Item 1. Business
General
	Jitney-Jungle Stores of America, Inc. and subsidiaries (the "Company") is a leading operator of supermarkets in the Southeast. As of January 3, 1998 the Company operated 217 stores located throughout Mississippi, Alabama and Louisiana and in selected markets in Tennessee, Arkansas and Florida. The Company is the largest supermarket operator in Mississippi, with 89 stores.
	On July 8, 1997, the Company entered into a definitive merger agreement with Delchamps, Inc. ("Delchamps"), an Alabama corporation. On September 12, 1997, Delta Acquisition Corporation ("DAC") a wholly owned subsidiary of the Company, completed an all cash tender offer for shares of Delchamps and accepted for payment approximately 75% of such shares. On November 4, 1997, DAC was merged with and into Delchamps. Delchamps was the surviving corporation and became a wholly- owned subsidiary of the Company. In connection with the acquisition the Company, among other things, (i) issued and sold $200 million of unsecured senior subordinated notes due 2007 (the "Senior Subordinated Notes") and (ii) entered into a $150 million revolving credit agreement (the "Senior Credit Facility") with Fleet Bank, N.A., which replaced the then existing $100 million revolving credit agreement ("Credit Facility") with Fleet Bank, N.A.
	The proceeds from the sale of the Senior Subordinated Notes and the borrowing under the Senior Credit Facility and the use of existing cash balances of the Company were used to repay certain outstanding Delchamps indebtedness, purchase Common Stock from Delchamps shareholders and pay fees and expenses related to the acquisition of Delchamps.
	Through a public offering, the Company issued and sold the Senior Subordinated Notes which bear interest at a rate of 10 3/8% per annum, payable semi-annually on March 15 and September 15 of each year. In addition, the Company entered into a revolving credit agreement on March 5, 1996 which provided a $100 million Credit Facility and subsequently, on September 15, 1997 the Company amended and restated the agreement to provide a $150 million Senior Credit Facility. The borrowings outstanding under the Senior Credit Facility at January 3, 1998 were $49.8 million. The commitments under the Senior Credit Facility will terminate, and all loans outstanding thereunder will be required to be repaid in full on March 15, 2004. Both the Senior Subordinated Notes and the Senior Credit Facility restrict future payment of dividends.
	On November 16, 1995, the Company and JJ Acquisitions Corp. ("JJAC") entered into an Agreement and Plan of Exchange and of Merger (the "Merger"). In connection with the Merger on March 5, 1996, JJAC among other things, (i) issued and sold $200 million of unsecured senior notes due 2006 (the "Senior Notes"), (ii) entered into a $100 million revolving credit agreement ("the Credit Facility") with Fleet Bank, N.A. (formerly NatWest Bank, N.A.), (iii) issued and sold Common Stock and a warrant in the aggregate amount of $7.4 million, and (iv) issued and sold three classes of Preferred Stock in the aggregate amount of $57.6 million. The proceeds from the sale of the notes, the Common Stock, warrants and Preferred Stock, together with borrowing under the Credit Facility and the use of existing cash balances of the Company were used to repay certain outstanding indebtedness,
purchase Common Stock from existing shareholders and pay fees and expenses related to the Merger. JJAC was merged with and into the Company, with the Company continuing as the surviving corporation. Upon the completion of the Merger, Bruckmann, Rosser, Sherrill & Co., L.P., owned 356,250 shares or approximately 83.82% of the Company's outstanding Common Stock on an undiluted basis.
	Through a public offering, JJAC issued and sold the Senior Notes which bear interest at a rate of 12% per annum, payable semiannually on March 1 and September 1 of each year. In addition, on March 5, 1996, the Company entered into the Credit Facility (which has been replaced by the Senior Credit Facility). The Senior Notes restrict future payment of dividends. 	 Store Formats
	Through its 79 years of operations in the Southeast, the Company has developed a strong consumer franchise, with many of its stores located in prime, high-traffic sites that provide significant competitive advantages. The Company currently operates supermarkets under three formats, each targeting specific market segments: (i) conventional supermarkets operating under the "Jitney-Jungle" and "Delchamps" name, (ii) combination food and drug supermarkets operating primarily under the "Jitney Premier" name and (iii) discount supermarkets operating primarily under the "Sack and Save" name. The Company currently operates 200 supermarkets (169 conventional stores averaging approximately 35,000 square feet, 11 combination stores averaging approximately 56,000 square feet and 20 discount stores averaging approximately 60,000 square feet), 53 gasoline stations and 10 liquor stores including recent changes made subsequent to fiscal year end. All of the Company's conventional and combination supermarkets utilize a "Hi-Lo" pricing strategy (featuring competitive prices on all product offerings as well as a selection of items that are promoted at lower prices to generate increased customer traffic), offer a wide range of specialty departments and deliver high levels of service to customers. The stores under the Jitney-Jungle name utilize the Jitney-Jungle Gold Card (a frequent shopper card) which was launched in January, 1997. Also, the 11 combination supermarkets offer expanded general and specialty merchandise, a wider range of full-service departments, expanded beauty care and pharmacy departments, superior customer service and are open 24 hours a day, seven days a week. The Company's 20 discount supermarkets utilize an everyday low price strategy (featuring consistently low prices aimed at the value conscious shopper). The discount supermarkets have lower operating costs than the conventional and combination supermarkets due to fewer service departments, lower customer service levels and enhanced productivity methods. The Company also operates 53 gasoline stations and 10 liquor stores at selected supermarket sites. The Company features nationally advertised and distributed merchandise, and also markets food products under a private label program. In July 1997 the Company began shifting a significant portion of its total advertising expenditures to television and radio media, focusing on a quality and service image, in order to reach a wider target audience.
Competition
	The Company's business is highly competitive. Competition is based primarily on supermarket location, price, service, convenience, cleanliness and product quality and variety. There is direct competition from many supermarkets, including independent stores and local outlets of regional and national
chains. Competition also exists with respect to particular products from such retailers as convenience stores, warehouse stores, drugstores and nonfood superstores.
Employees
	As of March 31, 1998, the Company employed approximately 18,000 people, of whom approximately 42% were full-time and 58% were part-time employees. None of the employees of the Company are covered by a collective bargaining agreement.
	The Company has an incentive compensation plan covering its key management staff under which incentive compensation for store operations is based upon the results of profitability of the operations within the scope of their management responsibility. Also, the Company has established a Stock Option Plan pursuant to which certain key management have been granted options to acquire shares of common stock of the Company (subject to certain restrictions) at a price determined at the time of issuance to be an estimate of fair market value.
Trade Names, Service Marks, Trademarks and Franchises
	The Company uses a variety of trade names, service marks and trademarks. Except for "Jitney-Jungle", "Sack and Save", and "Pump And Save", the Company does not believe any of such trade names, service marks or trademarks are material to its business. "Jitney-Jungle" is registered with the U.S. patent office and "Sack and Save", and "Pump and Save" are registered in the various states where the company operates. The Company is in the process of registering Delchamps with the U.S. patent office.
Environmental Matters
	The Company is subject to federal, state and local laws and regulations including those relating to environmental protection, workplace safety, public health and community right-to-know. The Company's supermarkets are not highly regulated under environmental laws since the Company does not engage in any industrial activities at these locations. The principal environmental requirements applicable to the Company's operations relate to the ownership or use of tanks for the storage of petroleum products, such as gasoline and diesel fuel, the operation of on-site paper trash incinerators, and the operation of an on-site printing facility. The Company operates 57 locations (including all 54 of the Pump and Save locations), and has retained responsibility for one former facility, at which petroleum products are stored in underground tanks. The Company has instituted an environmental compliance program designed to insure that these tanks are in compliance with applicable technical, operational and regulatory requirements, including periodic inventory reconciliation and integrity testing. The Company also operates small incinerators at 21 locations which burn paper trash and has air permits for these facilities. In addition, the Company's printing facility is subject to air and hazardous waste regulations. The Company's locations may have asbestos-containing materials which must be managed in accordance with environmental laws and regulations. However, the Company does not believe that the cost of such management will be material. The Company believes that the locations where it currently operates are in substantial compliance with regulatory requirements.
	The Company has undertaken programs to comply with upcoming regulatory obligations. First, at five locations, the Company must comply with petroleum tank upgrade or closure requirements under the Resource Conservation and Recovery Act of 1980, as amended, ("RCRA") (including all applicable requirements of state regulatory agencies) which must be met by the end of 1998. Second, over the next several years, the Company is planning to complete retrofitting of its chlorofluorocarbons ("CFC") chiller units to utilize non-CFC based refrigerants pursuant to the phase-out of CFCs under the Clean Air Act. Future events, such as changes in existing laws and regulations or their interpretation and the approach of other compliance deadlines may or will give rise to additional compliance costs or liabilities. Compliance with more stringent laws or regulations, as well as different interpretations of existing laws, may require additional expenditures by the Company which may be material. 	 	The Company may also be subject to requirements related to the remediation of, or the liability for remediation of, substances that have been released to the environment at properties owned or operated by the Company or at properties to which the Company sends substances for treatment or disposal. Such remediation requirements may be imposed without regard to fault and liability for environmental remediation can be substantial. Other than one previously owned property for which the Company retained responsibility for a clean-up in progress at the time of the sale, the Company has not been notified of any such releases relating to off- site treatment or disposal or to previously owned properties. However, 16 of the Company's locations have been or currently are the subject of environmental investigations or remediation, 12 as a consequence of known or suspected petroleum-related leaks or spills from storage tanks and four for minor spills or releases unrelated to tank usage. Four (4) other properties have undergone investigation or remediation for minor spills unrelated to tank usage.
	The Company may be eligible for reimbursement or payment for remediation costs associated with future releases from its regulated underground storage tanks and has obtained such reimbursement in the past. The states in which the Company operates each maintain a fund to assist in the payment of remediation costs and injury or damage to third parties from releases from certain registered underground tanks. Subject to certain deductibles, the availability of funds, compliance status of the tanks and the nature of the release, these funds have been and may be available to the Company for use in remediating releases from its tank systems. Due to the availability of such funds, the Company's unreimbursed cost for remediation at all of the facilities which have had leaks or spills from underground storage tanks has not been material. All significant required expenditures in connection with the clean up of such leaks and spills have been made at such locations, except at three recently discovered locations which are still undergoing investigation and one location awaiting state approval of its remediation plan. Remediation expenses at all the locations which are currently the subject of environmental investigation or remediation are anticipated to cost up to $240,000 in fiscal 1998 and approximately $125,000 per year thereafter, substantially all of which is subject to reimbursement as described above. In addition, the Company has obtained insurance coverage for bodily injury, property damage and corrective action expenses resulting from releases of petroleum products from underground storage tanks during the covered period at all 58 underground storage tank locations. 	
	Other than expenditures relating to the remediation of tank leaks and spills described above, the Company's expenditures to comply with environmental laws and regulations have primarily consisted of those related to tank upgrading and retrofitting CFC chiller units. The Company spent $130,000, $914,000, $468,000 and $515,000 for such activities during fiscal 1997 stub, fiscal 1997, 1996 and 1995, respectively. Between approximately $300,000 and $500,000 in expenditures are contemplated for retrofitting the CFC units and between approximately $455,000 and $755,000 in expenditures are contemplated for tank upgrading to comply with the 1998 tank standards or closure in fiscal 1998. These regulatory compliance costs are not covered by insurance.
Governmental Regulation
	The Company is subject to regulation by a variety of governmental agencies, including but not limited to the United States Food and Drug Administration, the United States Department of Agriculture and other federal, state and local agencies.
Fiscal Year Change
	The Company reports results of operations on a 52 or 53 week fiscal year. For fiscal years 1995, 1996 and 1997 the fiscal year ended on the Saturday nearest to April 30 of each year. The Company changed its fiscal year end on January 3, 1998 to the closest Saturday to December 31 of each year. This change created a "stub" year of 35 weeks for fiscal year ended January 3, 1998.
Item 2.
Item 2. Properties
	The following table recaps store data for fiscal 1997stub, 1997, 1996 and 1995:
(a) Changes subsequent to fiscal year end not included above are 	one gas station and seventeen supermarkets (16 conventional 	and 1 discount) were closed or sold. 	
	All of the Company's store properties are leased, with the exception of one store. These leases generally obligate the Company to pay its proportionate share of real estate taxes, common area maintenance charges and insurance costs. In addition, such leases generally provide for percentage of sales rent
when sales from the store exceed a certain dollar amount. These leases are usually long-term, with one or more renewal options. With the exception of one lease, which will expire in 2001, all leases will expire between 2005 and 2036 if the Company exercises all its options to renew. The Company owns all of its furnishing and fixtures in all supermarkets except for approximately $3.2 million of supermarket "POS" equipment which is leased, and has made various leasehold improvements to these supermarket sites. It is anticipated that the Company will own the furnishings and fixtures in all supermarkets under construction.
	Certain parties affiliated with the Company hold 20 leases, representing approximately 23% of the dollar amount of the Company's capital leases. Management believes that each of these leases was contracted for on an arm's length basis and contains terms that are no less favorable to the Company than could have been obtained with non-affiliated parties at the time each was entered into.
	The Company owns all of its warehouse and distribution facilities except for its 120,000 square-foot dry grocery and health and beauty care facility. This facility is under a lease expiring July 31, 2004 (including all renewal options). The table below details Jitney-Jungle's warehousing and distribution facilities by function. These warehouses and distribution facilities are located in Jackson, Mississippi and Hammond, Louisiana.
	Due to the acquisition of Delchamps, the Company owns a 65,000 square-foot building which houses the corporate headquarters of Delchamps in Mobile, Alabama (including a 2.7 acre parcel adjacent to such headquarters), the Hammond warehouse (including a 165-acre parcel adjacent to such warehouse) and interest in six additional parcels, some of which are undeveloped. In connection with the acquisition, Management is in the process of consolidating the corporate headquarters of the Company's combined operations in the existing corporate headquarters of Jitney-Jungle in Jackson, Mississippi. A divisional office is being opened in Mobile and the Delchamps Mobile headquarters will be closed. Management has discontinued all shipments to stores from the Hammond warehouse, and the Company may determine to sell, or develop for sale, certain of such parcels of real estate.
Item 3.
Item 3. Legal Proceedings
	The Company is not a party to any material pending legal proceedings, other than ordinary litigation incidental to the conduct of its business and the ownership of its properties.
Item 4.
Item 4. Submission of Matters to a Vote of Security Holders
	There were no matters submitted to a vote of security holders during the third quarter of its fiscal period ended January 3, 1998.
				 PART II
Item 5.
Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters
	The Company is closely held and is not actively traded at this time; therefore, there is not a current market.
	As of January 3, 1998, there were thirty-three (33) holders of record of Common Stock.
	There were no dividends paid by Jitney-Jungle to its shareholders during thirty-five weeks ended and the past fiscal years. The Senior Subordinated Notes and the Senior Credit Facility entered into by the Company restrict future payment of dividends.
Item 7.
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
	The following discussion of the Company's results of operations and of its liquidity and capital resources should be read in conjunction with the Consolidated Financial Statements and the notes thereto contained elsewhere in this report.
Results of Operations
General
	As of January 3, 1998 the Company operated a chain of 217 supermarkets and 54 gasoline stations. Net sales from gasoline stations during fiscal 1997 stub, 1997, and 1996 were 7.1%, 6.9%, and 5.2%, respectively, of the Company's net sales for such periods. The Company reports results of operations on a 52 or 53 week fiscal year. For fiscal years 1995, 1996 and 1997 the fiscal year ended on the Saturday nearest to April 30 of each year. The Company changed its fiscal year end on January 3, 1998 to the closest Saturday to December 31 of each year. This change created a "stub" year of 35 weeks for fiscal year ended January 3, 1998. The Company's first three fiscal quarters are 12 weeks, and the last quarter is 16 or 17 weeks. The consolidated statements of operations include 35 weeks for a short year for January 3, 1998, 53 weeks of operations for fiscal 1997 and 52 weeks for fiscal 1996 and 1995.
	The following sets forth, for the periods indicated, selected financial information expressed as a percentage of net sales.
	Approximately 18% of the Company's non-perishable sales result from its private label program. Private label products generally have a lower unit sales price than national brands, but provide a higher gross margin to the Company due to lower unit costs.
	During the past three years, an overall lack of inflation in food prices and increasingly competitive markets have made it difficult for the Company and other supermarket operators to achieve comparable store sales gains. Because sales growth has been difficult to attain, many operators, including the Company, have attempted to maintain market share through increased levels of promotional activities and discount pricing, creating a more difficult environment in which to increase year-over-year sales gains consistently. In addition, because of the growth in the Southeast market, many supermarket operators, including the Company, have opened new stores, resulting in declines in same store sales for the other stores in those areas.
Net Sales
	The following sets forth, for the periods indicated, net sales of the Company.
The net sales decrease of $83.4 million in 1997 stub was due to the "stub" year having only 35 weeks.
	The net sales increase of 4.2% in 1997 was primarily due to the opening of two supermarkets, the opening of seven new gasoline stations and the extra "53rd" week. Without this extra "53rd" week, sales would have increased approximately 2.2%. In addition, the Jitney-Jungle Gold Card (a frequent shopper card program) was launched at the beginning of the 4th quarter in January 1997 and, as a result, sales and customer count have increased.
	The net sales increase of 0.5% in 1996 was primarily due to the opening of four grocery supermarkets and the opening of eleven new gasoline stations, partially offset by the effect of closing seven supermarkets and two gasoline stations in fiscal 1996.
Gross Profit
	 The following sets forth, for the periods indicated, gross profit of the Company. 							
	The increase in gross profit as a percent of sales for fiscal 1997 stub was due to (i) an increase in sales due to the Delchamps acquisition and (ii) improved procurement results due to utilizing better buying decisions at better prices.
	The decrease in gross profit as a percentage of net sales of 0.1% for fiscal 1997 was principally due to discounts associated with the offering of the new Jitney-Jungle Gold Card (frequent shopper card) which was launched in January 1997.
	The increase in gross profit as a percentage of net sales of 0.3% for fiscal 1996 was due to (i) improved procurement results due to continued enhancements and improved utilization of the Company's information systems, which resulted in better buying decisions at better prices and (ii) the re-negotiation of a supply contract with Fleming Companies, Inc. in January 1996.
Direct Store, Warehouse and Administrative Expenses
	The following sets forth, for the periods indicated, direct store, warehouse and administrative expenses for the Company.
	In fiscal 1997 stub, direct store, warehouse and administrative expenses increased as a percent of sales principally due to the amortization of debt issue costs and goodwill related to the acquisition of Delchamps which was accounted for using the purchase method.
	 	In fiscal 1997, direct store, warehouse and administrative expenses increased $11.7 million principally due to the "53rd" week, while such expenses as a percentage of net sales remained the same at 21.6%. In fiscal 1997, personnel costs, the largest single component of store operating, selling and administrative expenses, were $152.9 million, or 12.4% of net sales, compared to $146.6 million or 12.4% of net sales for fiscal 1996. Depreciation and amortization increased $4.0 million principally due to acquisitions of property and equipment (including capital leases) associated with the Company's remodeling program, acquisition of new stores and gasoline stations and increased debt issue costs related to the Merger. Group insurance expense increased $.5 million principally due to an increase in medical claims paid during the year by the self-insured plan. Closed Operations expense increased $.7 million and included a provision for the closing of one conventional supermarket and one gasoline station in July 1997. The increases in SG&A were offset by reductions in store supplies and advertising costs and by an increase in backhaul income. In addition SG&A included the charge to expense of $2.7 million for costs associated with the employment contract of the Company's former Chief Executive Officer and the severance pay of various associates (a) who retired early or (b) whose positions were eliminated.
	In fiscal 1996, personnel costs, the largest single component of store operating, selling and administrative expenses, were $146.6 million, or 12.4% of net sales, compared to $143.5 million, or 12.2% of net sales for fiscal 1995. In addition to personnel costs, other increases in operating expenses for fiscal 1996 were principally due to increases in insurance expense ($0.8 million) as a result of a larger provision for workers compensation and general liability insurance, repairs and maintenance ($0.4 million), certain non-recurring legal and professional fees, and also depreciation and amortization expense which amounted to $27.3 million in fiscal 1996, or 2.3% of net sales, compared to $25.4 million for fiscal 1995, or 2.2% of net sales. The increase in depreciation and amortization in fiscal 1996 was primarily a result of increased capital expenditures relating to the remodeling of stores in fiscal 1995 and increased debt issue costs related to the Merger.
Operating Income
	As a percentage of net sales, operating income for fiscal 1997 stub, 1997 and 1996 was 1.6%, 3.0% and 3.2%, respectively. The decrease in operating income for fiscal 1997 stub as a percent of sales was principally due to bridge fees and amortization of debt issue cost and goodwill related to the acquisition of Delchamps.
EBITDA 	 The following sets forth, for the periods indicated, EBITDA of the Company.
	As a percentage of net sales, EBITDA for fiscal 1997 stub, 1997, 1996 and 1995 was 4.5%, 5.7%, 5.5%, and 5.6%, respectively. EBITDA represents income before interest, income taxes, depreciation, amortization and LIFO charges. Fiscal 1997 stub and fiscal 1997 are calculated before any deduction for certain special charges totaling $3.1 million and $2.7 million, respectively. EBITDA as presented is consistent with the definition used for covenant purposes contained in the Indenture. EBITDA is a widely accepted financial indicator of a company's ability to service debt. However, EBITDA should not be construed as an alternative to operating income, net income, or cash flows from operating activities (as determined in accordance with generally accepted accounting principles) and should not be construed as an indication of the Company's operating performance or as a measure of liquidity. However, management believes it to be a useful measure and therefore it has been presented.
Net Interest Expense
	 The following sets forth, for the periods indicated, net interest expense of the Company.
	 	 	The decrease in net interest expense of $4.6 million was due to fiscal 1997 stub only having 35 weeks.
	The increase in net interest expense for fiscal 1997 was primarily due to interest expense on the Senior Notes and the Credit facility, which were in place all of fiscal 1997 and only two months of fiscal 1996.
	The increase in net interest expense for fiscal 1996 was primarily due to interest expense of $3.6 million on the Senior Notes and $0.5 million on the Credit Facility which was partially offset by the decrease in interest expense as a result of repayment of historical debt prior to maturity and increase in interest income to $2.4 million for fiscal 1996 from $1.7 million for fiscal 1995.
Income Taxes
The following sets forth, for the periods indicated, income taxes of the Company.
	The decrease in income taxes for fiscal 1997 stub was due to a loss in pretax earnings. 	 	The decrease in income taxes for fiscal 1997 principally resulted from lower pretax earnings and a decrease in the effective tax rate which was primarily due to credits applicable to state income taxes.
	The decrease in income taxes for fiscal 1996 principally resulted from lower pretax earnings and a decrease in the effective tax rate which was principally due to the elimination of inter-company profit of a wholly owned subsidiary which previously was not included in the consolidated tax return.
Extraordinary Item
	In the second quarter of fiscal 1997 stub, in connection with the acquisition of Delchamps, the Company incurred cost of $1.4 million for the early retirement of debt, net of an income tax benefit of $0.5 million.
	In the fourth quarter of 1996 in connection with the Merger, the Company retired $35.7 million in long-term debt prior to its scheduled maturity. Prepayment penalties associated with early retirement of this debt resulted in an extraordinary loss of $1.5 million, net of an income tax benefit of $0.9 million.
Net Earnings (Loss)
The following sets forth, for the periods indicated, net operations of the Company.
Changes in net earnings are due to the factors reflected above.
Liquidity and Capital Resources
	Historically, the Company has funded its working capital requirements, capital expenditures and other needs principally from operating cash flows. Due to the Merger and acquisition of Delchamps, however, the Company has become highly leveraged and has certain restrictions on its operations. At January 3, 1998, the Company had $524.9 million of total long-term debt (including capitalized leases and current installments) and a shareholders' deficit of $167.9 million.
	The Company's principal sources of liquidity are expected to be cash flow from operations and borrowings under the Senior Credit Facility. The Company has outstanding $7.5 million in letters of credit issued under the Senior Credit Facility principally to secure obligations pursuant to a capitalized lease. Borrowings outstanding at January 3, 1998 under the Senior Credit Facility were $49.8 million. The commitments under the Senior Credit Facility will terminate, and all loans outstanding thereunder will be required to be repaid in full on March 15, 2004. Borrowings under the Senior Credit Facility, including revolving loans and up to $30 million in letters of credit, will not exceed the lesser of (i) the "Total Commitment", which initially will be $150.0 million, and (ii) an amount equal to the sum of (A) up to 65% of eligible inventory (valued at the lesser of FIFO cost or market value) of the Company and (B) the "Supplemental Availability", which initially is $53.0 million. Each of the Total Commitment and the Supplemental Availability will be reduced on a quarterly basis commencing September 1998.
	Cash provided by operating activities during fiscal 1997 stub was $37.2 million compared to $66.4 million for fiscal 1997 and $55.5 million for fiscal 1996. In fiscal 1997 stub, cash provided by operating activities decreased primarily due to the operating loss. In fiscal year 1997, inventories decreased due to an inventory reduction plan implemented by management and accounts payable increased by improving vendor terms to industry standards. These working capital improvements were partially offset by the reduction in net earnings due principally to the increase in cash interest expense as a result of additional borrowing activities discussed above. The principal reason for the increase of cash provided by operating activities for fiscal 1996 was a decrease in inventories due, in part, to store closings and a decrease in receivables which reflects a reduction in the uncollected billbacks due from vendors.
	Net cash used in investing activities was $239.2 million in fiscal 1997 stub, $22.3 million for fiscal 1997 and $4.2 million for fiscal 1996. Cash invested for fiscal 1997 stub was primarily used for the purchase of Delchamps. Capital expenditures were $36.9 million for fiscal 1997 stub, $24.1 million for fiscal 1997 and $30.1 million for fiscal 1996. In addition to capital expenditures related to new stores opened in fiscal years 1997 and 1996 the Company had several significant expansion and conversion projects in fiscal 1997 stub, 1997 and 1996.
	Net cash provided by financing activities was $199.6
million in fiscal 1997 stub. Net cash used in financing activities was $35.4 million for fiscal 1997 and $65.8 million for fiscal 1996. The principal source of funds in financing activities in fiscal 1997 stub was the issuance of the Senior Subordinated Notes and the restated $150 million Senior Credit Facility. The principal uses of funds in financing activities for fiscal 1997 were the payment of long-term debt and capital lease obligations. The main uses of funds in financing activities in fiscal year 1996 were the redemption of Common Stock and related merger costs, principal payments on debt and capital lease obligations and payments of dividends to stockholders.
	New stores, remodels, and conversions will continue to be the most significant portion of planned capital expenditures. Capital expenditure plans of the Company are frequently reviewed and are modified from time to time depending on cash availability and other economic factors.
	The Company's expenditures to comply with environmental laws and regulations at its grocery stores primarily consist of those related to remediation of underground storage tank leaks and spills and retrofitting chlorofluorocarbon ("CFC") chiller units. The Company's unreimbursed cost for remediation at the 16 facilities which have had leaks or spills has not been material. All significant required expenditures in connection with the cleanup of such leaks and spills have been made at such locations except at three recently discovered locations which are still undergoing investigation and one location awaiting state approval of its remediation plan. In addition, the Company has obtained insurance coverage for bodily injury, property damage and corrective action expenses resulting from releases of petroleum products from underground storage tanks during the covered period at all 58 locations. The Company spent $130,000, $914,000, $468,000 and $515,000 for retrofitting CFC- containing chiller units during fiscal 1997 stub, fiscal 1997, fiscal 1996 and fiscal 1995, respectively. Between approximately $300,000 and $500,000 in expenditures are contemplated for retrofitting the CFC units and between approximately $455,000 and $755,000 in expenditures are contemplated for tank upgrading to comply with 1998 tank standards or closure in fiscal 1998. These regulatory compliance costs are not covered by insurance.
Cost Reduction Opportunities
	As part of its ongoing process of reviewing and controlling operating costs, management has begun to implement initiatives designed to result in cost savings. Areas which the Company believes offer the greatest potential for such savings include, but are not necessarily limited to, improved labor scheduling, which the Company is currently implementing across its stores, inventory category management programs, which the Company began implementing during fiscal year 1997 and will continue to implement over the next 12 months, reductions in inventories held primarily at store level and improved terms with various merchandise suppliers, which was implemented successfully in fiscal 1997, and a reduction in annual overhead spending related to headcount reductions that the Company began implementing in May 1997. There can be no assurance that any cost savings will be achieved by the Company as a result of such initiatives.
Inflation
	As is typical of the supermarket industry, the Company has adjusted its retail prices in response to price trends. During the past three years, there has been an overall lack of inflation in food prices. 	 Year 2000
	The Company has initiated a company-wide program to identify and address issues associated with the ability of its date- sensitive information and business systems to properly recognize the year 2000 in order to avoid interruption of the operations of the Company. Systems are being reviewed by a management information services team, which is coordinating the efforts of internal resources as well as third party vendors in making the necessary changes to the Company's systems. Based on preliminary information, under current costs estimates for these changes will not have a material effect on the Company's financial statements. However, if the Company or its vendors are unable to resolve such processing issues in a timely manner, it could result in material risk.
				
				
				
				
				
				
JITNEY-JUNGLE STORES OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS THIRTY-FIVE WEEKS ENDED JANUARY 3, 1998 AND THE YEARS ENDED MAY 3, 1997, APRIL 27, 1996 AND APRIL 29, 1995 (Dollars in Thousands Except Per Share Amounts) ________________________________________________________________________
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Nature of Operations and Basis of Presentation - The 	Company operates supermarkets and gasoline stations located 	in six southeastern states primarily using distribution centers 	located in Jackson, Mississippi.
	The consolidated financial statements include those of Jitney- 	Jungle Stores of America, Inc. and its wholly-owned 	subsidiaries, Delchamps, Inc., Southern Jitney Jungle 	Company, Interstate Jitney Jungle Stores, Inc., McCarty- 	Holman Co., Inc. and subsidiary, and Jitney Jungle Bakery, 	Inc. All material intercompany profits, transactions and 	balances have been eliminated.
b. Use of Estimates - The consolidated financial statements are 	prepared in conformity with generally accepted accounting 	principles which require management to make estimates and 	assumptions that affect the reported amounts of assets and 	liabilities and disclosure of contingent assets and liabilities at 	the date of the financial statements and the reported amounts 	of revenues and expenses during the reporting period. Actual 	results could differ from those estimates.
c. Investments in Debt Securities - Debt securities have been 	categorized as available for sale and as a result are stated at 	fair value. The cost of debt securities is adjusted for 	amortization of premiums and accretion of discounts to 	maturity. Such amortization and interest are included in 	interest income. Realized gains and losses are included in 	other income or expense. The cost of securities sold is based 	on the specific identification method.
d. Inventories - Substantially all inventories are stated at the 	lower of cost using the last-in, first-out method or market.
e. Capitalization, Depreciation and Amortization - The cost of 	property, fixtures, equipment and improvements is 	depreciated and amortized by the straight-line method over 	the estimated useful lives of the assets. The estimated useful 	lives of buildings range up to forty years and the estimated 	useful life of fixtures and equipment is eight years. Assets 	under capital leases are recorded at the lower of fair value or 	the present value of future minimum lease payments. These 	assets and leasehold improvements are amortized by the 	straight-line method over their primary lease term. License 	and franchise rights are amortized by the straight-line method 	over twenty years. Debt issue costs are amortized over the 	life of the related debt by the interest method. At each 	balance sheet date the Company evaluates the recoverability 	of property, equipment and other long-term assets based upon 	expectations of nondiscounted cash flows and operating 	income.
f. Goodwill - Goodwill relates primarily to the excess of 	purchase price over fair value of net assets acquired in the 	acquisition of Delchamps, Inc. Such costs are being 	amortized over 40 years by the straight-line method.
				
g. Store Opening/Closing Costs - Non-capital expenditures 	incurred for new or remodeled retail stores are expensed as 	incurred. When a store is closed, the remaining investment in 	fixtures and leasehold improvements, net of expected salvage, 	is charged against earnings; any remaining lease liability, net 	of expected sublease recovery, is also expensed.
h. Income Taxes - Deferred tax liabilities and assets are 	determined based on the differences between the financial 	statement and tax bases of assets and liabilities using enacted 	tax rates in effect in the years in which the differences are 	expected to reverse.
i. Cash Equivalents - For purposes of reporting cash flows, 	cash equivalents include investments with maturities of three 	months or less when purchased.
j. Per Share Amounts - Earnings (loss) per common share and 	earnings (loss) per common share - assuming dilution are 	based on net income (loss) after preferred stock dividend 	requirements and the weighted average number of shares 	outstanding during each period. Earnings (loss) per common 	share - assuming dilution includes shares attributed to 	outstanding warrants and options granted to purchase 	common stock unless inclusion results in antidilution of per 	share amounts.
k. Reclassifications - Certain reclassifications have been made 	in the prior years' consolidated financial statements to 	conform to the method of presentation used in the current 	period.
2. TRANSITIONAL PERIOD FINANCIAL DATA
In September 1997, the Company elected to change its fiscal year end from the Saturday nearest April 30 to the Saturday nearest December 31. The change of fiscal year resulted in a transition period of thirty-five weeks beginning May 4, 1997 and ending January 3, 1998, whereas the fiscal year ended May 3, 1997 includes the operations of fifty-three weeks and the fiscal years ended April 27, 1996 and April 29, 1995 include the operations of fifty-two weeks.
Presented below are the unaudited consolidated results of operations for the comparable thirty-six week period ended January 4, 1997.
3. DELCHAMPS ACQUISITION
On September 12, 1997, Delta Acquisition Corporation ("DAC"), a wholly-owned subsidiary of the Company, completed an all cash tender offer for shares of Delchamps, Inc. ("Delchamps"), an Alabama corporation, and accepted for payment approximately 75% of such shares. On November 4, 1997, DAC was merged with and into Delchamps. Delchamps was the surviving corporation and
became a wholly-owned subsidiary of the Company. Delchamps is engaged in the business of retail food distribution through supermarkets located in Alabama, Florida, Louisiana, and Mississippi. This acquisition has been accounted for under the purchase method.
Holders of certain Delchamps shares dissented from the merger and indicated their intent to pursue their legal remedy under Alabama law. At January 3, 1998, the Company had a remaining liability of $26,637 representing approximately 888,000 shares (this includes dissenting shareholders and other unredeemed shares).
The purchase price for the Delchamps acquisition was $236,377, including direct acquisition costs. An affiliate of the Company's majority shareholder was paid fees of approximately $4,000 for services rendered in connection with the acquisition, including the arranging of financing. The excess of the purchase price over the fair values of the net assets acquired was $143,520 and has been recorded as goodwill, which is being amortized on the straight-line basis over forty years.
The results of operations of Delchamps have been included in the Company's consolidated financial statements since September 12, 1997. The purchase price, net of cash acquired of $84, has been allocated to the assets acquired and liabilities assumed based upon the fair values at the date of acquisition, as follows:
The following unaudited pro forma information presents a summary of consolidated results of operations of the Company and Delchamps as if the acquisition had occurred at the beginning of the periods presented.
				 				
These unaudited pro forma results have been prepared for comparative purposes only and include certain adjustments, such as additional depreciation expense as a result of the step-up in the basis of fixed assets, additional amortization of goodwill, increased interest expense on acquisition debt and certain synergies expected to result from the integration of Delchamps' operations with those of the Company. They do not purport to be indicative of the results of operations that would have occurred if the acquisition had been made as of those dates. In addition, the pro forma information is not intended to be a projection of future results.
4. RECAPITALIZATION
On March 5, 1996, JJ Acquisitions Corp. ("JJAC") merged with and into the Company with the Company continuing as the surviving corporation (the "Recapitalization"). JJAC was a wholly- owned subsidiary of Bruckmann, Rosser, Sherrill & Co., L.P. (the "Fund"). Upon consummation of the Recapitalization, the Fund and related investors received 83.82% of the Company's common stock and 11.76% was retained by the shareholders at the time of the Recapitalization.
The Recapitalization was accounted for by a charge to equity of $312,571 to reflect the redemption of common stock of the Company outstanding immediately prior to the Recapitalization. A closing fee of $4,000 was paid to the Fund Manager in connection with the Recapitalization.
Prior to the Recapitalization JJAC issued 425,000 shares of common stock for an aggregate of $6,500, issued an aggregate of $22,500 in liquidation preference of Class A Preferred Stock, issued $10,000 in liquidation preference of Class C Preferred Stock, and issued warrants to purchase 75,000 shares of common stock to the then holder (along with related investors) of 100% of the Class A Preferred Stock and 15% of the Class C Preferred Stock. The Company issued $27,446 in liquidation preference of Class B Preferred Stock as part of the consideration to shareholders at the time of the Recapitalization. In the Recapitalization the common stock, Class A Preferred Stock, and Class C Preferred Stock issued by JJAC were converted into like shares of the Company and the Company assumed the obligations of JJAC under the warrants.
5. INVESTMENTS IN DEBT SECURITIES
Investments in debt securities consisted of U.S. Treasury securities which matured in fiscal year 1997. Proceeds from sale of investments in debt securities were approximately $13,000 (1996) and $6,100 (1995). Losses of $43 (1996) and gains of $14 (1995) were realized on those sales.
6. INVENTORIES
Had the cost for all inventories been determined on the first-in, first-out method, inventories would have been higher by approximately $16,497 at January 3, 1998, $17,245 at May 3, 1997 and $18,227 at April 27, 1996. LIFO liquidations resulted in an increase in net earnings of $708 and $148 in the 35 weeks ended January 3, 1998 and the fiscal year ended May 3, 1997, respectively. The effect on net earnings of LIFO liquidations in fiscal years 1996 and 1995 was not material. 				 				
7. OTHER ASSETS
Other assets, net of accumulated amortization of $6,862 (1998), $3,916 (1997) and $3,059 (1996), consisted of the following:
8. PROPERTY UNDER CAPITAL LEASES AND LEASE COMMITMENTS
Leased property capitalized in the financial statements is summarized as follows:
Most store leases provide for contingent rentals based on percentages of sales in excess of stipulated amounts. The leases have primary terms ranging from five to twenty years and generally contain renewal options. Portions of store space are sublet under leases. The present value of future minimum lease payments relative to capital leases is included in the financial statements as obligations under capital leases. Lease liabilities are amortized over the lease term using the interest method.
The future minimum rental commitments for capital leases and noncancelable operating leases as of January 3, 1998, were as follows:
				 				
Minimum rental commitments have not been reduced by minimum sublease rentals of $1,149 applicable to capital leases and $969 applicable to operating leases due in the future under noncancelable subleases.
The following schedule shows the composition of total rental expense for all operating leases:
Rents, net of sublease income, paid to affiliated partnerships under long-term lease commitments were as follows:
Obligations to affiliated partnerships under capital leases were $11,639 at January 3, 1998, $8,602 at May 3, 1997 and $9,150 at April 27, 1996.
9. LONG-TERM DEBT
Long-term debt consisted of the following: 				 				
Aggregate maturities of long-term debt for the fiscal years following January 3, 1998 are as follows:
2004 $ 49,831 2006 200,000 2007 200,000 					 __________
					 $ 449,831 					 ==========
In September, 1997 the Company issued $200,000 of unsecured Senior Subordinated Notes which mature on September 15, 2007 and accrue interest at the rate of 10 3/8% per annum payable semi- annually. The proceeds from issuance of the Senior Subordinated Notes were used to fund a portion of the Delchamps acquisition consideration (see Note 3). The Senior Subordinated Notes are subordinated in right of payment to the Senior Notes and the Senior Credit Facility. Except under certain conditions, the Senior Subordinated Notes are not redeemable at the Company's option prior to September 15, 2002. Thereafter, the Senior Subordinated Notes are subject to redemption at the option of the Company at 105.188% of principal amount if redeemed during the twelve- month period beginning September 15, 2002 decreasing to 100% of the principal amount if redeemed during the twelve-month period beginning September 15, 2005 and thereafter plus accrued and unpaid interest thereon.
In March, 1996 the Company issued $200,000 of unsecured Senior Notes which mature on March 1, 2006 and accrue interest at the rate of 12% per annum payable semi-annually. The proceeds from issuance of the Senior Notes were used to fund a portion of the Recapitalization consideration (see Note 4). Except under certain conditions, the Senior Notes are not redeemable at the Company's option prior to March 1, 2001. Thereafter, the Senior Notes are subject to redemption at the option of the Company at 106% of principal amount if redeemed during the twelve-month period beginning March 1, 2001 decreasing to 100% of the principal amount if redeemed during the twelve-month period beginning March 1, 2004 and thereafter plus accrued and unpaid interest thereon.
In the event of a change of control as defined in the Indenture, holders of Senior Notes and the Senior Subordinated Notes have the right to require the Company to repurchase all or any part of such holder's notes at a price in cash equal to 101% of the aggregate principal amount thereof plus accrued and unpaid interest thereon.
The Company entered into a revolving credit agreement in March 1996 with several banks which provided a $100,000 Credit Facility and subsequently, in September 1997, the Company amended and restated the agreement to provide a $150,000 Senior Credit Facility. The Credit Facility and the Senior Credit Facility were used to finance a portion of the Delchamps acquisition and the Recapitalization consideration, to refinance certain indebtedness, and to provide for working capital requirements. The commitments under the Senior Credit Facility will terminate and all loans outstanding thereunder will be required to be repaid in full in March, 2004. Borrowings under the Senior Credit Facility, 				 				
including revolving loans and up to $30,000 in letters of credit, are limited to the lesser of (i) the "total commitment" which initially was $150,000 and (ii) an amount equal to the sum of (a) up to 65% of eligible inventory (valued at the lesser of FIFO cost or current market) and (b) the "supplemental availability" which initially was $53,000. Each of the total commitment and the supplemental availability will be reduced on a quarterly basis, commencing September 1998. The interest rates on borrowings under the Senior Credit Facility are, at the Company's option, a function of the bank's prime rate or LIBOR. The weighted average interest rate of loans under the Senior Credit Facility was 8.89% at January 3, 1998, 8.44% at May 3, 1997 and 8.62% at April 27, 1996. The agreement requires the Company to pay a facility fee at an annual rate of .425% (.50% before March 31, 1997) of the unused amount available under the Senior Credit Facility. Letters of credit aggregating $7,461 at January 3, 1998 and $10,481 at May 3, 1997 and April 27, 1996 were outstanding under the Senior Credit Facility.
The Senior Notes and Senior Subordinated Notes are guaranteed on a full, unconditional and joint and several basis by each of the Company's subsidiaries. The Senior Credit Facility is guaranteed by each of the Company's subsidiaries. In addition, obligations under the Senior Credit Facility are secured by a first lien on all of the Company's and its subsidiaries' assets.
The Senior Credit Facility and the Indenture pursuant to which the Senior Notes and Senior Subordinated Notes were issued contain numerous covenants which, among other things, restrict or limit the incurrence of indebtedness, payments of dividends and distributions, and capital expenditures. The Senior Credit Facility also contains numerous financial covenants, the more significant of which relate to leverage ratio, interest coverage ratio and cash flows. As of January 3, 1998 the Company was in compliance with the covenants under its debt agreements.
10. RESTRUCTURING OBLIGATION
In connection with the Delchamps acquisition, the Company recorded a restructuring obligation of $54,364 relating to (i) stores closed by Delchamps prior to the acquisition; (ii) Delchamps stores to be closed after the acquisition because of unprofitability; (iii) Company and Delchamps stores required to be divested under a consent decree with the Federal Trade Commission; (iv) closure of the Delchamps headquarters in Mobile, Alabama; and (v) closure of the Delchamps warehouse facility in Hammond, Louisiana. The $54,364 consists of $45,291 of future rental payments, $1,591 of severance costs, $474 of loss on divestiture of fixed assets, and $7,008 of miscellaneous expenses related mainly to the shutdown of the Mobile and Hammond facilities.
Of the total restructuring costs, $53,765 was recorded as goodwill as part of the purchase price allocation in the Delchamps acquisition and $599 was included as a special charge in the 1998 statement of operations. Charges against the restructuring obligation in 1998 were $770, consisting mainly of lease payments.
The obligations at May 3, 1997 and April 27, 1996 represent remaining payments under leases related to stores closed in prior years.
Since January 3, 1998, seventeen supermarkets and one gasoline station have been closed or sold, including ten stores that were required to be sold pursuant to the consent agreement with the Federal Trade Commission. 				 				
11. INCOME TAXES
Income taxes were composed of the following: 			
The income tax provision (benefit) varied from the federal statutory rate of 35% as follows: 								
The sources of temporary differences and the related deferred income tax effects were as follows:
				
Refundable income taxes of $5,663 at January 3, 1998 and $3,890 at April 27, 1996 represent the carryback of the tax net operating loss and the overpayment of estimated taxes, respectively. Such amounts are included in prepaid expenses and other in the balance sheet. Currently payable income taxes of $1,835 at May 3, 1997 are included in accrued expenses.
The Company's income tax returns through fiscal year 1994 have been examined by the Internal Revenue Service.
12. CAPITAL STOCK
Preferred Stock
Preferred stock consisted of the following:
The excess of liquidation preference over the carrying amount of the Class A Preferred Stock is being accreted by periodic charges to retained earnings to the mandatory redemption date.
Dividends on Class A Preferred Stock are payable quarterly. Through March, 2001, such dividends are payable, at the Company's option, either by cumulation to liquidation preference or in cash and thereafter are payable in cash. Dividends on Class B Preferred Stock and Class C Preferred Stock cumulate on an annual compounding basis until paid. Cumulative dividends not declared or paid on preferred shares aggregated $14,202 at January 3, 1998.
The Class A Preferred Stock is redeemable at the Company's option, (i) at any time after March 1, 2001 at a price equal to the then applicable liquidation preference plus accrued and unpaid dividends and a prepayment premium or (ii) on or prior to March 1, 1999 with the proceeds of a public offering of common stock at a price per share equal to 114% of the then applicable liquidation preference plus accrued and unpaid dividends thereon. All of the Class A Preferred Stock is required to be redeemed on or before March, 2008 at a price per share equal to the then applicable liquidation preference, plus accrued and unpaid dividends thereon.
The Class B Preferred Stock and Class C Preferred Stock, Series 2, are redeemable at the Company's option at any time, in whole or in part, at a price per share equal to the then applicable liquidation preference, plus accrued and unpaid dividends. All of the Class B Preferred Stock and all of the Class C Preferred Stock, Series 2, are required to be redeemed in March, 2010 and March, 2011, respectively, at a price per share equal to the then applicable liquidation preference plus accrued and unpaid dividends (including cumulated dividends). The Class C Preferred Stock, Series 1, is not redeemable by the Company at any time.
Under certain conditions, as defined, the Company is required to offer to repurchase all shares of preferred stock. Upon a change in control, the Company is required to offer to repurchase all shares of the Class A Preferred Stock at 101% of the then applicable liquidation preference plus accrued and unpaid dividends and all shares of Class B Preferred Stock and all shares of Class C Preferred Stock, Series 1 and Series 2, at 100% of the liquidation preference thereof plus accrued and unpaid dividends. In addition, the Company is required to offer to apply, subject to certain limitations, net proceeds raised through a primary issuance of securities junior to Class B Preferred Stock to repurchase shares of Class B Preferred Stock.
Except as required by law and with respect to certain specified matters, Class A Preferred Stock has no voting rights. Neither the Class B Preferred Stock nor the Class C Preferred Stock has any voting rights, except as required by law.
The Class A Preferred Stock is exchangeable (with cumulated dividends) at the Company's option, in whole but not in part, for subordinated exchange debentures of the Company. The exchange debentures will pay interest from the date of the exchange at the rate of 15% per annum, consisting of, at the Company's option, additional exchange debentures or cash on or prior to March, 2001 and cash thereafter. The exchange debentures will mature in March, 2008.
Class A Preferred Stock ranks senior to Class B Preferred Stock and Class C Preferred Stock in right of payment of cash dividends, liquidation preference and redemption (both mandatory and optional). The Class C Preferred Stock ranks junior to the Class B Preferred Stock in right of such cash payments.
The Senior Credit Facility and the Indenture (see Note 9) restrict the Company's ability to pay cash dividends, exchange Class A Preferred Stock for exchange debentures and redeem or repurchase Class A Preferred Stock, Class B Preferred Stock, Class C Preferred Stock and exchange debentures.
Warrants
Warrants to purchase 75,000 shares of common stock were issued in conjunction with the Recapitalization (see Note 4) and were outstanding as of May 3, 1997 and April 27, 1996. The warrants were recorded at fair value of $881 at date of issue. The warrants have an exercise price of $.01 per share and will expire in 2008.
13. STOCK OPTION PLAN
On October 25, 1996, the Board of Directors of the Company, who also hold a majority of the Company's issued and outstanding common stock, authorized the grant of stock options to certain executives and key officers. During the period ended January 3, 1998, the Company adopted the Jitney-Jungle Stores of America, Inc. 1997 Stock Plan (the "1997 Plan"). The 1997 Plan authorizes grants of stock options covering 50,000 shares of the Company's common stock. Grants under the 1997 Plan may take the form of incentive or non-qualified stock options. Options vest one-third each year. With certain exceptions, the options are granted for a term of ten years.
Grants under the 1997 Plan are made at a price that is not less than the fair market value as determined by the Board of Directors or a Committee of the Board at the effective date of grant.
				
The following is a summary of the stock option activity:
			
The following table summarizes information about stock options outstanding at January 3, 1998:
At January 3, 1998, options covering 1,533 shares were exercisable at a price of $62.50 per share.
During the period ended January 3, 1998, The Company adopted Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based Compensation," which requires companies to estimate the fair value for stock options on the date of grant. Under SFAS No. 123, the Company is required to record the estimated fair value of stock options issued as compensation expense in its statements of earnings over the related service periods or, alternatively, continue to apply the accounting methodologies as prescribed by Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees," and disclose the pro forma effects of the estimated fair value of stock options issued in the accompanying footnotes to its financial statements. In adopting SFAS No. 123, the Company decided to follow the accounting methodologies as prescribed by APB Opinion No. 25.
The pro forma effects of the total compensation expense that would have been recognized during the period ended January 3, 1998 under SFAS No. 123 are as follows:
In adopting SFAS No. 123, the Company estimated the fair value of stock options granted using the following assumptions:
Based on the results of the computations, the weighted-average fair value per option on the effective date of grant was $30.10 				 				
14. EMPLOYEE BENEFIT AND COMPENSATION PLANS
The Company has a profit-sharing plan covering substantially all employees with one or more years' service. Contributions are made at the discretion of the Board of Directors of the Company. Such expense totaled $1,013 in the 35 weeks ended January 3, 1998 and $1,200 in fiscal years ended in 1997, 1996, and 1995.
Prior to March 1996, the Company had a Phantom Stock Plan for certain key officers whereby deferred compensation units (expressed in shares of common stock) were earned to the extent that performance targets (expressed in terms of growth in stockholders' equity) were met. The amounts payable in accordance with the provisions of the Phantom Stock Plan became fully vested and immediately payable at the time of the Recapitalization (see Note 4). Effective with the Recapitalization $4,252 was paid to the participants and $712 was applied against the purchase price for shares of Class C Preferred Stock acquired by them in connection with the Recapitalization.
Effective with the Recapitalization the Phantom Stock Plan was amended and restated and renamed the Deferred Compensation Plan for Jitney-Jungle Stores of America, Inc. Under the amended plan no further awards may be made and no other individuals will become participants. Units credited to the participants consist of a cash amount payable in accordance with the terms of the Phantom Stock Plan before its amendment and an amount that will continue to be credited under the terms of the plan to an account, the value of which will be equal to the value of the number of shares of Class C Preferred Stock of the Company that could be acquired with that amount.
With respect to the amounts that continue to be credited under the plan as amended, an amount equal to the amount of any cash dividends that would have been paid on the number of shares of preferred stock credited to each participant's account will be paid to the participant at the same time as any cash dividends actually are paid on the preferred stock. Payment otherwise will be made under the amended plan at the same time as the preferred stock is redeemed, in an amount equal to the redemption price times the number (or proportionate number, in the event of a partial redemption) of shares of preferred stock credited to the participant's account.
15. SPECIAL CHARGES
Special charges consisted of the following:
The $1,779 is attributable to the employment agreement with the Company's then Chairman and Chief Executive Officer who, in January 1997, relinquished his position and duties as Chief Executive Officer. Payments to be made under the employment agreement were deemed not to relate to future services to be provided by the Chairman and, accordingly, such amounts were charged to expense.
16. EXTRAORDINARY ITEM
In connection with the Delchamps acquisition in the 35 week period ended January 3, 1998 and the Recapitalization in the fiscal year ended April 27, 1996, the Company retired certain long-term debt prior to its scheduled maturity. Early retirement of such debt resulted in extraordinary losses of $870 (1998) and $1,456 (1996), net of income tax benefits of $518 and $866, respectively.
17. EARNINGS (LOSS) PER COMMON SHARE
During the period ended January 3, 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." The adoption of SFAS No. 128 had no effect on the previously reported earnings (loss) per common share for prior years.
The following is a reconciliation of earnings (loss) before extraordinary item as reported in the accompanying statements of operations to earnings (loss) attributable to common stockholders used in computing earnings (loss) per common share and in computing earnings (loss) per common share - assuming dilution. Also presented is a reconciliation of weighted average common shares outstanding used in computing earnings (loss) per common share to weighted average common shares used in computing earnings (loss) per common share - assuming dilution.
Warrants issued in 1996 to purchase 75,000 shares of common stock have not been included in 1997 and 1998 and options granted in the 35 weeks ended January 3, 1998 to certain executives and key officers to purchase 37,660 shares of common stock have not been included in 1998 to calculate the weighted average common shares used in computing earnings (loss) per common share - assuming dilution because to do so would have been antidilutive for those periods. 				 				
18. FAIR VALUES OF FINANCIAL INSTRUMENTS
In accordance with Statement of Financial Accounting Standards (SFAS) No. 107, "Disclosures About Fair Value of Financial Instruments", information is provided about the fair value of certain financial instruments for which it is practicable to estimate that value. The fair value amounts disclosed represent management's best estimate of fair value. Certain financial instruments and all nonfinancial instruments are excluded, in accordance with SFAS No. 107. The aggregate fair value amounts presented are not intended to represent the underlying aggregate fair value of the Company.
The estimated fair values are significantly affected by assumptions used, principally the timing of future cash flows, the discount rate, judgments regarding current economic conditions, risk characteristics of various financial instruments and other factors. Because assumptions are inherently subjective in nature, the estimated fair values cannot be substantiated by comparison to independent quotes and, in many cases, the estimated fair values could not necessarily be realized in an immediate sale or settlement of the instrument. The following methods and assumptions were used by the Company in estimating fair value disclosures for financial instruments:
Cash and cash equivalents: The carrying amount reported in the balance sheet approximates fair value.
Investments in debt securities: The securities are carried at fair value and are based on quoted market prices.
Receivables, accounts payable and accrued expenses: The carrying amount reported in the balance sheet approximates fair value.
Long-term debt: The fair value of the Company's Senior Notes and Subordinated Notes is based on quoted market prices. The interest rates on borrowings under the Senior Credit Facility reset periodically. Consequently, the carrying value of borrowings under the Senior Credit Facility approximates fair value.
Redeemable preferred stock: The fair value of redeemable preferred stock is estimated at carrying value as such stock is not traded in the open market and a market price is not readily available.
The carrying amounts and fair values of the Company's financial instruments were as follows: 				 				
19. ACCOUNTING STANDARD TO BE ADOPTED IN THE FUTURE
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information" which is effective for fiscal years beginning after December 15, 1997. SFAS No. 131 redefines how operating segments are defined and requires disclosure of certain financial and descriptive information about a company's operating segments. The Company has not yet completed its analysis of which operating segments it will report on.
20. COMMITMENTS AND CONTINGENCIES
The Company is defendant in certain litigation incurred in the normal course of business. Management, after consulting legal counsel, is of the opinion that the liability, if any, which may result from this litigation will not have a material adverse effect on the Company's financial position or results of operations.
In 1996, the Company entered into a five-year supply agreement, which replaced a previously existing agreement, relating to merchandise purchases for stores located in Memphis, Tennessee and Little Rock and Pine Bluff, Arkansas.
In April 1997, the Company sold the operating assets of its bakery subsidiary for $750 and received $5,250 as consideration for entering into a five-year supply agreement with the purchaser of such operating assets. The $5,250 is being amortized over the term of the supply agreement.
In connection with the Delchamps acquisition, the Company amended a pre-existing agreement whereby the Fund Manager is entitled to receive $1,000 per year from the Company as a management fee for the performance of strategic and financial planning services. The amount of the annual management fee may be increased up to one percent of the Company's earnings before interest, income taxes, depreciation, amortization and certain special charges, computed on a quarterly basis. Management fees for the 35 weeks ended January 3, 1998 and the fiscal year ended May 3, 1997 approximated $484 and $250, respectively.
				* * * * * *
INDEPENDENT AUDITORS' REPORT To the Board of Directors and Stockholders of Jitney-Jungle Stores of America, Inc.:
We have audited the accompanying consolidated balance sheets of Jitney-Jungle Stores of America, Inc. and subsidiaries ("the Company") as of January 3, 1998, May 3, 1997 and April 27, 1996, and the related consolidated statements of operations, changes in stockholders' equity, and cash flows for the thirty-five weeks ended January 3, 1998 and for each of the three fiscal years in the period ended May 3, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Jitney-Jungle Stores of America, Inc. and subsidiaries as of January 3, 1998, May 3, 1997 and April 26, 1996, and the results of their operations and their cash flows for the thirty-five weeks ended January 3, 1998, and for each of the three fiscal years in the period ended May 3, 1997, in conformity with generally accepted accounting principles.
/s/ Deloitte & Touche LLP
Jackson, Mississippi
March 6, 1998 				
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
	There has been no change of accountants or reporting disagreements on any matters of accounting principle, practice, financial statement disclosure or auditing scope or procedure during the 35 weeks ended January 3, 1998 and the two most recent fiscal years.
				 PART III
Item 10.
Item 10. Directors and Executive Officers of the Registrant
Directors and Executive Officers
Name Age Position 						
W. H. Holman, Jr. 67 Chairman of the Board since 1967. Chief 				Executive Officer of the Company from 1967 				until January 1997. Member of the Board of 				two private companies.
Michael E. Julian 47 Chief Executive Officer since January 1997 				and formerly President of the 				Company from May 1997 to December 1997. 				Director of the Company since April 1996. 				Prior to January 1997 served as 				Chairman, President and Chief Executive 				Officer of Farm Fresh, Inc. since 1988. 				Mr. Julian is a member of the Compensation 				committee.
Ronald E. Johnson 48 President and Chief Operating Officer since 				December 1997. Director of the Company since 				May 1996. Previously served as Retail 				Grocery- President and Chief Executive Officer 				of Farm Fresh, Inc. from January 1997 to 				December 1997, Retail Grocery - Chairman, 				President and Chief Executive Officer of 				Kash n' Karry from 1995 to 1997 and Retail 				Grocery - Executive Vice President 				and Chief Operating Officer of Farm Fresh, Inc. 				from 1988 to 1995. Mr. Johnson is a member of 				the Audit committee.
Donald D. Bennett 61 Director of the Company since September 1997. 				Chairman of the Board of Rich Food Holding, 				Inc. since 1980. Member of the Board of 				Directors of Rich Food Holdings, Inc.
				 				
Directors and Executive Officers (Continued) 				
Name Age Position
Bruce C. Bruckmann 44 Director of the Company since March 1996 and a 				principal in BRS. He was an officer and 				subsequently a Managing Director of 				Citicorp Venture Capital, Ltd. ("CVC") from 				1983 through 1994. Member of the Board of 				Directors or Chairman of the Board of 				AmeriSource Distribution Corp., CORT Business 				Services Corp., Chromcraft Revington, Inc., 				Mohawk Industries, Inc., Town Sports 				International Inc. and Anvil Knitwear Inc. as 				well as several private companies.
Bernard J. Ebbers 56 Director of the Company since August 1996. 				President and Chief Executive Officer of 				WorldCom, Inc. since 1983. Member of the 				Board of Directors of WorldCom, Inc. Mr. 				Ebbers is a member of the Compensation 				committee.
Roger P. Friou 63 Director of the Company since June 1984. 				Private investor since 1997. Prior to May 				1997, served as President of the Company 				from March 1996 and as Vice Chairman, Chief 				Financial Officer, and Secretary of the 				Company since 1991. Member of the Board of 				Directors of Parkway Properties Inc. 				Mr. Friou is a member of the Audit and 				Compensation committees.
John M. Moriarty, Jr. 41 Director of the Company since April 1996. A 				Managing Director of Donaldson, Lufkin & 				Jenrette Securities Corporation since 1989 				and a Managing Director of DLJ Merchant 				Banking, Inc. since January 1996. Member of 				the Board of Directors of a private company. 				Mr. Moriarty is a member of Audit Committee. 	 Harold O. Rosser, II 49 Director of the Company since March 1996 and 				a principal in BRS. He was an officer and 				subsequently a Managing Director of 				Citicorp Venture Capital, Ltd. ("CVC") from 				1987 through 1995. Member of the Board of 				Directors of Davco Restaurants, Inc., as 				well as a private company. Mr. Rosser is the 				Chairman of the Compensation committee.
Directors and Executive Officers (Continued)
Name Age Position 					 Stephen C. Sherrill 45 Director of the Company since March 1996 				and a principal in BRS. He was an officer 				and a Managing Director of Citicorp Venture 				Capital, Ltd. from 1983 through 1995. Member 				of the Board of Directors of Galey & Lord, 				Inc., and of several private companies. Mr. 				Sherrill is the Chairman of the Audit 				committee.
David R. Black 45 Senior Vice President - Finance/Chief 				Financial Officer since 1996. Previously 				served as Treasurer and Controller from 1986. 				 R. Barry Cannada 42 Executive Vice President - General Counsel 				and Assistant Secretary since January, 1998. 				Previously served as a Partner with the 				law firm of Butler, Snow, O'Mara, Stevens & 				Cannada, PLLC from 1981 to 1997.
David K. Essary 48 Executive Vice President from March 1996 until 				January 1998 (resigned January 1998). 				Previously served as Executive Vice President 				- Retail Operations from 1991.
Harold D. Evans 53 Senior Vice President - Store Operations from 				1993 until March 1998 (resigned March 1998). 				Previously served as Vice President - Store 				Operations from 1986.
J. R. Hansbrough 42 Senior Vice President - Information Services 				from January 1996 to January 1998 (resigned 				January 1998). Previously served as Vice 				President - Information Services from 1994. 				Prior to that was a consultant and marketing 				representative with IBM Corporation from 1982.
Stephen R. Harmon 45 Executive Vice President - Marketing and 				Merchandising since June 1997. Previously 				served as Retail Grocery - Senior Vice 				President - Merchandising of Farm Fresh, Inc. 				from 1982 to June 1997.
W. H. Holman, III 34 Secretary of the Company since 1996 and also 				serves as President of Pump And Save, Inc. 				Previously served as Senior Vice President - 				Sales and Marketing from 1992 and Vice 				President - Sales and Marketing from 1991 				and is the son of W. H. Holman, Jr. Member 				of the Board of Directors of one private 				company. 				
Directors and Executive Officers (Continued)
Name Age Position 					
Jerry L. Jones 46 Senior Vice President - Administrative 				Operations since April 1997. Senior Vice 				President - Retail Operations March 1996 				to April 1997. Previously served as Senior 				Vice President - Human Resources since 1991. 				Prior to that, served as Vice President, 				Human Resources from 1989.
James P. Riley 48 Senior Vice President - Engineering since 				1996. Previously served as Vice President 				- Engineering from 1991 and Director of 				Engineering Services from 1985.
Clyde D. Staley 60 Senior Vice President - Real Estate since 				1996. Previously served as Vice President 				- Real Estate from 1985.
Albert J. Wanzelak 47 Senior Vice President - Human Resources 				since August 1997. Prior to that served 				as Retail Grocery - Vice President - Human 				Resources of Farm Fresh, Inc. from August 				1987 to August 1997. 				 				
Item 11.
Item 11. Executive Compensation
	The following table summarizes the compensation paid to or accrued by the Company for the chief executive officer and the other four most highly compensated executive officers of the Company during fiscal 1997 stub.
The amounts shown in this column include amounts contributed as salary deferral contributions under the Jitney-Jungle Stores of America, Inc. and Affiliates Profit Sharing Plan and Trust (the "401 (k) Plan").
Other annual compensation includes the annual estimated value of an automobile furnished by the Company.
Includes distributions from the Phantom Stock Plan.
Includes Company matching contributions under the 401(k) Plan, Company profit sharing contributions under the 401(k) Plan and premiums for group term life insurance.
During fiscal 1997, the Company recognized a special charge of approximately $1.8 million attributable to an employment agreement which allows future payments to be received by Mr. Holman, of which $365,936 was received by Mr. Holman in fiscal 1997 stub.
Includes annual installments of $100,000 per year as per an employment agreement with Mr. Essary.
				
STOCK OPTION PLAN
The Company has in effect an employee stock option plan pursuant to which options to purchase Common Stock of the Company are granted to certain executives and key officers of the Company. The following table shows option grants in the 1997 stub to the named executive officers:
All of the stock options granted to the officers are non- qualified options and have a term of ten years from the date of grant. Options granted to each officer become exercisable based on length of service with the Company.
The assumptions set forth in the chart above are merely examples and do not represent predictions of future stock prices or a forecast by the Company with regard to stock prices. The dollar gains shown in these columns reflect a future value based upon growth at the prescribed rates. The column labeled 0% shows the value at the date of grant of stock options whose exercise price was below the market price of the Company's Common Stock at the date of grant.
No options were exercised during the fiscal year ended May 3, 1997.
Directors Fees
	Directors who are employees of the Company do not receive additional compensation as directors. Directors who are not employees receive directors' fees of $12,000 per year plus $1,000 for each Board of Directors' meeting attended and $500 for each committee meeting attended.
Committees and Meetings of the Board of Directors
	The Board of Directors held four regular meetings during fiscal 1997 stub. All directors attended at least 75% of the total meetings of the Board of Directors and the committees of which they were members.
	The Company has an Audit Committee, which is a standing committee of the Board of Directors, presently consisting of three members who are Stephen C. Sherrill, Chairman, John M. Moriarty, Jr. and Roger P. Friou. Audit Committee's responsibilities include: (i) reviewing the plan, (ii) scope and results of the independent audit and reporting to the full Board whether financial information is fairly presented and whether generally accepted accounting principles are followed, (iii) monitoring the internal accounting and financial functions of the Company to assure quality of staff and proper internal controls, (iv) investigating conflicts of interest, (v) compliance with ethical standards and compliance with laws and regulations. There were no meetings of the Audit Committee during fiscal 1997 stub.
	The Company has a Compensation Committee, which is a standing committee of the Board or Directors, presently consisting of Harold O. Rosser, Chairman, Roger P. Friou and Bernard J. Ebbers. The Compensation Committee's responsibilities are to determine annual salaries and bonuses to the Company's senior management and to administer the Company's stock option and benefit programs. There was one meeting of the Compensation Committee during fiscal 1997 stub.
Employment Agreements
	W. H. Holman, Jr. has an employment contract with the Company covering the period through February 28, 2001. The agreement provides that Mr. Holman, Jr. will serve as Chairman of the Board and as Chief Executive Officer, at the discretion of the Board of Directors. The Board of Directors elected Michael E. Julian as Chief Executive Officer in January 1997. If Mr. Holman, Jr. ceases to be Chairman of the Board prior to February 28, 2001, he will continue to serve on the Board of Directors as Chairman Emeritus until February 28, 2001, with a salary equal to his base salary then in effect until February 28, 1999, and 50% of such base salary thereafter. Mr. Holman, Jr. is also eligible for a bonus through February 28, 1999.
	Mr. Essary has an employment contract with the Company providing for a base salary of approximately $186,000 per year for the period from March 1, 1995 through February 28, 1998. He is eligible for a bonus of up to 50% of his base salary less $11,000. A provision in his employment contract states that upon change in control of the Company, Mr. Essary will be 				 				
awarded a payment of up to $300,000 to be paid in annual installments of $100,000, beginning February 28, 1996. Mr. Essary became entitled to receive such payments, with the first $100,000 installment thereof paid in March 1996 after the consummation of the Merger, the second installment paid in March 1997 and the third installment was included in Mr. Essary's severance payment. In January 1998, Mr. Essary resigned from the Company.
	W. H. Holman, III has an employment contract with the Company covering the period through February 28, 1998 and will serve, at the discretion of the Board of Directors, as Secretary of the Company and as President of Pump and Save, Inc. Mr. Holman, III will receive a base salary of no less than $110,000 per year through February 28, 1998, subject to periodic increases as determined by the Board of Directors. Mr. Holman, III is also entitled to a bonus of up to 50% of his base salary less $11,000.
401(k) Plan
	The Company maintains the Jitney-Jungle Stores of America, Inc. and Affiliates Profit Sharing Plan and Trust (the "401(k) Plan") for the benefit of its employees who have satisfied the plan's eligibility requirements. Participants are permitted to make pretax salary reduction contributions, up to the amount permitted under applicable tax law. The Company makes a matching contribution equal to 50% of each participant's salary reduction contribution, up to a maximum of 2% of the participant's compensation. In addition, the Company may make additional profit sharing contributions in its discretion. Although in prior years the Company has made discretionary profit sharing contributions, it has no obligation to do so in the future. Company contributions become vested when the participant has been credited with five years of service. In March 1996, shares of Common Stock of the Company held under the 401(k) Plan were surrendered in connection with the Merger, and exchanged for cash and Class B Preferred Stock as provided in the Merger Agreement. In addition, the plan acquired Common Stock and Class C Preferred Stock for cash consideration.
	The Company's 401(k) Plan and the Delchamps Profit Sharing Plan are currently being merged into one plan. The estimated completion date for this transaction is the summer of 1998. At the time of the merger, the 401(k) Plan will be amended to bring it into compliance with the new statutory changes and the plan year will be changed to a calendar year.
				
Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the beneficial ownership of Common and Preferred Stocks as of January 3, 1998, by (i) each director, (ii) the chief executive officer and each of other most highly compensated executive officers of the Company, (iii) all executive officers and directors as a group and (iv) the Company's principal stockholders. Other than as set forth in the table below, there are no persons known to the Company to beneficially own more than 5% of the Common Stock. No Company securities are owned by John M. Moriarty, Jr., Bernard J. Ebbers, Donald D. Bennett or Ronald E. Johnson, each of whom is a director of the Company (Mr. Johnson is also an executive officer of the Company). 		
*Owns less than 1% of the total outstanding Common Stock, Class B Preferred Stock and Class C Preferred Stock. 				 				 				
Includes 331,732 shares of common stock owned directly by Bruckmann, Rosser, Sherrill & Co., Inc., L.P. ("BRS") and 22,018 shares to which BRS possesses sole voting power. BRS is a limited partnership, the sole general partner of which is BRS Partners and the manager of which is BRS. The sole general partner of BRS Partners is BRSE Associates. Bruce C. Bruckmann, Harold O. Rosser, II, Stephen C. Sherrill and Stephen F. Edwards are the only stockholders of BRS and BRSE Associates and may be deemed to share beneficial ownership of the shares shown as beneficially owned by the Fund. Such individuals disclaim beneficial ownership of any such shares.
Includes 10,000 shares of common stock owned directly and 19,699 shares to which Mr. Holman possesses sole voting power.
All shares of Class B Preferred Stock are owned by Trustmark National Bank ("Trustmark") pursuant to an escrow agreement by and among Trustmark, the Company and former Common Stock shareholders of the Company. Certain of the officers of the Company own an interest in the escrow account through which they have a beneficial interest in the number of shares of Class B Preferred Stock listed in this table.
DLJ Merchant Banking Partners, L.P. ("DLJ") and related investors have received outstanding warrants to purchase 15.0%, on a fully diluted basis, of the outstanding Common Stock of the Company as outlined in the Shareholders Agreement referred to under Item 13.
Item 13. Certain Relationships and Related Transactions.
	BRS received a closing fee of $4.0 million at the consummation of the acquisition of Delchamps. They also received $4.0 million in connection with the Merger in 1996. In addition, BRS is entitled to receive 1% of earnings before interest, income taxes, depreciation, amortization and certain special charges annually, with a minimum of $1.0 million per year, computed on a quarterly basis from the Company as a management fee for the performance of strategic and financial planning services in the future. In the 1997 stub and fiscal year 1997, BRS received $.48 million and $.25 million, respectively. Messrs. Bruckmann, Rosser, Sherrill and Edwards (not a director of the Company) are the only stockholders of BRS and BRSE Associates. BRSE Associates is the sole general partner of BRS Partners, which is the sole general partner of Bruckmann, Rosser, Sherrill & Co., L.P. (the "Fund"). The Fund is the majority stockholder of the Company.
	DLJ Merchant Banking Partners, L.P. ("DLJ") and related investors received $6.0 million underwriting discount and commission from the acquisition of Delchamps and public offering of Senior Subordinated Notes in 1997. They also received $6.0 million in connection with the Merger in 1996. Mr. Moriarty, a director in the Company, is an officer with DLJ.
	Pursuant to an agreement with the Company, McCarty- Holman Co., L.P. (the "Partnership") is the exclusive agent for the Company to rent, lease, operate and manage all locations where the Company has sublet space to various tenants and where it has space vacant and available for subleasing. W. H. Holman, Jr. owns a noncontrolling interest in the Partnership. Under the agreement, the Partnership is entitled to fees as follows: (i) for management: 4% of all rental/lease collections; (ii) fees for leasing: 6% of the annual rent (for a month-to- month tenancy; one-half of the first month's rent); and (iii) fees for services other than as delineated above are negotiated. In the 1997 stub and fiscal year 1997, the Partnership received approximately $37,000 and $41,000 respectively, in fees pursuant to this agreement. Management believes that the agreement is on an arm's length basis and is on terms that are no less favorable to the Company than could have been obtained with non-affiliated parties at the time the agreement was entered into.
	W. H. Holman, Jr., W. H. Holman, III, Clyde Staley and Roger P. Friou own in the aggregate noncontrolling interests in certain partnerships that are landlords under twenty (20) leases (involvement is Holman, Jr., 18 leases; Holman, III, 6 leases; Staley, 5 leases; and Friou, 8 leases) for stores or other facilities where the Company and its subsidiaries are the tenants. In the 1997 stub and fiscal year 1997, the Company paid a combined total rent under these twenty (20) leases of approximately $2.6 million and $3.6 million, respectively. Management believes that each of these leases is on an arm's length basis and is on terms that are no less favorable to the Company than could have been obtained with non-affiliated parties at the time each lease was entered into.
	David K. Essary, Executive Vice President, had an outstanding loan for the purchase of Common Stock from the Company in the amount of $79,906 as of January 3, 1998. This note was paid subsequent to year end. The seven (7) other executive officers have combined loans outstanding of $64,412 which were used for the purchase of the Company's Common
				
Stock and Class C Preferred Stock. Two (2) other executive officers have combined loans outstanding of $51,000 which are for real estate property .
	Certain shareholders of the Company, entered into a Shareholders Agreement which contains certain agreements among such shareholders with respect to the capital stock and corporate governance of the Company. The shareholders involved are Bruckmann, Rosser, Sherrill & Co., L.P., DLJ Merchant Banking Partners, L.P., and Messrs. W. H. Holman, Jr., Roger P. Friou, and W. H. Holman, III. Agreements regarding corporate governance and the capital stock of the Company were also entered into by the Company, Bruckmann, Rosser, Sherrill & Co., L.P., and Messrs. W.H. Holman, Jr., Roger Friou, W.H. Holman, III, David Essary, Jerry Jones, Stephen R. Harmon, David R. Black, Harold D. Evans, James P. Riley, J.R. Hansbrough, and Clyde D. Staley in the Securities Purchase and Holders Agreement.
	Pursuant to an agreement with the Company, Michael E. Julian received a fee of $170,000 in fiscal year 1997 for certain consulting services provided to the Company.
				 PART IV
Item 14.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
The following is an index of the financial statements, schedules and exhibits included in this Report or Incorporated herein by reference:
(a) 1. Financial Statements:
	 Consolidated Balance Sheets as of January 3, 1998, 	 May 3, 1997 and April 27, 1996.
	 Consolidated Statements of Operations for the thirty- 	 five weeks ended January 3, 1998 and for each of the 	 three fiscal years in the period ended May 3, 1997.
	 Consolidated Statements of Changes in Stockholders' 	 Equity for the thirty-five weeks ended January 3, 1998 	 and for each of the three fiscal years in the period 	 ended May 3, 1997.
	 Consolidated Statements of Cash Flows for the thirty- 	 five weeks ended January 3, 1998 and for each of the 	 three fiscal years in the period ended May 3, 1997.
	 Notes to Consolidated Financial Statements
	 Independent Auditors' Report
	2. Financial Statement Schedules:
	 There are no Financial Statement Schedules included 	 with this filing for the reason that they are not 	 applicable, are not required, or the information is 	 included in the financial statements or notes thereto.
	3. Exhibits
	 The following is an index of the exhibits included in 	 this Annual Report on Form 10-K or incorporated 	 herein by reference:
	Exhibit No.
	*2.1 Agreement and Plan of Exchange and of 		Merger, dated as of November 16, 1995 by and 		among JJ Acquisitions Corp. and Jitney-Jungle 		Stores of America, Inc., Southern Jitney Jungle 		Company, McCarty-Holman Co., Inc. and 		Jitney-Jungle Bakery, Inc. (incorporated by 		reference to Exhibit No. 2.1 to Amendment 		No. 2 to Form S-1 [No. 33-80833] of JJ 		Acquisitions Corp. filed with the Commission 		on February 27, 1996).
	*2.2 Agreement and Plan of Merger dated July 8, 		1997 by and among the Company, Delchamps, 		Inc. and Delta Acquisition Corporation 		(incorporated by reference to Exhibit 2 to Form 		8-K [No. 33-80833] of the Company dated July 		14, 1997).
	*3.1 Amended and Restated Articles of 		Incorporation of Jitney-Jungle Stores of 		America, Inc. (including designation of Class 		B Preferred Stock) (incorporated by reference 		to Exhibit No.3.3 to Amendment No. 2 to 		Form S-1 [No. 33-80833] of JJ Acquisitions 		Corp. filed with the Commission on February 		27, 1996).
	*3.2 Restated by-laws of Jitney-Jungle Stores of 		America, Inc. (incorporated by reference to 		Exhibit No. 3.6 to Amendment No. 2 to Form 		S-1 [No. 33-80833] of JJ Acquisitions Corp. 		filed with the Commission on February 27, 		1996).
	*3.3 Composite Amended and Restated Articles of 		Incorporation of Delchamps, Inc. (incorporated by 		reference to Exhibit 3.1 to Form 10-Q of 		Delchamps, Inc. for the quarter ended September 		28, 1996). 		 	*3.4 Composite of By-Laws of Delchamps, Inc. 		(incorporated by reference to Exhibit 3.2 to Form 		10-Q of Delchamps, Inc. for the quarter ended 		September 28, 1996.
	*3.5 Amended and Restated Articles of Incorporation 		of Interstate Jitney-Jungle Stores Inc. 		(incorporated by reference to Exhibit 3.5 to 		Amendment No. 1 to Form S-4 [No. 333-38957] 		of Jitney-Jungle Stores of America, Inc. filed with 		the Commission on November 7, 1997).
	*3.6 Restated By-Laws of Interstate Jitney-Jungle 		Stores, Inc. (incorporated by reference to Exhibit 		3.6 to Amendment No. 1 to Form S-4 [No. 333- 		38957] of Jitney-Jungle Stores of America, Inc. 		filed with the Commission on November 7, 1997). 		 	*3.7 Amended and Restated Articles of Incorporation 		of McCarty-Holman Co., Inc. (incorporated by 		reference to Exhibit 3.7 to Amendment No. 1 to 		Form S-4 [No. 333-38957] of Jitney-Jungle Stores 		of America, Inc. filed with the Commission on 		November 7, 1997). 		 	*3.8 Restated By-Laws of McCarty-Holman Co., Inc. 		(incorporated by reference to Exhibit 3.8 to 		Amendment No. 1 to Form S-4 [No. 333-38957] 		of Jitney-Jungle Stores of America, Inc. filed with 		the Commission on November 7, 1997). 		 	*3.9 Amended and Restated Articles of Incorporation 		of Southern Jitney Jungle Company (incorporated 		by reference to Exhibit 3.9 to Amendment No. 1 		to Form S-4 [No. 333-38957] of Jitney-Jungle 		Stores of America, Inc. filed with the Commission 		on November 7, 1997).
*3.10 Restated By-Laws of Southern Jitney Jungle 		Company (incorporated by reference to Exhibit 		3.10 to Amendment No. 1 to Form S-4 [No. 333- 		38957] of Jitney-Jungle Stores of America, Inc. 		filed with the Commission on November 7, 1997).
*3.11 Amended and Restated Articles of Incorporation 		of Pump and Save, Inc. (incorporated by reference 		to Exhibit 3.11 to Amendment No. 1 to Form S-4 		[No. 333-38957] of Jitney-Jungle Stores of 		America, Inc. filed with the Commission on 		November 7, 1997).
*3.12 Restates By-Laws of Pump and Save, Inc. 		(incorporated by reference to Exhibit 3.12 to 		Amendment No. 1 to Form S-4 [No. 333-38957] 		of Jitney-Jungle Stores of America, Inc. filed with 		the Commission on November 7, 1997).
*3.13 Amended and Restated Articles of Incorporation 		of Supermarket Cigarettes Sales, Inc. 		(incorporated by reference to Exhibit 3.13 to 		Amendment No. 1 to Form S-4 [No. 333-38957] 		of Jitney-Jungle Stores of America, Inc. filed with 		the Commission on November 7, 1997).
*3.14 By-Laws of Supermarket Cigarettes Sales, Inc. 		(incorporated by reference to Exhibit 3.14 to 		Amendment No. 1 to Form S-4 [No. 333-38957] 		of Jitney-Jungle Stores of America, Inc. filed with 		the Commission on November 7, 1997).
*3.15 Amended and Restated Articles of Incorporation 		of Jitney-Jungle Bakery, Inc. (incorporated by 		reference to Exhibit 3.15 to Amendment No. 1 to 		Form S-4 [No. 333-38957] of Jitney-Jungle Stores 		of America, Inc. filed with the Commission on 		November 7, 1997). 		 *3.16 Restated By-Laws of Jitney-Jungle Bakery, Inc. 		(incorporated by reference to Exhibit 3.16 to 		Amendment No. 1 to Form S-4 [No. 333-38957] 		of Jitney-Jungle Stores of America, Inc. filed with 		the Commission on November 7, 1997). 		 		 	*4.1 Indenture dated as of September 15, 1997 among 		the Company, the Subsidiary Guarantors from 		Marine Midland Bank as Trustee, Donaldson 		Lufkin & Jenrette Securities Corporation and 		Credit Suisse First Boston (incorporated by 		reference to Exhibit 4.1 to Form S-4 [No. 333- 		38957] of Jitney-Jungle Stores of America, Inc. 		filed with the Commission on October 29, 1997). 		 	*4.2 Registration Rights Agreement dated as of 		September 15, 1997 among the Company, the 		Subsidiary Grantors, Donaldson, Lufkin & 		Jenrette Securities Corporation and Credit Suisse 		First Boston (incorporated by reference to Exhibit 		4.2 to Form S-4 [No. 333-38957] of Jitney-Jungle 		Stores of America, Inc. filed with the Commission 		on October 29, 1997).
	*4.3 Form of the Company's 10 3/8% Senior 		Subordinated Notes due 2007 (included in Exhibit 		4.1) (incorporated by reference to Exhibit 4.3 to 		Form S-4 [No. 333-38957] of Jitney-Jungle Stores 		of America, Inc. filed with the Commission on 		October 29, 1997).
	*4.4 Revolving Credit Agreement dated September 15, 		1997 by and among Fleet Capital Corporation and 		the Company (incorporated by reference to 		Exhibit 4.4 to Form S-4 [No. 333-38957] of 		Jitney-Jungle Stores of America, Inc. filed with 		the Commission on October 29, 1997).
	*4.5 Indenture dated March 5, 1996 between the 		Company and Marine Midland Bank, as Trustee, 		relating to the issuance and sale of $200,000,000 		aggregate principal amount of 12% Senior Notes 		due 2006 (incorporated by reference to Exhibit 		No. 4.2 Amendment No. 2 to Form S-1 [No. 33- 		80833] of JJ Acquisition Corp. filed with the 		Commission on February 27, 1996).
	*4.6 Warrant dated March 4, 1996 to purchase 		75,000 shares of Common Stock of the 		Company by DLJ Merchant Banking Partners, 		L.P. and related investors (incorporated by 		reference to Exhibit No.4.3 to Amendment No. 		2 to Amendment No. 2 to Form S-1 [No. 33- 		80833] of JJ Acquisitions Corp. filed with the 		Commission on February 27, 1996).
	*4.7 Memorandum of Agreement dated October 15, 		1985 by and among the City of Jackson, 		Mississippi and McCarty-Holman Co., Inc. 		($3,650,000) (incorporated by reference to 		Exhibit No.4.8 to Amendment No. 2 to Form 		S-1 [No. 33-80833] of JJ Acquisitions Corp. 		filed with the Commission on February 27, 		1996).
	*5.1 Opinion of Dechert Price & Rhoads (incorporated 		by reference to Exhibit 5.1 to Amendment No. 1 		to Form S-4 [No. 333-38957] of Jitney-Jungle 		Stores of America, Inc. filed with the Commission 		on November 7, 1997).
	*9.1 Voting Trust Agreement dated November 1, 		1990 by and among Carolyn Holman Kroeze, 		as Executrix and the parties named therein 		(incorporated by reference to Exhibit No. 9.1 to 		Amendment No. 2 to Form S-1 [No. 33- 		80833] of JJ Acquisitions Corp. filed with the 		Commission on February 27, 1996).
*10.1 Purchase Agreement dated September 10, 1997 		among the Company, Donaldson, Lufkin & 		Jenrette Securities Corporation and Credit Suisse 		First Boston with respect to the 10 3/8% Senior 		Subordinated Notes due 2007 (incorporated by 		reference to Exhibit 10.1 to Form S-4 [No. 333- 		38957] of Jitney-Jungle Stores of America, Inc. 		filed with the Commission on October 29, 1997). 		
*10.2 Supply Agreement dated March 19, 1989 as 		amended, by and among Fleming Companies 		Inc. (successor in interest to Malone & Hyde, 		Inc.), the Company and Interstate Jitney-Jungle 		Stores, Inc. (incorporated by reference to 		Exhibit No. 10.2 to Amendment No. 2 to Form 		S-1 [No. 33-80833] of JJ Acquisitions Corp. 		filed with the Commission on February 27, 		1996).
	*10.3 Membership in Topco Associates, Inc. 		(Cooperative) by ownership of six hundred 		(600) shares of Common Stock, such stock 		certificate being dated July 1, 1991 		(incorporated by reference to Exhibit No. 10.3 		to Amendment No. 2 to Form S-1 [No. 33- 		80833] of JJ Acquisitions Corp. filed with the 		Commission on February 27, 1996). 		 	*10.4 Flour Sale Confirmation and Contract dated 		July 19, 1995 by and among Cargill, 		Incorporated and Jitney-Jungle Bakery, Inc. 		(incorporated by reference to Exhibit No. 		10.4 to Amendment No. 2 to Form S-1 [No. 		33-80833] of JJ Acquisitions Corp. filed with 		the Commission on February 27, 1996). 		 	*10.5 Employment Agreement dated as of February 		15, 1995 by and among the Company Roger 		P. Friou (incorporated by reference to Exhibit 		10.6 to Amendment No. 2 to Form S-1 [No. 		33-80833] of JJ Acquisitions Corp. filed with 		the Commission on February 27, 1996).
	*10.6 Employment Agreement dated as of February 		24, 1995 by and among the Company and 		David K. Essary (incorporated by reference 		to Exhibit 10.7 to Amendment No. 2 to Form 		S-1 [No. 33-80833] of JJ Acquisitions Corp. 		filed with the Commission on February 27, 		1996).
	*10.7 Employment Agreement dated as of March 5, 		1996 by and among the Company and W. H. 		Holman, Jr. (incorporated by reference to 		Exhibit 10.6 to the Company's Annual 		Report on Form 10-K, dated July 24, 1996).
	*10.8 Employment Agreement dated as of March 5, 		1996 by and among the Company and W. H. 		Holman, III. (incorporated by reference to 		Exhibit 10.7 to the Company's Annual 		Report on Form 10-K, dated July 24, 1996).
	*10.9 Restatement and Amendment by the Entirety 		of the Jitney-Jungle Stores of America, Inc. 		and Affiliates Profit Sharing Plan and Trust 		(incorporated by reference to Exhibit No. 		10.8 to Amendment No. 2 to Form S-1 [No. 		33-80833] of JJ Acquisitions Corp. filed with 		the Commission on February 27, 1996).
*10.10 Deferred Compensation Plan for the 		Company dated as of November 16, 1995 by 		and among Jitney-Jungle Stores of America, 		Inc., Southern Jitney Jungle Company, 		Jitney-Jungle Bakery, Inc., McCarty-Holman 		Co., Inc. and W. H. Holman, Jr., Roger P. 		Friou and David K. Essary (incorporated by 		reference to Exhibit No. 10.9 to Amendment 		No. 2 to Form S-1 [No. 33-80833] of JJ 		Acquisitions Corp. filed with the 		Commission on February 27, 1996). 				 				
	*10.11 Shareholders Agreement dated as of March 		5, 1996 by and among DLJ Merchant 		Banking Partners, L.P. JJ Acquisitions Corp., 		and certain other signatories party thereto 		(incorporated by reference to Exhibit No. 		10.10 to Amendment No. 2 to Form S-1 		[No. 33-80833] of JJ Acquisitions Corp. filed 		with the Commission on February 27, 1996).
	*10.12 Securities Purchase and Holders Agreement 		dated as of March 5, 1996 by and among JJ 		Acquisitions Corp., Bruckmann, Rosser, 		Sherrill & Co., L.P. and other parties thereto 		(incorporated by reference to Exhibit No. 		10.12 to Amendment No. 2 to Form S-1 		[No. 33-80833] of JJ Acquisitions Corp. filed 		with the Commission on February 27, 1996).
	*10.13 Registration Rights Agreement dated as of 		March 5, 1996 by and among the Company 		and other parties named therein (incorporated 		by reference to Exhibit No. 10.13 to 		Amendment No. 2 to Form S-1 [No. 33- 		80833] of JJ Acquisitions Corp. filed with 		the Commission on February 27, 1996).
	*10.14 Membership and Licensing Agreement dated 		August 1, 1973 between Topco Associates, 		Inc. and Delchamps, Inc. and attached copy 		of Articles of Incorporation and By-Laws of 		Topco Associates, Inc. (incorporated by 		reference to Exhibit 10(a) to the Registration 		Statement on Form S-1 [No. 2-86926] of 		Delchamps, Inc.)
	*10.15 Agreement for Termination of Employment 		dated as of September 19, 1997 between 		Delchamps, Inc. and David W. Morrow 		(incorporated by reference to Exhibit 10(j) to 		Form 10-K of Delchamps, Inc. for fiscal year 		ended June 28, 1997).
	*10.16 Form of Director Indemnity Agreement of 		Delchamps, Inc. (incorporated by reference to 		Exhibit 10 to Form 10-Q of Delchamps, Inc. for 		the quarter ended September 28, 1996).
	 *12.1 Statement of Ratio of Earnings to Fixed Charges 		(incorporated by reference to Exhibit 12.1 to 		Form S-4 [No. 333-38957] of Jitney-Jungle 		Stores of America, Inc. filed with the 		Commission on October 29, 1997). 	 	 21.1 Subsidiaries of the Company.
	 23.1 Consent of Dechert Price & Rhoads (included in 		Exhibit 5.1) (incorporated by reference to Exhibit 		23.1 to Form S-4 [No. 333-38957] of Jitney- 		Jungle Stores of America, Inc. filed with the 		Commission on October 29, 1997).
				
	 *23.2 Consent of Deloitte & Touche LLP (incorporated 		by reference to Exhibit 23.2 to Amendment No. 1 		to Form S-4 [No. 333-38957] of Jitney-Jungle 		Stores of America, Inc. filed with the 		Commission on November 7, 1997).
	 *23.3 Consent of KPMG Peat Marwick (incorporated 		by reference to Exhibit 23.3 to Form S-4 [No. 		333-38957] of Jitney-Jungle Stores of America, 		Inc. filed with the Commission on October 29, 		1997). 				
	 *24 Power of Attorney (incorporated by 		reference to Exhibit 24 to Form S-4 [No. 333- 		38957] of Jitney-Jungle Stores of America, Inc. 		filed with the Commission on October 29, 1997).
	 *25 Statement of Eligibility and Qualifications, Form 		T-1, of Marine Midland Bank (incorporated by 		reference to Exhibit 25 to Form S-4 [No. 333- 		38957] of Jitney-Jungle Stores of America, Inc. 		filed with the Commission on October 29, 1997).
	 27.1 Financial Data Schedule.
	 *99.1 Form of Letter of Transmittal (incorporated by 		reference to Exhibit 23.2 to Amendment No. 1 to 		Form S-4 [No. 333-38957] of Jitney-Jungle 		Stores of America, Inc. filed with the 		Commission on November 7, 1997).
	 *99.2 Form of Notice of Guaranteed Delivery 		(incorporated by reference to Exhibit 23.2 to 		Amendment No. 1 to Form S-4 [No. 333-38957] 		of Jitney-Jungle Stores of America, Inc. filed 		with the Commission on November 7, 1997).
	*Previously filed as indicated.
(b) Reports on Form 8-K.
On November 19, 1997, the Company filed a Current Report on Form 8-K stating under "Item 5. Other Items" that on November 4, 1997 Delta Acquisition Corporation ("Delta"), an Alabama corporation and wholly owned subsidiary of Jitney- Jungle Stores of America, Inc. (Jitney-Jungle) merged with and into Delchamps, Inc., an Alabama corporation ("Delchamps"). Delchamps is now a wholly owned subsidiary of Jitney-Jungle. As of November 4, 1997, Delchamps' shareholders representing approximately 620,749 shares, or 8.8% of the outstanding shares of Delchamps, purportedly indicated their intention to exercise dissenters' rights with respect to the merger.
				 				
				 SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
		 Jitney-Jungle Stores of America, Inc. 		 (Registrant)
		 By /s/ Michael E. Julian 			 _____________________ 			 (Michael E. Julian 			 President and 			 Chief Executive Officer) 			 (Principal Executive Officer)
		 Date April 2, 1998 			 ____________________
		 By /s/ David R. Black 			 _____________________ 			 (David R. Black 			 Senior Vice President - 			 Finance, 			 Chief Financial Officer) 			 (Principal Financial and 			 Accounting Officer)
		 Date April 2, 1998 			 _____________________
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.