~~operating ~~Sales~~losses increased from $0.8 million in 2004 to $1.5 million in 2005. Gross margin also decreased in the first quarter by 22 basis points from 23.05% to 22.83% and operating margin also declined. The decreases are primarily due to the impact of the implementation of our value proposition late last year. Additionally, the March closure of one of our Sheboygan area stores added to our operating loss as the costs associated with the closure increased the store’s losses by approximately $218,000 over the first quarter of last year. We expect to realize the anticipated benefits resulting from the closure in future periods.

~~Wholesale net~~15 ~~sales for the 12- and 40- week periods ended October 4, 2003 increased 4.8% and 4.2%, respectively, compared to the same periods in 2002. These increases were due primarily to:~~

•Franchise Wholesaleretail net sales of approximately $2.0 million and $7.1 million during the third quarter of 2003 and first three quarters of 2003, respectively, due to a temporary secondary wholesale supplier arrangement with a group of local supermarkets previously supplied by Fleming Companies. This relationship ended in mid-August.segment

• The February 2003 opening of a replacement franchised supermarket in Omro, Wisconsin.

(In thousands, except percentages)
	For the 16-weeks ended
	April 23, 2005			April 24, 2004
Sales	$	38,016		$	32,534
Gross profit		8,908			7,883
Gross margin		23.4	%		24.2	%
Selling and administrative expenses		8,647			7,257
As a percent of sales		22.7	%		22.3	%
Depreciation and amortization		778			735
As a percent of sales		2.1	%		2.2	%
Operating loss	$	(517	)	$	(109	)
Operating margin		(1.4	)%		(0.3	)%

• Our franchise ~~The~~retail ~~July~~segment ~~2003~~is ~~opening~~comprised of athe ~~replacement~~franchise ~~franchised~~entities ~~supermarket~~that inwe ~~Juneau~~were required to start consolidating as of January 4, ~~Wisconsin~~2004 primarily because of our loan guarantees to these entities and their financial condition at the time the loan guarantees were made. Our operating results for the first quarter of 2005 include the results of 18 consolidated franchise stores.

• Franchise retail ~~The~~sales ~~completion,~~for ~~during~~ the ~~third~~first quarter of ~~2003~~2005 increased $5.5 million, or 16.9%, compared to the first quarter of ~~expansion~~2004. ~~and~~The ~~remodeling~~increase ~~projects~~was atprimarily ~~franchised~~due to the conversion of two corporate stores in ~~Mosinee~~September ~~and~~2004. ~~Cross~~Gross ~~Plains,~~margin ~~Wisconsin~~for the franchise retail stores decreased 80 basis points compared to the first quarter of 2004 as the consolidated franchise stores were impacted by the value proposition to a larger degree than the corporate stores based on the mix of merchandise in these stores.

WeAdditional ~~expect~~sales ~~our~~increases ~~wholesale~~are ~~net~~needed ~~sales~~ to beimprove ~~positively~~the ~~impacted~~operating ~~during~~results ~~the~~of ~~remainder~~certain of ~~2003~~the ~~due~~stores towithin the ~~expansion~~franchise ~~and~~retail ~~renovation~~segment. ofSubject ato ~~franchised~~local ~~replacement~~market ~~store~~competitive ~~project~~conditions inand industry ~~Mayville~~factors, ~~Wisconsin~~ ~~and~~we ~~our~~believe ~~franchised~~the ~~replacement~~operating ~~store~~results infor ~~Union~~these ~~Grove,~~franchise ~~Wisconsin,~~entities ~~both~~may continue ofto ~~which are~~improve ~~scheduled~~over totime bewith ~~completed~~further bysales ~~mid-November~~growth and the continued close management of operational expenses.

~~In mid-September,~~16 we broke ground for our new and expanded bakery and delicatessen production facility in Platteville, Wisconsin. This new 46,000 square foot facility will replace an existing smaller bakery/deli production facility, also in Platteville, which was acquired as part of our purchase of Dick’s Supermarkets in June 2001. Construction on this new facility is expected to be completed in the summer of 2004.

GrossRetail ProfitStores

~~Due~~We continue to ~~the~~review ~~opening~~all ofremaining ~~one~~underperforming ~~new market~~ corporate ~~store~~ and ~~two~~franchise ~~larger~~stores ~~replacement corporate~~to ~~stores~~determine ~~during~~appropriate ~~the~~actions ~~third~~to ~~quarter,~~be wetaken ~~increased~~for ~~our~~those ~~promotional~~locations ~~efforts~~that inare ~~these~~not ~~markets~~meeting ~~and~~our ~~reduced~~performance expectations. To the extent that our ~~prices~~corporate atand ~~these~~franchise retail stores. Asare not aable ~~result~~to ofsubstantially ~~these~~achieve ~~price~~expected ~~decreases~~sales, ~~our~~operating ~~retail~~income, ~~gross~~or cash flows, we ~~profit~~could ~~margin~~be ~~was~~required ~~lower~~to ~~than~~record itasset ~~would~~impairment ~~otherwise~~or ~~have~~other ~~been~~charges ~~during~~and ~~this~~we ~~period.~~may ~~This~~decide ~~was~~to ~~the~~sell or ~~primary~~close ~~cause~~additional stores. The range of ~~the~~any ~~decrease~~such inpotential ~~our~~charges, ~~gross~~which ~~margin~~could ~~during~~be significant, ~~the~~would ~~third~~be ~~quarter.~~based ~~Our year-to-date~~on ~~gross~~a ~~margin~~number ~~remained~~of ~~consistent~~factors, ~~with~~primarily related to the ~~prior~~stores’ current ~~year~~and asprojected aoperating ~~result~~performance, offuture anrequired capital expenditures, ~~offsetting~~interest ~~positive~~rates, ~~book~~and long-term growth assumptions. We will continue to~~-physical~~ ~~inventory~~review ~~adjustment~~the results of ~~approximately~~our ~~$500,000~~initiatives ~~made in~~to improve the ~~first~~operating ~~quarter~~results offor ~~2003.~~these ~~This~~stores ~~adjustment~~throughout ~~was~~2005 ~~made~~and monitor inthe ~~connection~~valuation ~~with~~of our long-lived assets for these stores and the ~~completion~~corporate retail ofsegment, ~~the~~as ~~final~~a ~~phase~~whole, and the adequacy of our ~~wholesale~~provision ~~systems~~for ~~project~~potentially uncollectible franchise receivables.

Gross profitInterest margin during the third quarter also decreased in comparison to the prior period as a result of the application of Emerging Issues Task Force Issue (“EITF”) No. 02-16, “Accounting by a Customer (including a Reseller) for Certain Consideration Received from a Vendor.” Applying the provisions prescribed by EITF No. 02-16 resulted in the reclassification of certain cash consideration received from our vendors. In the past, we recognized certain vendor rebates and advertising consideration received in excess of direct advertising costs as a reduction of our selling, general and administrative expenses. EITF No. 02-16 specifies that, if the amount of cash consideration paid by the vendor exceeds the cost being reimbursed, the excess amount should be characterized as a reduction of cost of products sold when recognized in the reseller’s income statement. The reclassification of these items reduced our cost of products sold and, correspondingly, increased our selling, general and administrative expense by $0.9 million and $0.8 million for the third quarter of 2003 and 2002, respectively and by $3.2 million and $3.0 million year-to-date for 2003 and 2002, respectively. Expense

~~Selling,~~ Interest expense ~~General~~increased ~~and~~primarily ~~Administrative~~due ~~Expenses~~to the interest on the capital lease obligation for the new bakery/deli production facility.

The decreaseIncome inTax our selling, general, and administrative expenses, as a percent of net sales, in our third quarter was primarily due to our ongoing focus on reducing our operating costs and increasing our efficiency. However, during the third quarter of 2003, these reductions were partially offset by an increase in our promotional spending, including increased promotional spending in connection with the opening of several new stores. In addition, we incurred a pretax charge of $350,000 for professional fees related to the pursuit of several acquisitions that ultimately did not occur. We also incurred an incremental pretax charge of $885,000 as a result of increasing our reserve for potentially uncollectible franchisee receivables. It is likely that additional charges for potentially uncollectible receivables from franchisees may be incurred in the future as a result of ongoing increasing competition in various of our franchisee markets. Provision

12 Our effective tax rate for income from continuing operations was 38.9% for 2005 and (49.5%) for 2004.

As partDiscontinued of our ongoing effort to reduce costs, we reduced our corporate staff by 20 people early in the fourth quarter of 2003. We anticipate the annual pretax payroll savings resulting from these staff reductions, along with other reductions that have resulted from retirements, to be approximately $1.3 million. In the fourth quarter, such savings will be partially offset by related personnel severance costs but are estimated to result in net pretax savings of up to $200,000. We have also initiated numerous other initiatives in an effort to further reduce our future selling, general, and administrative expenses. Operations

~~During~~Discontinued ~~the~~operations ~~fourth~~include ~~quarter of 2003, we anticipate incurring a special assessment of approximately $126,000 related to a shortfall in~~ the ~~union~~operating ~~health~~results ~~insurance plan~~ for ~~our Illinois corporate~~ stores. ~~Also,~~that we ~~plan~~have toclosed ~~close~~or ~~our~~sold ~~Watertown,~~and ~~Wisconsin~~as ~~corporate store prior~~ to ~~the~~which ~~end~~we ofwill ~~our~~have ~~fourth~~no ~~quarter.~~continuing ~~Pretax~~involvement ~~charges~~in ~~related~~those tospecific ~~this~~markets. ~~closure~~They ~~for~~include ~~employee~~the ~~severance~~operating ~~pay,~~results ~~lease~~of ~~termination,~~one ~~inventory~~store ~~and~~that ~~other~~we ~~asset~~closed ~~disposal~~in ~~costs~~December ~~are~~2003, ~~expected~~five ~~to be~~stores ~~approximately~~that ~~$300,000~~we ~~pretax.~~closed in ~~Future~~May ~~net~~2004 ~~sales~~and ~~are~~one ~~expected~~store tothat ~~decrease~~we ~~by approximately~~sold ~~$9.5~~in ~~million~~August ~~annually~~2004 asthat awe ~~result~~will ofno ~~this~~longer ~~store closure~~supply.

~~Due to~~17 the increasingly competitive nature of the supermarket industry and the challenging economic environment, some of our franchised and corporate retail stores continue to experience operational challenges in their respective marketplaces. In order to further improve our overall financial results, we continue to actively evaluate various business alternatives to these operations. These alternatives include selling these supermarkets, converting franchised supermarkets into corporate supermarkets (and vice versa), closing supermarkets and implementing other operational changes. In addition, further assessments of several other corporate and franchise stores and their ongoing prospects will be made in the fourth quarter. If any of these stores are closed, converted or consolidated, we will likely incur significant charges. Any decisions regarding the closure, conversion or consolidation of stores would be made with the intention of improving our future earnings, although these actions would also have the effect of reducing future net sales.

Net Earnings

Our operating income for the 12- and 40- week periods ended October 4, 2003 decreased 34.1% to $1.8 million and 12.0% to $8.7 million, respectively, compared to the same periods in 2002. Net earnings for the 12- and 40- week periods ended October 4, 2003 decreased 52.6% to $0.7 million and 23.6% to $4.3 million, respectively, compared to the same periods in 2002. Diluted earnings per share for the third quarter and first three quarters of 2003 decreased 50.0% and 16.0%, respectively, to $0.14 and $0.84 compared to $0.28 and $1.00 for the same periods in 2002. These decreases were caused primarily by the factors listed above and an increase in our interest costs and amortization expenses, partially offset by a decrease in our diluted weighted average common shares and equivalents outstanding. The increased interest costs and amortization expenses were primarily related to the recognition of two new capitalized leases for our new corporate store in Kenosha, Wisconsin and our replacement corporate store in Sheboygan, Wisconsin. Diluted weighted average common shares and equivalents outstanding for the 12- and 40- weeks ended October 4, 2003 were approximately 5,058,000 and 5,074,000, respectively, compared to approximately 5,207,000 and 5,249,000, respectively, for the same periods in 2002.

After the end of our second quarter of 2003, we lowered our earnings estimate for 2003 to reflect our then current belief that our 2003 earnings would fall slightly below our previously disclosed estimate of between $1.54 to $1.60 per share. Due to uncertainties related to the current economic environment, higher potentially uncollectible franchise receivables, costs associated with our implementation of the Sarbanes-Oxley Act and the anticipated closing of our Watertown corporate store, we currently believe that our 2003 earnings will fall short of this revised estimate.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions in applying certain critical accounting policies. Critical accounting policies are those that require the most subjective and complex judgments.

On an ongoing basis, we evaluate our estimates utilizing historic experience, consultation with experts and other methods we consider reasonable. Actual results may differ significantly from our estimates. Any effects on our business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the facts that give rise to the revision become known (See Part II, Item 7 under the caption “Critical Accounting Policies” of our annual report on Form 10-K for the year ended December 28, 2002 for additional discussion).

As discussed more fully above in Note 7, “New Accounting Pronouncements,” in the notes to the condensed consolidated financial statements, we believe that the FASB is in the process of modifying and/or clarifying certain provisions of FIN 46 and that certain FASB Staff Positions (“FSP”) relating to FIN 46 are being deliberated. These modifications and FSPs, when finalized, could impact our analysis of the applicability of FIN 46 to the potential consolidation of our franchisees into our consolidated financial statements. We currently believe that FIN 46 could require us to consolidate our results with those of some or all of our franchisees and that such a consolidation would likely have a material impact on our consolidated financial statements.

Liquidity and Capital Resources
Summary

AtAs ~~October~~of 4April 23, ~~2003~~2005, we had ~~cash and equivalents totaling~~ $1113.67 million, ~~compared to $14.3 million~~ of ~~cash~~availability and equivalents at year-end 2002. The net cash outflow of approximately $2.7 million was attributable to various operational, investing and financing activities. Our working capital position (current assets minus current liabilities) at October 4, 2003 was a negative $161,000, compared to $28.8 million at December 28, 2002. As noted below, the amounts owed under our revolving credit ~~agreement have been classified as short-term~~ ~~debt because the~~ facility. ~~expires~~We onbelieve ~~April~~that ~~30,~~our ~~2004.~~cash Inflow ~~contrast,~~from atoperations ~~year-end,~~and ~~the~~availability ~~amounts owed~~ under ~~this facility were classified as long-term debt Excluding the effects of the classification of amounts owed pursuant to~~ our revolving credit ~~agreement~~facility aswill ~~short-term debt,~~be ~~our~~sufficient ~~working~~to ~~capital~~meet ~~position~~our ~~would~~normal ~~have~~expected ~~been~~working ~~$26.3 million at October 4, 2003. Our~~capital ~~current ratio (current assets divided by current liabilities) at October 4~~requirements, ~~2003~~planned ~~was~~capital ~~1.00 to 1.00~~expenditures, ~~compared~~and ~~to 1.56 to 1.00 at December 28, 2002. However, excluding the classification of amounts owed pursuant to our revolving credit agreement as short-~~term debt, ~~our~~payments ~~current~~for ~~ratio would have been 1~~2005.48 ~~to 1.00 at October 4, 2003.~~

AsThe offollowing ~~October~~tables 4,summarize ~~2003,~~ our ~~borrowings~~cash ~~were~~flow ~~approximately~~during ~~$26.7~~the ~~million~~first ~~under~~quarters ~~our~~of ~~unsecured bank~~2005 ~~revolving~~and ~~credit agreement. Because this agreement expires on April 30,~~ 2004, ~~we have~~and ~~classified~~other ~~this~~information ~~debt~~related asto ~~short-term. We are currently exploring a new, replacement or extended credit agreement with various financial institutions, including~~ our ~~existing banks,~~liquidity and ~~expect~~capital toresources ~~have~~(in ~~a new~~thousands, ~~replacement~~except ~~or extended credit agreement in place prior~~for toratios): ~~April 30, 2004.~~

	2005			2004

Cash and cash equivalents at beginning of year	$	5,870		$	1,323
Cash provided by operating activities		4,507			1,550
Cash provided by (used in) investing activities		(29	)		2,592
Cash provided by (used in) financing activities		(4,231	)		3,429
Cash of consolidated franchises at beginning of period		--			115

Cash and cash equivalents at end of period	$	6,117		$	9,009

~~Our~~In March 2004, we entered into a new, secured three-year, $40.0 million revolving credit facility ~~agreement~~with ~~requires~~LaSalle usBank and U.S. Bank. The new credit facility replaced our former unsecured $35.0 million revolving credit facility that was to ~~comply~~expire ~~with~~on ~~the~~April ~~following~~30, ~~financial~~2004. Our ~~covenants~~new credit facility required us to pledge all of our assets as collateral and ofincreased our interest rate by 25 to 50 basis points compared to the ~~end~~weighted ofaverage interest ~~each~~rate ~~quarter~~that we paid in 2003. In addition, our new credit facility includes covenants that prohibit us from taking certain other actions. For example, these covenants:

Financial Covenant	Required Amount/Ratio	Ratio as of October 4, 2003
Tangible net worth	Our tangible net worth (as defined in our revolving credit agreement) must equal or exceed $20 million plus 50% of our consolidated net earnings (as defined in our revolving credit agreement) since January 1, 2001	Our tangible net worth exceeded this requirement by $8.8 million
Fixed Charge Coverage	1.20:1.00 (minimum)	0.94:1.002
Ratio 1
Funded Debt plus	2.50:1.00 (maximum)	1.87:1.004
Contingent Liabilities to
EBITDA 3

•

prohibit us from guaranteeing additional franchisee bank debt;

1• ~~Our~~prohibit ~~fixed~~us ~~charge~~from ~~coverage~~paying ~~ratio is defined as (i) EBITDA, or earnings before interest, taxes, depreciation and amortization (as defined in our revolving credit agreement) minus~~ cash dividends ~~minus~~on ~~income~~our ~~taxes~~common ~~paid and minus capital expenditures, in each case for the most recent four quarters~~stock; ~~divided by (ii) the sum of our (a) interest expense for the most recent four quarters, (b) current maturities of our long-term debt~~ and ~~(c) net current obligations under capital leases. As of October 4, 2003, our current obligations of $2.2 million under capital leases were offset by related sublease receivables of $1.3 million.~~

2• ~~Although~~limit ~~not reflective of~~ our ~~business~~ability understanding with our banks, a technical reading of the terms of our revolving credit agreement could require that the amounts outstanding under this agreement be treated as short-term debt for purposes of calculating this ratio. If calculated in this manner, our fixed charge coverage ratio would be 0.11:1.00. We are currently working with our banks to ~~clarify~~repurchase our ~~revolving~~common ~~credit agreement so that amounts owed hereunder are treated as long-term debt for purposes of calculating this ratio~~stock.

3The ~~Funded~~covenants ~~Debt,~~in ~~Contingent~~our ~~Liabilities~~new ~~and~~credit facility ~~EBITDA~~also ~~are~~limit ~~defined in~~ our ~~revolving~~ability ~~credit~~to ~~agreement.~~incur ~~For~~additional ~~purposes~~debt ofand ~~this~~other ~~calculation~~obligations, ~~amounts~~including capital ~~owed~~lease ~~under~~obligations. In addition, our ~~revolving~~new credit ~~agreement~~facility ~~were~~requires ~~not~~us ~~included~~to ascomply ~~short-term~~with the ~~debt.~~following financial covenants at the end of each quarter:

4 Although not reflective of our business understanding with our banks, a technical reading of the terms of our revolving credit agreement could require that the amounts outstanding under this agreement be treated as short-term debt for purposes of calculating this ratio. If calculated in this manner, our funded debt plus contingent liabilities to EBITDA ratio would be 0.69:1.00. We are currently working with our banks to clarify our revolving credit agreement so that amounts owed hereunder are treated as long-term debt for purposes of calculating this ratio.

Financial Covenant⁽¹⁾	Required Ratio	Ratio as of April 23, 2005	Ratio as of January 1, 2005

Fixed Charge Coverage Ratio⁽²⁾	At least 1.25:1	3.31:1	5.01:1

Total Senior Debt Cash Flow Leverage Ratio⁽³⁾	No more than 2.00:1	1.35:1	1.48:1

Paid Sublease Ratio⁽⁴⁾	At least 0.90:1	0.98:1	0.98:1

As indicated above, as of October 4, 2003, we did not meet the fixed charge coverage ratio required by our revolving credit agreement. As a result, we were not in technical compliance with the terms of our revolving credit agreement. We are currently working with our banks to receive a waiver of this deficiency or an amendment to our revolving credit agreement that would lower this ratio so that we will be in compliance. In order to obtain such a waiver or amendment, our banks may require us to pay an additional fee, agree to additional and/or more restrictive loan covenants, provide collateral security for their loans and/or our franchisee guarantees, and/or agree to other restrictions on our use of capital, including potentially on our capital expenditures, our ability to effect acquisitions, our stock repurchases and/or our payment of dividends. Although we believe that the following potential consequences are unlikely, because we are not in technical compliance with our revolving credit agreement, our banks technically could (i1) ~~refuse~~Each ~~to lend us additional amounts under our revolving credit agreement and/or (ii) require us to repay the entire amount owed thereunder prior to the April 30, 2004 expiration date~~ of ~~the revolving credit agreement. If our banks exercise either of~~ these ~~options,~~ratios ~~then~~is ~~our current~~defined working capital levels would likely not provide us with an adequate liquidity position for the remainder of the year. We are currently exploring a new, replacement or extended credit facility with various financial institutions, including our existing banks, and we believe we will have a new, replacement or extended credit agreement in ~~place~~ ~~prior to the April 30, 2004 expiration of~~ our revolving credit agreement.

15(2) Our Fixed Charge Coverage Ratio is a measure of our cash flow compared to our fixed charges.

~~Two of the financial covenants in our revolving credit agreement are based, in part, on our EBITDA~~ (~~as defined above~~3). ~~Although~~Our ~~EBITDA~~Total isSenior ~~used~~Debt asCash aFlow ~~measurement~~Leverage ~~tool~~Ratio ~~used to evaluate company performance and cash flow by management and for our debt covenant calculations, it~~ is ~~not intended to be an alternative to performance measures under generally accepted accounting principles. Nevertheless, we believe that EBITDA is useful information to investors because it is~~ a ~~tool to~~ measure ~~our compliance with the provisions~~ of our ~~revolving~~ ~~credit~~senior ~~agreement.~~debt ~~The~~compared ~~following~~to ~~table compares~~ our ~~EBITDA~~cash ~~with our earnings before income taxes:~~ flow.

	For the 12-weeks ended				For the 40-weeks ended
	October 4, 2003		October 5, 2002		October 4, 2003		October 5, 2002
Net earnings	$	684	$	1,443	$	4,259	$	5,266
Interest		704		425		1,738		1,323
Income Taxes		437		901		2,722		3,323
Depreciation and amortization		2,372		1,829		6,884		5,885
EBITDA	$	4,197	$	4,598	$	15,603	$	15,797

(4)	Our Paid Sublease Ratio is a measure of the number of our franchisees who sublease their stores from us who are current on their rent payments.

Cash Flows From Operating Activities

~~For~~Cash ~~the~~provided ~~40-~~by ~~weeks~~operating ~~ended~~activities ~~October~~was $4,.5 ~~2003,~~million ~~our~~in ~~net~~2005 ~~cash~~compared ~~provided~~to ~~from operations was~~ $101.7 6 million, ~~compared~~in 2004. toThis ~~$5.5~~change ~~million~~was ~~for~~largely the ~~same~~result ~~period~~of cash generated in ~~2002.~~2005 ~~This~~from ~~increase~~reduced inlevels ~~net~~of wholesale inventory. Cash provided by operating ~~cash~~activities ~~inflows~~before ~~compared~~changes toin ~~2002~~operating assets ~~was~~and ~~primarily~~liabilities ~~due~~was to$4.6 ~~timing~~million ofin the ~~receipt~~first quarter of ~~payments~~ ~~from~~2005, ~~our~~compared ~~wholesale~~to ~~customers~~$4.6 million ~~and~~in the ~~timing~~first quarter of ~~payments to our suppliers~~2004.

Cash Flows From Investing Activities

~~Net~~Our ~~cash~~aggregate ~~outflows~~capital ~~from~~expenditures ~~investing~~were ~~activities for the first three quarters of 2003 totaled~~ $90.~~7 million,~~5 ~~compared to $9.6~~ million for the ~~same period in 2002. Capital expenditures during the~~ first ~~three~~quarter ~~quarters~~ of ~~2003~~2005, ~~included $6.7 million for retail equipment and fixtures~~compared ~~primarily related~~ to ~~new store openings,~~ $12.42 million ~~relating to improvements at our distribution centers and bakery/deli facility, $0.6 million~~ for ~~corporate~~the ~~office technology~~quarter ~~hardware~~of ~~and software and $1~~2004.9 ~~million for our ongoing systems projects.~~

We have used sale and leaseback arrangements to finance substantially all of our retail facility projects. Under these arrangements, we capitalize the costs incurred for land and buildings under development until project completion. Upon completion, the facilities are sold and lease arrangements are established. In the first quarter of 2004, we completed the sale and leaseback for the corporate store opened in January 2004 and we were reimbursed for some interim funding related to the replacement bakery/deli production facility. We currently have no further commitments for any additional new or replacement facilities.

Our 2005 capital budget is approximately $6.1 million. Approximately $1.7 million of our 2005 budget has been committed for implementing our retail pricing technology that will allow us to more strategically manage competitive prices and ultimately enhance our gross margins. Our remaining capital budget has been allocated as follows: $2.2 million for remodeling and maintaining our corporate stores, $0.8 million for our distribution centers and our new bakery/deli manufacturing facility, and $1.4 million for other technology-related projects and office renovations. We are not currently anticipating the purchase of any unaffiliated retail stores in 2005, but we may acquire supermarkets from one or more of our franchisees that may decide to exit the supermarket business. Any amounts that we spend in such transactions would be in addition to our current 2005 capital budget.

Cash Flows From Financing Activities

~~Net~~Cash ~~cash~~used ~~outflows~~for ~~from~~ financing activities ~~for~~primarily ~~first~~reflects ~~three~~net ~~quarters~~borrowing ofor ~~2003~~repayments ~~totaled~~under ~~$3.7~~our ~~million~~revolving ~~compared~~credit tofacility, ~~$5.5~~and ~~million~~payments inof ~~cash~~capital ~~inflows~~lease ~~for~~obligations ~~the~~and ~~same~~term ~~period in 2002~~debt. ~~The change~~During ~~was primarily due to~~ the ~~net~~first ~~change~~quarter inof ~~the~~2005, ~~borrowing~~we ~~activity~~used ~~year~~cash ~~over~~to ~~year.~~reduce ~~During~~borrowing ~~the first~~under ~~three quarters of 2003,~~ our ~~borrowings~~revolving oncredit facility ~~our~~by $352.07 million ~~revolving~~and ~~credit agreement~~to ~~increased~~pay $1.34 million ~~compared~~in tocapital anlease ~~increase~~obligations ofand $9term debt.1 ~~million~~In ~~for~~ the first ~~three~~ ~~quarters~~quarter of ~~2002.~~2004, ~~Net~~we ~~cash~~paid ~~outflows~~$1.4 million for ~~2003~~capital ~~were~~lease ~~also~~obligations ~~impacted by our increased~~and ~~acquisition~~term ofdebt ~~treasury~~and ~~stock~~while ~~during~~borrowing ~~the~~an ~~first~~additional ~~three~~$5.5 ~~quarters~~million ofunder ~~2003~~our ~~compared~~revolving ~~to the same~~credit ~~period in 2002~~facility. ~~These~~Due ~~stock repurchases were primarily~~ to ~~provide~~credit ~~liquidity~~facility torestrictions, ~~our shareholders~~and in our ~~retirement~~focus ~~savings~~on ~~plan.~~reducing ~~During~~our ~~the~~debt, ~~first three quarters of 2003~~ we do ~~repurchased~~not ~~156,000~~currently ~~shares~~anticipate ofpaying ~~our~~any ~~common~~dividends ~~stock~~or ~~for~~making anany ~~aggregate~~additional ~~price~~repurchases ~~of nearly $2.4~~under ~~million,~~our ~~compared~~stock torepurchase ~~104,000~~plan ~~shares~~during ~~aggregating nearly $1~~2005.8 ~~million for the first three quarters of 2002.~~

~~Our ratio~~19 of total liabilities to shareholders’ investment at the end of the third quarter of 2003 was 2.41 compared to 2.09 at fiscal year end 2002 and 1.76 at the end of the third quarter of 2002. The increase in the ratio of liabilities to shareholders’ investment since the end of the third quarter of 2002 was primarily due to the recognition of two new capitalized leases for our new corporate store in Kenosha, Wisconsin and the replacement corporate store in Sheboygan, Wisconsin, as well as an increase of $4.0 million in borrowings under our $35.0 million revolving credit agreement to fund our systems projects and franchised and corporate store remodeling and replacement projects.

16Special Note Regarding Forward-Looking Statements

AtCertain matters discussed in this filing, particularly in the ~~end~~section titled “Item 2. – Management’s Discussion and Analysis of ~~the~~Financial ~~third~~Condition ~~quarter~~and Results of ~~2003~~Operations,” ~~approximately~~are “forward-looking ~~$2.2~~statements” ~~million~~intended ~~remained~~to ~~available~~qualify for the safe harbors from ~~our~~liability ~~current~~established ~~Board~~by the Private Securities Litigation Reform Act of 1995. These forward-~~authorized~~looking ~~$30~~statements ~~million~~can ~~share~~generally ~~repurchase~~be ~~plan~~identified as such because the context of the statement will include words such as we believe, anticipate, expect or words of similar import. ~~Also~~Similarly, statements that describe our future plans, objectives, strategies or goals are also forward-looking statements. Specifically, forward-looking statements include statements about: (a) our expectations regarding the anticipated benefits of our new operational focus, particularly our new in-store ~~October~~value ~~2003~~proposition and pricing and marketing strategy, including the impact that they will have on our future financial ~~Board~~performance and condition, including on our net sales and gross profit margins and comparable store sales; (b) the anticipated benefits that our new in-store value proposition and specific marketing plans and other operating goals will have on our underperforming corporate and franchised supermarkets and the potential consequences if such anticipated benefits are not realized; (c) the number of ~~Directors~~expected ~~declared~~owned and franchisee supermarket closings in 2005, the amount of charges we expect to incur in connection with such supermarket closings and the potential effect that such charges could have on our future financial performance and condition; (d) the annual savings that we expect to realize as a ~~third~~result ~~quarter~~of ~~2003~~our ~~cash~~full ~~dividend~~integration of ~~$0.09~~our ~~per~~Dick’s ~~share~~Supermarkets operations; (e) the anticipated impact that our new headquarters pricing system will have on our pricing strategy; (f) our ability to continue to grow our wholesale operations; (g) our belief that our existing bank credit facility will provide us with sufficient liquidity to meet our normal, expected working capital requirements, planned capital expenditures, and term debt payments for 2005; and (h) the potential that we may incur impairment charges for long-lived assets or goodwill and the potential magnitude of such ~~common~~charges. ~~stock~~Such forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect our anticipated results. ~~The~~Such ~~dividend~~risks isand ~~payable~~uncertainties include, but are not limited to, the following: (1) our realizing the expected benefits of our new in-store value proposition and the likely material adverse consequences to our financial results and condition if they are not realized or not realized in a timely manner; (2) the possibility that the our vendors may adversely change the terms on ~~December~~which they extend credit to sell us products; (3) our limited liquidity under our revolving credit facility; (4) our significant capitalized lease and guarantee amounts; (5) the presence of intense competitive market activity in our market areas, ~~2003~~including competition from warehouse club stores and deep discount supercenters; (6) the cost advantages that many of our competitors have as a result of their larger purchasing power and, in many cases, non-union workforces; (7) our ability to ~~shareholders~~identify and convert new franchisee stores; (8) our continuing ability to obtain reasonable vendor marketing funds for promotional purposes; (9) the potential recognition of ~~record~~repositioning onand/or other charges ~~November~~resulting 21from potential closures, ~~2003~~conversions and isconsolidations ~~expected~~of retail stores due principally to ~~approximate~~the $0competitive nature of the industry and to the quality of our retail store operators; (10) the potential recognition of additional charges relating to uncollectible accounts receivable from our franchise operators; (11) the potential recognition, if we are not able to achieve our operating plans for certain of our corporate retail stores, of additional potentially significant impairment charges for long-lived assets or goodwill; and (12) our costs to continue to comply with the Sarbanes-Oxley Act of 2002.5 ~~million~~Shareholders, potential investors and other readers are urged to consider these risks carefully in evaluating the forward-looking statements made herein and are cautioned not to place undue reliance on such forward-looking statements. The forward-looking statements made herein are only made as of the date of this annual report on Form 10-K and we disclaim any obligation to publicly update such forward-looking statements to reflect subsequent events or circumstances.

~~Major~~Item ~~2003~~3. Quantitative ~~Commitments~~and Qualitative Disclosures about Market Risk

~~The~~Our ~~first~~only ~~two~~variable ~~phases~~rate offinancial ~~our~~instrument ~~$20~~subject ~~million~~to ~~business~~interest ~~information~~rate ~~technology~~risk ~~capital~~is ~~expenditure~~our revolving ~~project~~credit facility, ~~the~~which ~~infrastructure~~permits ~~and~~borrowings ~~the~~at ~~wholesale~~interest ~~business~~rates ~~segments,~~based ~~have~~on ~~been~~either ~~completed.~~the ~~Since~~bank’s ~~the~~prime ~~fourth~~rate ~~quarter~~or adjusted LIBOR. As a result of ~~2001,~~the weamounts ~~have~~owed ~~invested~~pursuant ~~about~~to ~~$10.4~~our revolving ~~million~~credit facility, increases in market interest rates would cause our ~~systems~~interest ~~project.~~expense ~~The~~to ~~remaining~~increase ~~two~~and ~~phases~~our ~~are~~earnings ~~the~~from ~~retail~~continuing ~~business~~operations ~~and~~before ~~services~~income ~~segments~~taxes to decrease. InBased ~~the retail~~on ~~business~~our ~~segment,~~credit ~~the~~facility ~~new~~borrowings ~~point-~~as of~~-sale~~ ~~hardware~~April ~~and~~23, ~~software~~2005, ~~has~~a ~~been~~100 ~~installed~~basis atpoint ~~three~~increase ~~stores.~~in ~~Although~~market weinterest ~~are~~rates ~~continuing~~would ~~the~~increase ~~rollout~~our toannual ~~all~~interest ofexpense ~~our~~by approximately ~~stores~~$176,000. ~~the~~Similarly, ~~schedule has~~a ~~been~~100 ~~extended~~basis aspoint wedecrease ~~integrate~~in the ~~rollout~~market ~~with~~interest ~~other~~rate would ~~projects~~reduce at our ~~stores~~annual interest expense by approximately $176,000.

~~Due~~We tobelieve ~~the~~that ~~difficult economic climate, intense competition in~~ our ~~markets~~exposure ~~and~~to ~~the~~other ~~length~~market ~~of time~~risks ~~since~~including ~~our~~risks ~~last~~related ~~successful acquisition, we do not expect~~ to ~~meet~~changes ~~our goal of increasing our net sales by 15%~~ in ~~2003 from 2002. As a result of these factors and our~~ ~~recent~~foreign ~~financial~~currency ~~results~~exchange rates, wecommodity ~~are intensifying our efforts to improve the results of our current operations and reevaluating the scope and implementation timetable for the services segment of our systems project~~prices, ~~including~~equity ~~determining how we can best incorporate the requirements of Section 404 of the Sarbanes-Oxley Act into the implementation. As a result of these reevaluations~~prices, ifand wetrade ~~decide to cancel or scale back certain phases of our~~accounts ~~services~~receivable ~~systems~~is ~~project,~~not ~~then we may incur~~ significant ~~impairment charges~~. ~~These charges may materially affect our results in the quarter and year that they are incurred.~~

~~Our 2003~~20 capital budget is approximately $14.8 million, compared to our actual 2002 capital spending of $13.7 million. This budget is comprised of approximately $7.9 million for corporate retail replacement supermarkets, $1.3 million for distribution center additions, $4.4 million for our business systems project and $1.2 million for other technology-related and office upgrade projects. As of October 4, 2003, we had approximately $4.2 million remaining to be expended this year out of our total $14.8 million capital budget. As indicated above, we are reevaluating all of our planned capital expenditure projects with a view towards canceling or deferring all nonessential projects. As a result, we likely will not spend the entire amount of our remaining 2003 capital budget. We are currently evaluating our capital expenditure budget for 2004. We anticipate that our capital budget for 2004 will be lower, and perhaps substantially lower, than in recent years due to the current economic environment and potential limitations on our revolving credit agreement borrowing availability. We are not currently anticipating purchasing any potential multiple-store supermarket chain acquisitions. We may, however, acquire stores from one or more of our franchisees that decide to exit the supermarket business.

~~Special~~Item ~~Note~~4. Procedures ~~Regarding~~and ~~Forward-Looking~~Controls ~~Statements~~

Certain matters discussed in our Form 10-Q are “forwardlooking statements” intended to qualify for the safe harbors from liability established by the Private Securities Litigation Reform Act of 1995a. ~~These~~Evaluation ~~forwardlooking statements can generally be identified as such because the context~~ of ~~the~~disclosure ~~statement~~controls will include words such as we believe, anticipate, expect or words of similar import. Similarly, statements that describe our future plans, objectives, strategies or goals are also forwardlooking statements. Specifically, forward-looking statements include our statements about our: (a) expectation that we will not meet our goal of increasing sales by 15% in 2003 compared to 2002; (b) plans to open an expanded Platteville centralized production facility, remodel and expand existing supermarkets, open additional corporate supermarkets and convert existing supermarkets to franchised supermarkets; (c) expectations regarding our current and future reserves related to our franchise receivables; (d) expectations procedures:

17 Based on their respective evaluations as of the end of the fiscal quarter to which this Quarterly Report on Form 10-Q relates, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

regarding the savings that will result from our recent reduction of our corporate staff; (e) expectations regarding a special assessment related to a shortfall in one of our union health insurance plans; (f) expectations regarding the effects of our plans to close our Watertown, Wisconsin store, including the anticipated closing costs and reduction in our future sales; (g) expectations regarding the effects that other potential store closings may have on our financial performance; (h) expectations that we will not meet our previously announced earnings per share target; (i) belief that we may, in the future, be required to consolidate our results with those of some or all of our franchisees and the effect that such a consolidation might have on our financial statements; (j) expectations that we will enter into a new, replacement or extended credit facility prior to April 30, 2004; (k) expectations regarding the terms on which our banks may enter into a waiver or amendment of our revolving credit agreement related to our technical non-compliance such agreement; (l) belief that our banks are not likely to exercise the remedies available to them in light of our technical non-compliance with our revolving credit agreement; (m) expectations regarding the adequacy of our liquidity for the remainder of the year; (n) review of our systems project, including the impairment charges that we may incur if we cancel or scale back one or more phases of this project; and (o) anticipated capital expenditures during the remainder of 2003 and in 2004b. ~~Such~~Changes forward-looking statements are subject to certain risks and uncertainties that may materially adversely affect the anticipated results including, but not limited, to the following: (1) the cost and results of our new business information technology systems replacement project, including any financial statement and/or operational impact of any decision not to implement certain phases thereof; (2) the presence of intense competitive market activity in ~~our market~~internal ~~areas,~~control ~~including~~over competition from warehouse club stores and deep discount supercenters; (3) our ability to identify and develop new market locations and/or acquisition candidates for expansion purposes; (4) our continuing ability to obtain reasonable vendor marketing funds for promotional purposes; (5) our ability to continue to recruit, train and retain quality franchise and corporate retail store operators; (6) the potential recognition of significant repositioning charges resulting from potential closures, conversions and consolidations of retail stores due principally to the competitive nature of the industry and to the quality of our retail store operators; (7) the potential recognition of additional reserves and/or write-offs relating to accounts receivable from our franchise operators; (8) vacancy in our chief executive officer and chief financial officer positions; (9) ability to obtain a waiver of our breach under our revolving credit agreement or an amendment to our revolving credit agreement and the restrictions that might be imposed in connection with any such waiver or amendment; (10) ability to obtain a new, replacement or extended credit facility to replace our current revolving credit agreement that expires on April 30, 2004; (11) costs to implement the Sarbanes-Oxley Act of 2002; and (12) increasing debt, capitalized lease and guarantee amounts. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forwardlooking statements and are cautioned not to place undue reliance on such forwardlooking statements. The forwardlooking statements made herein are only made as of the date of this Form 10-Q and we undertake no obligation to publicly update such forwardlooking statements to reflect subsequent events or circumstances. reporting:

~~Item~~ During the 3first quarter of 2005, we completed the integration of the redundant management functions for our Dick’s Supermarkets operations. ~~Quantitative~~ This effort included incorporating substantially all of the accounting operations for the Dick’s Supermarkets stores and ~~Qualitative~~the ~~Disclosures~~bakery/deli ~~about~~production ~~Market~~facility ~~Risk~~into the accounting operations for all of our other corporate operations. As a result, these entities are now subject to the same accounting processes and internal controls as other corporate stores.

~~Our~~Except ~~only~~for ~~variable~~the ~~rate~~preceding ~~financial~~change, ~~instrument~~there ~~subject~~were tono ~~interest~~changes ~~rate~~in ~~risk~~our isinternal ~~our~~control ~~$35~~over ~~million~~financial ~~revolving~~reporting ~~credit~~identified ~~agreement,~~in ~~which~~connection ~~permits~~with ~~borrowings~~the atevaluation ~~interest~~required ~~rates~~by ~~based~~Rule on13a-15(b) ~~either~~of the ~~bank’s~~Exchange ~~prime~~Act ~~rate~~that oroccurred ~~adjusted~~during ~~LIBOR~~the ~~rate.~~fiscal Wequarter ~~borrowed~~to ~~approximately~~which ~~$26.7 million under~~ this ~~facility~~quarterly asreport relates ofthat ~~October~~have 4,materially ~~2003 and~~affected, asor aare ~~result,~~reasonably ~~increases~~likely ~~in market interest rates would cause our interest expense~~ to ~~increase~~materially ~~and our earnings before income taxes to decrease. Based on our outstanding revolving credit agreement borrowings as of October 4~~affect, ~~2003,~~ ~~a 100 basis point increase in market interest rates would increase~~ our ~~annual~~internal ~~interest~~control ~~expense~~over byfinancial ~~approximately $267,000~~reporting. ~~Similarly, a 100 basis point decrease in the market interest rate would reduce our annual interest expense by approximately $267,000.~~

~~We believe~~PART ~~that our exposure to market risks related to changes in foreign currency exchange~~II OTHER ~~rates~~INFORMATION ~~and trade accounts receivable is insignificant.~~

Item 42. ~~Procedures~~ Changes ~~and~~in ~~Controls~~Securities and Use of Proceeds

In January 1992, our board of directors instituted a share repurchase plan. Since then, the ~~Evaluation~~aggregate amount of ~~disclosure~~our ~~controls~~common stock that we can repurchase pursuant to this plan has been increased several times, most recently to its current $30.0 million limit. During the quarter ended April 23, 2005, we did not repurchase any shares of our common stock. Although the plan does not have any expiration date, due to credit facility restrictions, and ~~procedures:~~our focus on reducing our debt, we do not currently anticipate making significant additional repurchases under this plan during 2005.

~~Based~~Pursuant onto ~~their~~covenants ~~respective~~in ~~evaluation~~our asrevolving ofcredit ~~the~~facility, ~~end~~we ofare ~~the~~prohibited ~~period~~from ~~covered~~paying ~~by this Quarterly~~cash ~~Report~~dividends on ~~Form 10-Q,~~ our ~~acting~~common ~~principal~~stock ~~executive officer~~ and ~~chief~~are ~~accounting~~limited ~~officer have~~in ~~concluded that~~ our ~~disclosure~~ability ~~controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934 (the “Exchange Act”)) are effective~~ to ~~ensure~~repurchase ~~that~~our ~~information required to be disclosed by us in reports that we~~common ~~file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms~~stock.

1821

bItem 6. ~~Changes~~ Exhibits ~~in internal controls:~~

~~There have~~10.1 ~~been~~Offer noof ~~significant~~Employment ~~changes in our internal control over financial reporting that have materially affected or are reasonably likely~~ to ~~materially~~Joe ~~affect~~Livorsi, ~~our~~dated ~~internal control~~April ~~over~~4, ~~financial reporting subsequent to the date of the previously- mentioned evaluation.~~ 2005

~~PART~~31.1 ~~II OTHER INFORMATION~~Certification by the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~Item 3~~31. ~~Defaults~~2 ~~upon Senior~~Certification ~~Securities~~by the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

~~In response~~32 toCertifications ~~this~~of ~~Item,~~Periodic ~~the~~Financial ~~information~~Report ~~set~~by ~~forth in Note 6, “Long-Term Debt,” in~~ the ~~Notes~~Principal toExecutive ~~Condensed~~Officer ~~Consolidated Financial Statements~~ and ~~the~~Principal ~~information~~Financial ~~related~~Officer pursuant to ~~our~~ ~~revolving~~Section ~~credit~~906 ~~agreement set forth in “Management’s Discussion and Analysis~~ of ~~Financial~~the ~~Condition~~Sarbanes-Oxley ~~and~~Act ~~Results~~ of ~~Operations – Liquidity and Capital Resources – Summary” is hereby incorporated by reference~~2002.

~~Item~~22 ~~5. Other Items~~

On March 28, 2003, we filed our annual report on Form 10-K for our fiscal year ended December 28, 2002 (“Fiscal 2002”). Due to a clerical error, the Independent Auditors’ Report relating to Schedule VII — Valuation and Qualifying Accounts and Reserves for the fiscal years 2002, 2001 and 2000 was erroneously omitted. This schedule and Independent Auditors’ Report are being filed solely to correct this error and no other changes have been made to the schedule attached hereto as Exhibit 99. Except as required to correct this error, all information contained in Exhibit 99 is stated as of March 28, 2003, the date that we filed our Form 10-K for Fiscal 2002. SIGNATURES

~~Item~~Pursuant ~~9. Exhibits~~to ~~and~~the requirements of the ~~Reports~~Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its ~~Form~~behalf ~~8-K~~by the undersigned thereunto duly authorized.

(a) Exhibits


	FRESH BRANDS, INC.
Dated: June 1, 2005	By: /s/ Louis E. Stinebaugh
	Louis E. Stinebaugh,
	President and Chief Operating Officer
Dated: June 1, 2005	By: /s/ John H. Dahly
	John H. Dahly,
	Executive Vice President, Chief Financial Officer,
	Secretary and Treasurer

3123 ~~Certifications by the Acting Chief Executive Officer and Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~

32 Certification of Periodic Financial Report by the Acting Chief Executive Officer and Chief Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

99 Schedule VII — Valuation and Qualifying Accounts and Reserves

(b) Reports on Form 8-K

We furnished a current report on Form 8-K dated August 7, 2003 pursuant to item 9 with respect to our press release for the second quarter ended July 12, 2003.

We furnished a current report on Form 8-K dated September 12, 2003 pursuant to item 9 with respect to our press release announcing the termination of the employment relationship with our Chief Financial Officer, Mr. S. Patric Plumley, effective September 12, 2003.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	FRESH BRANDS, INC.
Dated: November 18, 2003	By: /s/ Michael G. Isken
	Michael G. Isken,
	Controller (Chief Accounting Officer)

UNITED STATESSECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FRESH BRANDS, INC.

General

Results of Operations

Wholesale segment

•Corporate Theretail September 2003 purchase and consolidation of a Menasha, Wisconsin competitive store with our existing Piggly Wiggly storesegment

GrossRetail ProfitStores

Net Earnings

Critical Accounting Policies and Estimates

Liquidity and Capital ResourcesSummary

Cash Flows From Operating Activities

Cash Flows From Investing Activities

Cash Flows From Financing Activities

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Liquidity and Capital Resources
Summary

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