Empire Company
Annual Report 2000

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S T R E N G T H S

Mounted Canadian Trooper, 1917
A.J. Munnings, R.A. (British 1878-1959)

Oil on canvas

It  is  the  custom  of  Empire  Company  Limited  to  feature  works  of  Canadian  art,  selected  from  the  Sobey  collection,  in  its 

annual reports.

Alfred  James  Munnings  was  an  eccentric,  prolific  artist  and  undoubtably  the  most  famous  British  equestrian  artist  of 

the Twentieth Century. Although accidentally blinded in one eye in 1899, he was recruited into the Canadian War Memorial

program in 1917. As one of the many artists commissioned to depict Canada’s war effort, he shared the discomfort and danger

of life at the Front to paint the men and horses of the Canadian Cavalry Brigade and the Canadian Forestry Corps of France.

The artist considered his experiences with Canadian units to have been among the most rewarding events of his life. While on

the verge of fame and fortune, Munnings painted this Canadian Cavalry trooper in full military uniform, in France.

Colour reproductions of the Mounted Canadian Trooper are available in limited numbers, upon request. Please write to the

company, c/o The Sobey Art Foundation or visit our web site at www.empireco.ca. or www.emp-a.com.

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F o c u s e d   o n   o u r   S t r e n g t h s

Empire’s careful transition during the past two years has allowed the Company to focus on its strengths as

never before. The acquisition of Oshawa and the successful integration of our food distribution business

have created a formidable, national competitor – one that is trimming expenses, modernizing operations,

and enhancing customer service. The impending sale of our 25% interest in Hannaford Bros. Inc. will

M i s s i o n   S t a t e m e n t

Goal:

Empire is committed to building shareholder value through long-term profitability and 

growth by becoming a market leader in its core operating businesses and by investing in 

other opportunities to augment this growth in value.

How:

Empire will achieve this goal by treating employees in ways that create extraordinary 

customer service and shareholder value.

ensure Empire’s ability to support the growth and development of its core businesses while strengthening 

Values: Empire will be a good corporate citizen, upholding the highest standards of integrity and 

an already healthy balance sheet. 

ethical conduct.

Share Performance
Empire Class A shares (1) 
($ per share)

0
1
.
2
3

5
2
.
7
2

0
0
.
6
2

0
7
.
5
0 1
3
.
2
1

96 97 98 99 00

(1) Closing price at fiscal year 
ended April 30. 

In the past five years, Empire’s 
Class A shares have posted 
an annualized return of 20.0% 
compared to 16.9% for the 
TSE 300. 

C o r p o r a t e   P r o f i l e

Empire Company Limited is a diversified Canadian company headquartered in Stellarton, Nova

Scotia  whose  key  businesses  include  food  distribution,  real  estate  and  corporate  investment

activities. Guided by conservative business principles, our goal is to build long-term shareholder

value  through  income  and  cash  flow  growth,  and  equity  appreciation.  We  accomplish  this

through direct ownership and equity participation in businesses that have the potential for long-

term growth and profitability. Empire is committed to continually reviewing the performance

of these companies and assessing the industry, management and operations to ensure they fit our

investment philosophy.

I n s i d e   E m p i r e

Financial Highlights  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Empire At-a-Glance  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Letter to Shareholders  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Focused on our Strengths  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Food Distribution  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Real Estate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Investments and Other Operations  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Management’s Discussion and Analysis  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Management’s and Auditors’ Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Notes to Financial Statements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Eleven-Year Financial Review  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Corporate and Director Information  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Investor Information  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40

Mission Statement, Corporate Governance
and Community Involvement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . IBC

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C o r p o r a t e   G o v e r n a n c e

The  governance  of  the  corporation  is  the  responsibility  of  Empire’s  Board  of  Directors

which  has  three  committees  consisting  of  the  Corporate  Governance  Committee;  the

Human Resources Committee; and the Audit Committee. For a more detailed review of

the Company’s governance practices see Empire’s 2000 Management Information Circular.

C o m m u n i t y   I n v o l v e m e n t

Empire  is  an  active  member  of  the  communities  in  which  it  operates  through  the 

volunteer  efforts  of  its  employees  and  the  financial  support  provided  each  year  by  the

Sobey Foundation. The Company is a member of the Imagine corporate giving program

and sponsors numerous charitable initiatives through its operating companies including the

popular “Tape Saver” program and the annual “Run for the Cure” in support of breast

cancer research. 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
E M P I R E C O M P A N Y L I M I T E D

01

F i n a n c i a l   H i g h l i g h t s

• Revenue increased by 75% to $11.16 billion, primarily reflecting a full year of results from 

the combined Sobeys/Oshawa operations, versus 22 weeks last year.

• Operating income was up 68% to $374 million.

• Earnings before net capital gains and other items reached $84.7 million, a 41% increase.

($ in millions, except per share amounts)

2000

1999

Change

Total Revenue
Empire Company 
($ in millions)

4
6
1
,
1
1

8
7
3
,
6

0
5
1
,
3

0
2
3
,
3

5
1
9
,
2

96 97 98 99 00

(Fiscal)

Operations

Revenue

Operating income

Earnings before net capital gains 

and other items

Capital gains, net of tax

Other items

Net earnings

Operating cash flow (1)

Financial Position

Total assets

Shareholders’ equity

Per Share Information

Earnings before goodwill charges,
net capital gains and other items

Earnings before net capital gains 

and other items

Capital gains, net of tax

Operating Income
Empire Company 
($ in millions)

9
.
2
2
2

6
.
5
6
1

8
.
9
4
1

8
.
2
4
1

2
.
4
7
3

Other items

Net earnings

Operating cash flow(2)

Book value

Dividends

Share Price

High

Low

Close

11,164.5

6,377.6

374.2

222.9

84.7

2.1

–

86.8

297.0

60.0

24.1

50.8

135.0

161.5

75.1%

67.9%

41.2%

(91.3%)

–

(35.7%)

83.9%

4,171.1

4,023.5

3.7%

602.8

737.7

(18.3%)

2.52

1.71

47.4%

2.20

0.05

–

2.25

7.86

1.55

0.65

1.35

3.55

4.31

17.45

18.06

0.2800

0.2725

33.95

24.65

32.10

32.55

25.00

26.00

41.9%

(92.3%)

–

(36.6%)

82.4%

(3.4%)

2.8%

23.5%

96 97 98 99 00

(Fiscal)

(1) Operating cash flow before restructuring charges, net change in other current items and after preferred dividends.
(2) Before restructuring charges.

02 E M P I R E C O M P A N Y L I M I T E D

A t - a - G l a n c e

F o o d   D i s t r i b u t i o n

Sobeys  Inc.,  a  61%-owned  subsidiary  of  Empire,  is  the  second  largest  food  distribution 
company in Canada and one of the largest in North America with annual revenues of more
than $11 billion. With 1,371 retail stores including popular banners such as IGA, Sobeys,
Foodland,  Food  Town, and  Price  Chopper,  spanning  ten  provinces,  thousands  of  wholesale 
customers, a corporate and franchised retail distribution network that spans 10 provinces,
and  SERCA, Canada’s  only  national  foodservice  operation,  Sobeys  is  realizing  unprece-
dented economies of scale and abundant opportunities for growth in a consolidating industry.

R e a l   E s t a t e

Empire’s Real Estate operation controls one of the largest portfolios of prime retail proper-
ties  in  Atlantic  Canada  through  wholly-owned  subsidiaries  Atlantic  Shopping  Centres
Limited  (ASC)  and  Sobey  Leased  Properties  Limited  (SLP).  SLP’s  portfolio  is  primarily
directed at supporting retail operations, while ASC’s is a more diversified portfolio made up
of enclosed shopping centres. The Real Estate operation owns and manages 12.0 million
square feet of commercial property.

I n v e s t m e n t s

Empire manages an investment portfolio in excess of $1 billion, the largest investment at
year-end  being  a  25%  interest  in  Hannaford  Bros.  Co.  Subsequent  to  year  end,  Empire
anticipates selling its Hannaford investment for a total consideration slightly in excess of
$1.0 billion Canadian dollars.

Empire’s  other  operations  consist  of  Empire  Theatres,  the  leading  movie  exhibitor  in
Atlantic Canada with 117 screens in 19 locations.

E M P I R E C O M P A N Y L I M I T E D

03

K e y   D e v e l o p m e n t s

• The company exceeded $35 million in integration 

synergies and remains on target to achieve $70 million 
in total annual savings by the end of fiscal 2001.

•

Sobeys retired $117.7 million in long-term debt during 
fiscal 2000.

• Completed the integration of the private label program, 
adding 60% more items to the Our Compliments and 
Smart Choice lines in the process.

• Completed the rollout of SAP, an enterprise wide 
management software system, in Atlantic Canada.

• Built 48 new or replacement stores and expanded 

or modernized 103 others in fiscal 2000.

•

Steady occupancy levels and rising average lease rates 
contributed to record revenues and operating income 
during fiscal 2000.

• Major developments during fiscal 2000 included 
a 12-plex theatre project known as Studio 12 for
Empire Theatres Limited in Avalon Mall, St. John’s,
Newfoundland, completion of a 100,000 sq. ft. 
Zellers store in New Minas, Nova Scotia, a new 
Sobeys food store at Sydney Shopping Centre, 
Nova Scotia, and the redevelopment of Fundy 
Trail Mall in Truro, Nova Scotia.

•

Subsequent to year end, we anticipate the sale of our
25% equity interest in Hannaford Bros. Co. for a total
consideration in excess of $1.0 billion Canadian dollars.
The total proceeds from the Hannaford sale are expected
to be approximately US$500 million in cash and 11.7
million Class A common shares of Delhaize America Inc. 

• Announced intentions around the Hannaford sale 

proceeds are: (i) continuing to hold Delhaize Class A
common shares; (ii) repay $365 million in bank loans;
and (iii) maintain a portfolio of liquid investments 
to augment the growth and development of our 
core businesses.

• Empire Theatres posted another year of record revenue, 

operating income and net income.

Revenue
Food Distribution
($ in millions)

Operating Income
Food Distribution
($ in millions)

6
0
0

,

1
1

2
3
2

,

6

6

.

5
6
2

1

.

1
2
1

8
7
9

,

2

5
5
1

,

3

6
4
7
,
2

0

.

.

2
2 6
8
4

1
.
5
4

96 97 98 99 00

96 97 98 99 00

Revenue
Real Estate
($ in millions)

1
.
7
5
1

0
.
8
4
1

8
.
2
4
1

0
.
1
4
1

0
.
9
3
1

Operating Income
Real Estate
($ in millions)

1
.
0
7

0
.
3
6

0
.
2
6

1
.
5
5 6
.
0
6

96 97 98 99 00

(Fiscal)

96 97 98 99 00

(Fiscal)

Investment Income
($ in millions)

Market Value of 
Marketable Securities
($ in millions)

3
.
1
4

7
.
6
3

2
.
8
3

9
.
7
3

3
.
7
3

1
.
4
3

6
.
5
3

9
.
0
3

7
.
2
3

9
.
8
2

96 97 98 99 00

Dividends and Interest

Equity Earnings

9
.
6
4
0
,
1

0
.
2
8
4

1
.
6
6
1
,
1

2
.
7
5
7

4
.
4
8
3

7
.
5
0
4

6
.
6
8
7

3
.
9
6
5

2
.
9
4
7 4
.
3
4
3

96 97 98 99 00

Unrealized Gain

Book Value

04 E M P I R E C O M P A N Y L I M I T E D

L e t t e r   t o   S h a r e h o l d e r s

By almost any measure, fiscal 2000 was Empire’s best year ever. We achieved record revenue, income

from operations and cash flow while setting the stage for the continued growth and development of our

core businesses in the years ahead.

Paul D. Sobey, President and CEO

The  theme  of  last  year’s  Annual  Report  –  “A  New  Platform  for  Growth”  –  reflected  the
acquisition  of  The  Oshawa  Group  Limited  in  December  1998  and  the  reintroduction  of
Sobeys Inc. into the public market. Sobeys has now successfully completed its first full year
since this acquisition, and we are pleased to report that we have exceeded our own expecta-
tions based upon strong operational improvements and the achievement of all major targets
associated  with  the  effective  integration  of  the  former  Sobeys/Oshawa  businesses.  Most
importantly,  we  have  successfully  positioned  Empire  for  long-term  growth  in  its  core  food 
distribution business.

To further support that objective, on May 3, 1999 Empire advised Hannaford Bros. Co. that it
would not be extending the “Standstill Agreement” which governed our 25% equity interest
in the company. The reason for this decision, quite simply, was to provide us with more flex-
ibility in realizing the inherent value of our investment. Subsequent events have shown it was
the right course of action.

As previously announced, on August 17, 1999, Delhaize America Inc. (formerly Food Lion)
and Hannaford entered into a merger agreement pursuant to which Delhaize will acquire all
of the common shares of Hannaford. The actual sale of our 25% equity interest in Hannaford
is  expected  to  be  completed  subsequent  to  year  end,  and  will  result  in  Empire  receiving
approximately US$500 million in cash and 11.7 million Class A common shares of Delhaize
America Inc. for a total consideration in excess of $1.0 billion Canadian dollars.

Empire’s initial investment in Hannaford was made in 1979. Over the past 21 years we have
enjoyed a cordial and prosperous relationship. We wish the management and employees of
Hannaford continued success.

F O C U S E D O N O U R S T R E N G T H S The Hannaford proceeds will allow us to remain focused on
our strengths. We will repay $365 million of short-term debt to enhance our financial flexi-
bility.  Empire  incurred  $220  million  in  bank  loans  as  a  result  of  repurchasing  6.5  million
Empire Class A common shares. The balance of the cash proceeds will be held through a port-
folio of high quality, tradable investments to provide diversification and liquidity, while also 
augmenting the growth and development of our food distribution and related businesses.

The investment in Delhaize America, Inc. will be held as an investment in our portfolio. It is
interesting to note that the market value of our position in Delhaize is worth almost as much
as our stake in Hannaford was in 1994.  

In the longer term, Empire will identify and invest in businesses where we can add tangible
value directly or through subsidiaries. We have undertaken a special in-depth analysis of all
aspects of our business to determine how our resources can be best deployed going forward.
This process will be completed during fiscal 2001 and, as always, our strategic direction will

Donald R. Sobey, Chairman

E M P I R E C O M P A N Y L I M I T E D

05

be guided by conservative business principles with the goal of building long-term shareholder
value through growth in income, cash flow and equity appreciation.

T H E B E N E F I T S O F I N T E G R AT I O N

Sobeys  has  made  impressive  progress  in  integrating  the 
former  Oshawa  operations.  In  last  year’s  report,  the  company  identified  $35  million  in 
annual integration savings that were to be achieved in each of fiscal 2000 and 2001. One year
later,  we  are  very  pleased  to  report  that  Sobeys  is  ahead  of  target  through  consolidated 
purchasing, more effective supply chain management and integrated merchandising programs.
Sobeys expects to achieve in excess of $70 million in annual savings by the end of fiscal 2001.

Sobeys  has  made  significant  infrastructure  investments  necessary  to  maintain  their  earnings
momentum. An SAP enterprise wide management software system has been fully installed in
Atlantic  Canada  and  is  scheduled  for  rollout  across  Canada  during  the  next  fiscal  year.  An
advanced warehouse management system, which fully integrates with SAP, has been installed
in the company’s Atlantic Canada operations. The system has also been extended to two state-
of-the-art food distribution centres that were opened in the Greater Metropolitan Toronto area.   

Sobeys’  focus  on  infrastructure  investment  has  not  been  at  the  expense  of  the  retail  sites.
During fiscal 2000, a total of $386 million was invested by the company, franchise owners and
through third party financing of which $270 million was directed at enhancing the retail net-
work. Next year, total investment is expected to reach $641 million, $505 million of which
will be directly committed to retail store projects.

Sobeys  also  operates  Canada’s  only  national  foodservice  business,  SERCA, which  provides
groceries,  produce  and  meat  to  restaurants  and  institutions.  This  sector  of  the  economy  is
growing at a healthy rate and SERCA plans to capitalize on its leadership position. During the
year, construction began on a 265,000 sq. ft. distribution warehouse in Mississauga, Ontario,
which will rationalize the number of distribution centres in the province from 11 to five when
completed in the Fall of 2000.

S T R E N G T H T H R O U G H O U T O U R O P E R AT I O N S The  Real  Estate  operation  turned  in  another
stellar performance in fiscal 2000. As a result of strong economic growth in Atlantic Canada, the
superb  efforts  of  management,  a  leading  leasing  team  and  the  efforts  of  all  employees,  new
records were posted for revenue, operating earnings and net earnings.

With the divestiture of Hannaford, our 48% ownership stake in Wajax will become the only
equity-accounted investment in our portfolio. One of Canada’s largest equipment distribution
companies, Wajax’s contribution to Empire’s fiscal 2000 earnings increased by $1.0 million as
a result of better asset management and cost control. 

Other operations include Empire Theatres, which had a superb year. Empire Theatres is the
largest movie exhibitor in Atlantic Canada with 117 screens in 19 locations. During the year,
the  company  opened  three  new  locations  including  a  12-screen  complex  at  Avalon  Mall, 
St. John’s, Newfoundland.

F I N A N C I A L R E S U LT S Consolidated revenues were up 75% to $11.2 billion from $6.4 billion
last year. On a comparable basis – that is, assuming Oshawa operations had been part of our
results  for  all  12  months  of  fiscal  1999  –  revenues  were  still  up  an  impressive  7.6%.  This
achievement is the result of strong growth in each of our food distribution, real estate and 
theatre operations.

06 E M P I R E C O M P A N Y L I M I T E D

L E T T E R T O S H A R E H O L D E R S

Operating income reached $374.2 million in fiscal 2000, an increase of $151 million from 
fiscal 1999. The inclusion of 12 months of results of the former Oshawa operations com-
pared to 22 weeks in fiscal 1999 accounts for the majority of the increase.

Earnings  before  goodwill  charges,  net  capital  gains  and  other  items,  increased  47%  to
$96.7 million or $2.52 per share in fiscal 2000. Net earnings before net capital gains and
other items were ahead 41% to a record $84.7 million or $2.20 per share compared to
$60.0 million or $1.55 per share last year.

T H E Y E A R A H E A D While fiscal 2000 was a banner year, we believe the best is yet to
come.  We  expect  Empire  to  achieve  record  cash  flow  and  strong  earnings  growth  in 
fiscal 2001. Growth in the Canadian economy is expected to exceed 4% during the next
12 months and within that favorable environment, the fundamentals in each of our busi-
nesses are strong and stable.  

The cash proceeds from the Hannaford divestiture provide a source of funds to reduce
debt  and  continue  to  invest  in  related  businesses  and  other  opportunities  that  further
enhance shareholder value. At the same time, we will have more than adequate resources
to finance the growth and development of our core businesses. 

T H E P E O P L E O F E M P I R E Our progress during the past year is the direct result of the
contributions  of  more  than  34,000  employees  at  Empire  and  its  related  companies.
Thanks  to  their  efforts,  we  have  continued  to  meet  the  needs  of  our  customers  while
positioning the Company for long-term growth in earnings and shareholder value.

We  would  also  like  to  acknowledge  the  contributions  of  Tom  Bleasdale,  who  will 
be  retiring  from  the  Board  of  Directors  in  September  of  this  year.  Empire  has  greatly 
benefited  from  Tom’s  presence  during  the  past  six  years  and  we  thank  him  for  his 
counsel and guidance.

In  December  1999,  we  welcomed  Paul  Beesley  as  Senior  Vice  President  and  CFO  of
Empire. Paul joined us with extensive financial management experience, most recently
as Vice President and CFO of The Globe & Mail. He replaced Allan Rowe who is now
focusing  his  full  attention  on  Sobeys  Inc.  as  that  company’s  Executive  Vice  President 
and CFO.

Finally, on behalf of the entire board, we wish to also thank our customers and share-
holders whose support is so essential to Empire’s success.

Paul D. Sobey
President and CEO

Donald R. Sobey
Chairman

E M P I R E C O M P A N Y L I M I T E D

07

F o c u s e d o n o u r

S t r e n g t h s

At  Empire,  our  traditional  approach  to  value  creation  has  long  been  one  of 

the  company’s  key  strengths.  It  consists  of  three  basic  responsibilities  that

include:  (1)  ensuring  that  we  have  the  best  management  in  place  to  run  the

businesses we own or invest in, (2) allocating capital in a manner which max-

imizes long-term sustainable value creation; and (3) continually monitoring the

performance and potential of our businesses to ensure that our objectives are

being met.

The December 1998 acquisition of Oshawa has proved to be highly consistent

with this approach. Today, we are the majority owner of the second largest food

distribution company in Canada, with $11 billion in sales and operations from

coast to coast. Such scale is a vital strength in an increasingly global industry.

In the meantime, Sobeys management continues to enhance our return on this

investment by capturing the synergies promised in last year’s report.  

Another of the company’s key strengths is a conservative approach to financial

management,  as  evidenced  by  prudent  accounting  policies  and  traditionally

modest levels of net debt. Although our debt to capital ratio has increased over

the prior year -- mostly the result of bank loans incurred to fund Empire’s buy-

back of 5.5 million Class A common shares in March, 2000 -- the pending sale

of Hannaford Bros. Co. for an estimated $1.0 billion has placed Empire in a pos-

ition of unprecedented financial strength and flexibility. Today, we are blessed

with the ability to support the growth and development of our core food distri-

bution business while substantially improving an already healthy balance sheet.

08 E M P I R E C O M P A N Y L I M I T E D

F o o d   D i s t r i b u t i o n

Empire’s interest in the food distribution business consists of a 61% ownership position in 

Sobeys Inc. – the second largest food distributor in Canada in terms of sales, number of 

supermarkets and geographic presence, and the country’s only national foodservice distributor.

Sobeys’ enterprise-wide capital 

expenditures, including the contributions 

of franchisees and third-party financing,

reached a record $386 million.

R E C O R D R E S U LT S For the first time, Sobeys’ revenues reached the $11 billion mark, increas-
ing 77% from the prior year. Fiscal 2000 includes a full 12 months of results from the former
Oshawa operations compared to 22 weeks in the previous year. Sobeys was able to manage
the complex task of merging two large organizations while posting a comparable sales increase
of 2.6%, or 2.2 points in excess of food price inflation.

Operating  earnings,  before  last  year’s  restructuring  and  integration  charges,  grew 136%  to
reach $176.7 million – primarily as a result of the impact of a full year of Oshawa’s operations
along with the company’s new economies of scale and other integration synergies that were
unleashed  during  the  year.  On  the  same  basis,  earnings  before  goodwill,  which  more 
accurately  reflect  the  ongoing  capacity  of  the  business  to  generate  profit,  reached  a  record
$99.2 million. Net earnings reached $80.2 million. Strong earnings growth is expected to con-
tinue  given  ongoing  improvements  in  the  company’s  management  process  and  the
opportunity for additional savings through integration.

I N T E G R AT I O N S AV I N G S A H E A D O F TA R G E T To date, Sobeys has exceeded its initial target of
$35 million in fiscal 2000 cost savings. Most of this amount came from enhanced purchasing
power, as well as numerous opportunities for improvement in merchandising and supply chain
management. The company remains on target to achieve a cumulative $70 million reduction
in annual operating expenses by the end of the current fiscal year.  

A S T R O N G E R B A L A N C E S H E E T Meanwhile, Sobeys made excellent progress in strengthening
its balance sheet. Sobeys paid down $117.7 million in long-term debt during the past year,
despite  the  largest  capital  investment  program  in  its  history.  The  company’s  debt  to  equity
ratio improved to 1.1:1 from last year’s 1.5:1.   

A N A M B I T I O U S C A P I TA L I N V E S T M E N T P R O G R A M While the acquisition of Oshawa present-
ed substantial opportunities to lower cost through consolidation, its long-term benefits are far
more promising. As one of the two major players in a rapidly consolidating industry, Sobeys
is  positioned  to  reap  tremendous  benefits  through  the  expansion  and  modernization  of  its
operations. During fiscal 2000, Sobeys spent $270 million on the expansion and moderniza-
tion of its store and distribution networks. Including contributions of the franchisees and third
party financing, enterprise wide expenditures totaled $386 million.

As expected, the majority of capital activity was focused on Ontario where past investment
had not kept pace with the company’s other geographic regions. During the year, the Ontario
region completed the expansion of the Milton distribution centre and the construction of a
similar, 420,000 sq. ft. facility in Whitby. These state-of-the-art, multi-temperature facilities
replace  three  older  facilities  and  are  expected  to  save  $14  million  annually  in  distribution
expenses while greatly enhancing supply logistics. A new 265,000 sq. ft. warehouse for the
company’s foodservice operation, SERCA, will complete the consolidation of the Ontario

E M P I R E C O M P A N Y L I M I T E D

09

distribution  network  -    from  11  centres  last  year  to  five  -  providing SERCA  Ontario  cus-
tomers with high-quality handling of products destined for their use.

At  the  same  time,  Sobeys  has  begun  to  expand  and  improve  its  store  network,  especially  in
Ontario. During fiscal 2000, Sobeys completed the construction of 48 new or replacement stores
and expanded or modernized an additional 103 locations, mostly in support of the IGA, Sobeys
and Price Chopper banners.

Next  year,  with  the  modern  distribution  network  now  in  place  across  the  country,  the
investment in Sobeys store network continues in earnest. The company has earmarked total
system wide spending of $641 million or about 6% of sales, over 78% of which will be direct-
ed toward the store network.

The Sobeys “superstore” format caters

to time-pressed shoppers with extensive

prepared meal departments and services

such as in-store pharmacies, banking 

and dry-cleaning.  

Building activity is expected to include 52 new stores, the replacement or enlargement of 22
others and more than 600 renovation projects. Once again, most of our investment will be
centred on the IGA, Sobeys and Price Chopper banners within the context of the company’s
multi-banner strategy.

A B A N N E R F O R E V E R Y M A R K E T S E G M E N T

Essentially,  Sobeys’  multi-banner  strategy 
is  aimed  at  deploying  each  of  the  company’s  banners  in  a  complementary  relationship  that
maximizes sales and profitability in each market while minimizing direct competition between
its own operations. The key to making this strategy work is to provide distinct value proposi-
tions for each consumer segment in the market.

For  instance,  a  growing  number  of  the  company’s  133  Sobeys corporate  stores  are  full-size
supermarkets aimed at customers who demand wide assortment and full service in a modern,
pleasant  atmosphere.  At  up  to  60,000  sq.  ft.  this  “superstore”  format  features  farm-fresh 
produce,  full-line  bakeries,  extensive  prepared  meal  selections,  and  other  services  such  as 
in-store pharmacies, dry-cleaning and banking.

The company’s 545 IGA stores are designed to meet the needs of suburban and mid-sized com-
munities. At 15,000 to 45,000 sq. ft., IGA is a “neighborhood” store banner, with an emphasis
on  fresh  departments  and  the  kind  of  personalized  service  that  appeals  to  discriminating 
customers. During the past year, the modernization of our IGA network included the expan-
sion of the Garden Market format with its emphasis on appealing fresh departments in 72 stores.

Price Chopper is a 20,000 to 40,000 sq. ft. “discount” format aimed squarely at the needs of the
most price sensitive shoppers in medium to large size urban markets. This banner offers a full
range of departments and succeeds in underpricing traditional supermarkets with a functional
store design and a low cost operating approach.

In addition, the company reaches the rural market through banners such as Foodland, Knechtel,
Food Town and Les Marchés Tradition. We also serve the distinct convenience market through
banners  such  as  Green  Gables,  Needs and  Boni  Choix as  well  as  hundreds  of  affiliated  and 
independent operators across Canada.

S T R O N G E R S U P P O R T S Y S T E M S During the past year, Sobeys made excellent progress in sup-
porting the development of each of these banners. As expected, technology played a central
role. The company’s new SAP enterprise wide information system, developed in partnership
with IBM, is now operational in Atlantic Canada where it is enabling a number of important
initiatives in purchasing, merchandising, accounting and supply chain management. Rollout

10 E M P I R E C O M P A N Y L I M I T E D

F O O D D I S T R I B U T I O N

of the system into Quebec, Ontario and western Canada will be completed within the next
12 months with the foodservice operation scheduled for conversion in fiscal 2002.

C AT E G O R Y M A N A G E M E N T One of the most important benefits of the enterprise-wide net-
work is the kind of information that is aiding the company’s category management program.
Also aided by point-of-sale technology that has been installed in many of the company’s oper-
ations, category managers are able to gain insights into consumer preferences and shopping
habits  as  never  before.  Basically,  category  management  approaches  our  business  from  the 
perspective of consumers. It provides a framework to consider the impact of all buying and
merchandising decisions within the context of probable consumer behavior.  

Category plans have been built and executed for all banners in Atlantic Canada and results to
date  have  been  positive. The  program,  which  will  ultimately  include  more  than  250  cate-
gories, is scheduled for rollout over a two-year period.

B E T T E R L O G I S T I C S Advanced technology is also playing a roll in many other productivity
enhancing initiatives. Coincident with the modernization of Sobeys’ warehouse network, the
company has taken the opportunity to install advanced EXE logistics management software.
Readily integrated with Sobeys enterprise-wide information system, EXE automatically directs
and monitors the movement of product throughout the warehouse, resulting in faster through-
put and lower costs.

During the past year, Sobeys addressed the challenge of consolidating its private 

label programs, taking the opportunity to pick the best from each and saving millions 

in annual procurement costs in the process.

B E T T E R VA L U E While cost savings are an important part of the value proposition, Sobeys also
continues to develop a range of new products and services for its customers. One of the best
examples is the company’s private label program. During the past year, Sobeys addressed the
challenge of consolidating its private label programs, taking the opportunity to pick the best
from each while providing a better value proposition for the customer. At year-end, Sobeys
had expanded the Our Compliments and Smart Choice programs by 60% to 2,369 items.

While customers appreciate a level of quality equivalent to or better than national brands at 
significantly  less  cost,  the  benefits  of  a  thriving  private  label  program  for  Sobeys  include
enhanced margins and a unique product offering. The company sees significant opportunity for
growth in private label and plans to introduce more than 1,000 items over the next two years.

A N AT I O N A L F O O D S E R V I C E C O M PA N Y Sobeys’ foodservice operation, SERCA, posted record
financial  results  during  the  past  year  while  advancing  its  position  as  the  largest  and  only 
national  foodservice  company  in  Canada.  Due  in  large  part  to  the  impact  of  a  full  year  of
Oshawa results, revenue reached 96% to $2.1 billion and operating income rose by 92% to
$33.8 million, respectively. Following the integration of the former foodservice operations,
the consolidation and modernization of the Ontario distribution network and the expansion
of  a  private  label  program,  SERCA is  better  positioned  than  ever  to  meet  the  needs  of  its 
customers from coast-to-coast. 

E M P I R E C O M P A N Y L I M I T E D

11

R e a l   E s t a t e

Empire’s 12.0 million sq. ft. real estate portfolio provides the company with a number 

of important benefits, including earnings stability and diversification. In fiscal 2000, 

the Real Estate operation contributed a record $70.1 million in operating income, up 8% 

from the previous year.

More than 30 percent of the Real 

Estate division’s total square 

footage is leased to an Empire-

related company.

R E A L E S TAT E ’ S S T R AT E G I C VA L U E While the Real Estate operation’s portfolio is an excel-
lent investment in its own right, it also helps to create significant synergies within Empire and
its related businesses. For our Real Estate operation, it provides top-quality anchor tenants and
a stable source of revenue and cash flow. For our retail operations, it provides the flexibility
to expand or modify properties in response to changing market conditions.

Empire’s real estate assets are owned and managed through two wholly-owned subsidiaries:
Atlantic Shopping Centres Limited (ASC) and Sobey Leased Properties Limited (SLP). As the
largest real estate company in Atlantic Canada, ASC is focused on the acquisition, develop-
ment and management of enclosed shopping malls and mixed-use, retail and office complexes.
SLP is engaged in the acquisition, development and financing of prime retail locations for free-
standing  Sobeys  stores  and  attached  shopping  plazas.  In  total,  the  Real  Estate  operation’s
portfolio consists of 84% retail space and 16% office space.

During  the  year,  the  Real  Estate  operation  also  assumed  management  of  all  non-operating
food store real estate from the former Oshawa Group and is overseeing the disposition of these
and other non-strategic assets throughout the country.

Thanks to buoyant economic conditions in Atlantic Canada, continued strength in the com-
mercial  real  estate  market,  sound  management  and  dedicated  employees,  both  Real  Estate
subsidiaries contributed a record performance in fiscal 2000.  

AT L A N T I C S H O P P I N G C E N T R E S ASC’s  real  estate  portfolio  consists  of  31  shopping  centres
with a gross leasable area of 5.9 million square feet and 12 mixed-use office buildings with a
gross leasable area of 1.6 million square feet.

In  fiscal  2000,  ASC’s  performance  was  aided  by  continuing  improvement  in  average  lease
rates. Vacancy rates were relatively stable at 9.2% compared to 8.9% one year ago. The com-
pany’s results also benefited from the May 1, 1999 opening of the MTT Call Centre in our
Scotia Square, Halifax property. Scotia Square contains the largest concentration of corporate
call  and  data  centres  in  the  region.  Between  Halifax  and  Moncton,  ASC  leases  more  than
350,000 sq. ft. of call centre space to the Canadian Imperial Bank of Commerce, the Bank of
Nova Scotia, Purolator, ICT Group Incorporated and several other companies. 

ASC results also began to reflect an increase in gross revenue that has come from new tenan-
cies at our shopping centres. Major new anchors include: Zellers at Sydney Shopping Centre
and Amherst Centre, Business Depot at Fredericton Mall and Downsview Mall, and Sobeys at
County Fair Mall, Amherst Centre and Sydney Shopping Centre.

12 E M P I R E C O M P A N Y L I M I T E D

R E A L E S T A T E

The Real Estate division undertook a number of new developments during the year includ-
ing: the conversion of the Fundy Trail Mall in Truro, N.S. into a strip centre; the completion
of  a  major  expansion  for  Zellers at  our  property  in  New  Minas,  N.S.;  the  completion  of  a 
new Sobeys food store at Sydney Shopping Centre, Sydney, N.S., and the construction of a
new 12-plex cinema for Empire Theatres at Avalon Mall, in St. John’s, Nfld. 

It is also worth noting that the demise of Eaton’s had a minimal effect on the company. The
single Eaton’s tenancy in the portfolio – at Highfield Square in Moncton, N.B. – was replaced
by a new Bay store soon after its departure.

Sobey Leased Properties – whose portfolio consists mainly of freestanding food stores 

and attached shopping plazas – also achieved record results in fiscal 2000 thanks to continued

growth in the food distribution business.

S O B E Y L E A S E D P R O P E R T I E S

Sobey  Leased  Properties  –  whose  portfolio  consists  mainly 
of freestanding food stores and attached shopping plazas – also achieved record results in fiscal
2000.  Vacancy  rates  decreased  to  4.4%  from  5.4%  one  year  earlier  as  a  result  of  increased 
leasing activity.

During the past year, most of SLP’s building activity was focused on Atlantic Canada with the
addition of 310,000 sq. ft. in new retail space, including the acquisition of two shopping plazas
in St. John’s, Nfld.

With the addition of an extensive food distribution network in central and western Canada,
SLP has the opportunity to continue to profitably grow its business. SLP’s intention is to con-
tinue to support the expansion of Sobeys where it is financially and strategically advantageous
to do so.

E M P I R E C O M P A N Y L I M I T E D

13

I n v e s t m e n t s   a n d   O t h e r   O p e r a t i o n s

The third major component of Empire’s business - investments and other operations - achieved

excellent growth in market value during the year, largely reflecting the imminent sale of our 25%

interest in Hannaford Bros. Co. to Delhaize America, Inc.

With 117 screens in 19 locations,

Empire Theatres is the largest movie

exhibitor in Atlantic Canada.

S A L E O F H A N N A F O R D T O D E L H A I Z E A M E R I C A The Hannaford sale transaction is expected
to generate more than $1.0 billion (approximately US$500 million in cash and 11.7 million
Class A common shares of Delhaize America). As a result, Empire will be well positioned to
support  the  growth  and  development  of  our  core  businesses  while  still  retaining  a  valuable
stake in the U.S. food distribution business.

Our pending interest in Delhaize America Inc. will provide another opportunity to enhance
the value of our portfolio as the industry consolidates south of the border. Part of Belgium-
based  Delhaize  “The  Lion”  Group,  Delhaize  America  Inc.  will  be  the  fifth  largest  food
distribution company in the United States after merging with Hannaford.

WA J A X L I M I T E D Empire’s 48% equity interest in Wajax Limited will soon represent the only
equity-accounted  investment  in  the  company’s  portfolio.  Wajax  is  engaged  in  the  sale  and
after-sales  parts  and  service  support  of  mobile  equipment,  industrial  components  and  diesel
engines  through  an  extensive  network  of  branches  across  Canada  and  the  northwestern
United States.

For  its  fiscal  year  ended  December  31,  1999,  Wajax  reported  net  earnings  of  $4.0  million 
versus $9.5 million the prior year. Relatively low commodity prices that prevailed well into
1999 impacted the profitability of each of Wajax’s core businesses.

With  respect  to  Wajax’s  current  fiscal  year,  we  believe  the  company  is  well  positioned  for 
significant  earnings  improvement.  Higher  commodity  prices  and  increased  activity  in  the
Canadian resource sector bode well for the company in the year ahead. In addition, the com-
pany’s management team is more focused on shareholder value than ever before. They are
managing  working  capital  more  effectively  and  are  reducing  debt  while  positioning  the 
company for continued leadership in the highest growth areas of its business.

Empire has already begun to see the benefit from these initiatives, with the contribution to
Empire’s earnings from Wajax in fiscal 2000 up $1.0 million over the prior year.

O T H E R O P E R AT I O N S Empire’s  other  operations  consist  of  wholly-owned  Empire  Theatres
Limited,  the  largest  movie  exhibitor  in  Atlantic  Canada  with  117  screens  in  19  locations.
Largely  as  a  result  of  focused  management  and  the  keen  efforts  of  its  dedicated  employees,
Empire Theatres continued to contribute positively to Empire’s results in fiscal 2000, posting
new records for revenue, operating income and net income. 

Empire Theatres continues to modernize its circuit with the opening of three new locations
in  fiscal  2000,  including  a  12-screen  complex  at  Avalon  Mall,  St.  John’s,  Newfoundland.
Developments  in  fiscal  2001  include  the  opening  of  a  new  “Studio  5”  theatre  complex  in
Summerside, P.E.I. and in Miramichi, N.B., with further announcements to come.

14 E M P I R E C O M P A N Y L I M I T E D

M a n a g e m e n t ’ s   D i s c u s s i o n   a n d   A n a l y s i s

This  section  of  the  annual  report  provides  management’s  discussion  and  analysis  of  the 
financial condition of Empire Company Limited and its financial performance for the year ended
April 30, 2000 with a comparison to the year ended April 30, 1999. As part of this discussion, 
we assess the outlook of each business segment, the financial condition of the company, and the
impact of risks. This discussion should be read in conjunction with the consolidated financial state-
ments, including the notes that accompany them, found on pages 26 to 37.

In comparing fiscal 2000 to fiscal 1999, it should be noted that for the first 30 weeks of fiscal 1999,
Empire’s  food  distribution  business  was  operated  through  Sobeys  Capital  Inc.,  then  a  wholly
owned subsidiary of Empire. As a result of a restructuring in connection with the acquisition of
The Oshawa Group Limited (“Oshawa”), effective December 1998, the food distribution business
(including that of Sobeys Capital Inc. and Oshawa) now operates through Sobeys Inc., which is
approximately 61% owned by Empire. Accordingly, results for the first 30 weeks of fiscal 1999,
reflect 100% ownership of Sobeys Capital Inc., while for the last 22 weeks of fiscal 1999, and all
of fiscal 2000, reflect 61% of Sobeys Inc.

R E S U LT S Earnings  before  net  capital  gains  and  other  items  reached 
C O N S O L I D AT E D
$84.7 million in fiscal 2000, an increase of $24.7 million or 41% from last year’s $60.0 million,
calculated on the same basis. On a per share basis, earnings before net capital gains increased 42% to
$2.20 per share in 2000, from $1.55 per share in 1999. Including net capital gains of $2.1 million in
2000, primarily as a result of the sale of liquid investments, and $24.1 million last year, again primarily
as a result of the sale of liquid investments, earnings before other items amounted to $86.8 million
($2.25 per share), an increase of $2.7 million or 3% over last year’s $84.1 million ($2.20 per share).

Two  other  items  occurred  in  fiscal  1999  that  impacted  net  earnings:  (i)  a  dilution  gain  on  the
issuance of common shares by Sobeys in the amount of $79.9 million or $2.13 per share; and (ii)
Empire’s share of a net restructuring charge taken by Sobeys in the fourth quarter of 1999 equal
to $29.1 million or $0.78 per share. These one-time items in fiscal 1999 were in connection with
Sobeys’ acquisition of The Oshawa Group in December 1998. Factoring in these other items for
fiscal 1999, Empire’s net earnings in fiscal 2000 amounted to $86.8 million ($2.25 per share), a
decrease of $48.2 million from last year’s $135.0 million ($3.55 per share).

The table below presents Empire’s earnings per share before goodwill charges, net capital gains
and  other  items,  as  well  as  the  earnings  per  share  contribution  from  net  capital  gains  and  from
other items.

Earnings Before Goodwill,
Net Capital Gains and Other Items 
Empire Company
($ per share)

0
2

.

2

9
6
.
1

5
5
.
1

9
2
.
1

3
9
.
0

96 97 98 99 00

C O N S O L I D AT E D E A R N I N G S P E R S H A R E

Earnings before goodwill charges, net capital gains 

and other items

$

Earnings before net capital gains and other items
Net capital gains
Earnings before other items
Other items:
Dilution gain on issue of common shares by subsidiary
Share of restructuring and integration costs by subsidiary
Earnings per share

2000

1999

$

2.52

2.20

0.05

2.25

–

–

1.71

1.55

0.65

2.20

2.13

(0.78)

3.55

$

2.25

$

The weighted average number of shares outstanding for earnings per share calculation purposes
was 37.8 million for fiscal 2000, compared to 37.5 million for fiscal 1999. Total common shares
outstanding at the end of fiscal 2000 were 32.8 million, a decrease of 6.3 million common shares
from  the  39.1  million  common  shares  outstanding  at  the  end  of  fiscal  1999.  The  reduction  in
common shares outstanding from the prior year is attributable to two events: (i) a normal course
issuer bid which expires August 26, 2000 under which the Company bought back 974,850 Class A

E M P I R E C O M P A N Y L I M I T E D

15

common  shares  at  prevailing  market  prices  during  fiscal  2000;  and  (ii)  a  substantial  issuer  bid 
completed by the Company in March 2000 which resulted in the buyback and cancellation of
5,503,900 Class A common shares. 

The funding requirement for the substantial issuer bid, equal to $187 million, was facilitated by
way of a bank loan that will be repaid at the earlier of September 30, 2000 or upon closing of the
sale of Empire’s ownership interest in the common shares of Hannaford Bros. Co. The Hannaford
sale  consideration  will  consist  of  approximately  $500  million  US  cash,  and  approximately  11.7
million Class A common shares in Delhaize America, Inc. At current exchange rates, the value of
the  total  consideration  to  be  received  by  Empire  will  be  slightly  in  excess  of  $1.0  billion  in
Canadian funds.

As  previously  noted,  Empire’s  fiscal  2000  earnings  before  net  capital  gains  and  other  items
increased  by  $24.7  million  or  41%  over  the  prior  year.  The  composition  of  the  $24.7  million
($0.65  per  share)  increase  in  earnings  before  net  capital  gains  and  other  items  over  last  year  is 
as follows:

Food Distribution’s contribution to Empire’s operating earnings equaled $49.3 million in 2000,
an increase of $22.7 million or 86% from the $26.5 million contribution recorded in 1999. The
significant  increase  in  contribution  from  Food  Distribution  operations  from  the  prior  year  is 
primarily attributed to the following: (i) the benefit of having a full year of operating earnings from
the  combined  Sobeys  Inc.  business,  versus  22  weeks  the  prior  year;  (ii)  achievement  of  the 
$35 million in synergies targeted for the first year, in connection with the Sobeys/Oshawa merger
that  was  consummated  in  December  1998;  and  (iii)  the  benefits  accruing  from  more  than 
$100 million reduction in managed working capital since the acquisition date.

Real  Estate’s contribution  to  Empire’s  operating  earnings  increased  by  $1.8  million  or  32%  in 
fiscal 2000 from the prior year. This increase is due to a 6% rise in rental revenues and a 100 basis
point reduction in the operating cost to revenue ratio from the prior year. 

Investments contribution to Empire’s earnings (before net capital gains) increased by $2.3 million
or  7%  from  the  prior  year.  The  increase  is  primarily  attributed  to  continued  growth  in  equity
accounted earnings contribution from Empire’s investment in Hannaford Bros. Co.

Other Operations contribution to Empire’s operating earnings increased by $0.8 million or 41%
from the prior year. This increase is primarily the result of strong revenue growth and effective
expense control at wholly owned Empire Theatres Limited.

Corporate expenses amounted to $8.6 million in 2000, a $2.9 million increase from the prior year
primarily  as  a  result  of  the  additional  interest  expense  associated  with  funding  the  buyback  of
Empire Class A common shares during the year.

The following table presents revenue and operating income for the last two years for each of the
three business operations comprising Empire Company Limited.

($ in millions)

Revenue 
Food Distribution(1)
Real Estate
Investment and Other
Inter-segment elimination

Operating Income
Food Distribution(1)
Real Estate
Investment and Other
Corporate Expenses

2000

1999

Change

$

11,006.1

$

6,231.8

157.1

46.0

(44.7)

$

11,164.5

$

265.6

$

$

70.1

44.0

(5.5)

148.0

38.1

(40.3)

6,377.6

121.1

65.1

41.7

(5.0)

$

374.2

$

222.9

76.6%

6.1%

20.8%

10.9%

75.1% 

119.4%

7.7%

5.3%

9.5%

67.9%

(1) Fiscal 1999 for food distribution reflects Sobeys Inc. operations for 22 weeks.

Total Revenue
Empire Company 
($ in millions)

4
6
1

,

1
1

8
7
3

,

6

0
5
1

,

3

0
2
3

,

3

5
1
9

,

2

96 97 98 99 00

(Fiscal)

Operating Income
Empire Company 
($ in millions)

2
.
4
7
3

9
.
2
2
2

6
.
5
6
1

8
.
9
4
1

8
.
2
4
1

96 97 98 99 00

(Fiscal)

16 E M P I R E C O M P A N Y L I M I T E D

M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

Revenues  increased  75%  in  fiscal  2000,  to  $11.1  billion,  an  increase  of  $4.8  billion  over  fiscal
1999, primarily as a result of the inclusion of Sobeys Inc. revenues for the full fiscal year versus 22
weeks last year. Same store sales for all banners grew by 2.6% in fiscal 2000, relatively consistent
with 1999 same stores sales growth for all banners of 2.9%.

In fiscal 2000, operating income reached $374.2 million compared to $222.9 million in the prior
year, an increase of $151.3 million or 68%. The increase is primarily attributable to the inclusion
of Sobeys Inc.’s operating income for the full fiscal year versus only 22 weeks last year, along with
continued growth in the balance of our food distribution business and operating income growth
from our real estate business. With respect to our investments and other operations, Empire real-
ized a $2.8 million increase in earnings contribution from its investment in Hannaford Bros. Co.
in fiscal 2000. The earnings contribution from Wajax Limited increased by $1.0 million from the
prior year. Operating income from other operations increased by $1.3 million from the prior year,
reflecting improved performance at Empire Theatres. 

F O O D D I S T R I B U T I O N Our food distribution business is carried on through our 61% ownership
interest in Sobeys Inc., the second largest food distributor in Canada in terms of sales ($11.0 bil-
lion),  number  of  corporate  and  franchised  stores  (1371  stores)  and  geographic  presence,  and
Canada’s only national foodservice distributor. Prior to December 1998, Empire owned 100% of
Sobeys Capital Inc., which consisted primarily of 114 corporate supermarkets operating under the
Sobeys banner along with a franchised retail and foodservice business. The majority of food group
revenues prior to the acquisition were linked to Atlantic Canada.

In  fiscal  2000,  Sobeys  Inc.  accounted  for  98.6%  of  Empire’s  operating  revenues  and  71.0%  of
operating income. Sobeys Inc. revenue and cash flow base is diversified across Canada. 

Food distribution revenue increased 76.6% in fiscal 2000 to reach $11.0 billion, an increase of $4.8
billion over fiscal 1999 results. After adjusting fiscal 1999 to include Oshawa revenues for the full
year, the year-over-year sales growth rate would have been 7.6%. Net square footage increased by
2.8% or 424,164 square feet during the year.

Operating income for the year increased by $144.5 million or 119%, reaching $265.6 million or
71.0% of Empire’s total operating income. The effect of including the Oshawa results for the full
year versus 22 weeks last year accounted for the majority of this increase. The remaining increase
in  operating  income  is  attributable  to  a  combination  of  higher  sales  volume,  an  increase  in 
margins and lower operating expenses.

At year-end, Sobeys operated 419 corporate stores and 952 franchised stores as well as 25 food 
distribution centres and 27 foodservice operations. Of the corporate stores, 133 operate under the
Sobeys banner and 38 stores operate under the IGA banner. The largest franchised banner is IGA,
with 507 franchised stores. The proportion of retail store square footage by region across Canada
is as follows: 17.7% Western; 33.4% Ontario; and 48.9% Eastern (includes Quebec). 

Food  Distribution  Outlook Sobey’s  outlook  for  the  Food  Distribution  operation  is  positive 
primarily as a result of planned benefits accruing from more efficient distribution, centralized buy-
ing, administrative and corporate cost reductions, continued private label development, enhanced 
merchandising techniques, and ongoing corporate store and franchised development programs.

Sobeys’  integration  model  was  based  on  the  realization  of  $35  million  in  pre-tax  integration 
savings from the Oshawa acquisition in fiscal 2000 and a total savings of $70 million pre-tax by
the end of the following year. Sobeys has exceeded its first year target of $35 million and expects
that it will meet the annual $70 million target by the end of fiscal 2001.

The outlook for revenue is strong primarily due to a planned program of new store openings and
renovations/expansions, as well as the continued growth of the existing corporate and franchised
store base, and planned volume increases in the foodservice business.

Assets 
Food Distribution 
($ in millions)

0

.

9
5
8

,

2

8

.

1
8
7

,

2

3

.

6
0
5

2

.

8
3
5

0

.

1
9
5

96 97 98 99 00

Capital Expenditures
Food Distribution 
($ in millions)

2
.
6
1
2

8
.
5
8
1

3
.
0
7

4
.
9
6

4
.
1
5

96 97 98 99 00

E M P I R E C O M P A N Y L I M I T E D

17

Planned system wide spending for fiscal 2001 is $641 million. Sobeys Inc. expects to open 52 new
stores,  replace  22  older  stores,  and  conduct  99  major  renovations  and  556  minor  renovations  in 
fiscal  2001.  Capital  activity  includes:  $181  million  on  new  and  replacement  store  construction, 
$134 million on renovations, $57 million related to information technology and SAP systems devel-
opment, $53 million related to SERCA foodservice, and over $200 million related to franchisee and
third party financing.

Management is confident that this spending level, along with various initiatives designed to build 
on core competencies in areas such as: category management, systems, private label brands, banner
positioning, and customer loyalty programs will result in significant earnings growth in future years.

R E A L E S TAT E The Real Estate operation is primarily focused on the acquisition, development
and  management  of  a  portfolio  of  properties  that  complements  or  supports  Empire’s  Food
Distribution and other retail operations.

Empire’s real estate operations have 12.0 million square feet under management versus 11.5 mil-
lion  square  feet  the  prior  year.  Operations  are  conducted  through  100%-owned  Atlantic 
Shopping Centres (ASC) and 100%-owned Sobey Leased Properties (SLP). ASC’s portfolio con-
sists of 31 shopping centres with a gross leaseable area of 5.9 million square feet and 12 mixed-used
office  buildings  with  a  gross  leaseable  area  of  1.6  million  square  feet.  SLP’s  portfolio  consists
mainly of freestanding food stores and attached shopping plazas having a total gross leaseable area
of 4.5 million square feet.

The Real Estate operation contributed $70.1 million or 18.7% of Empire’s total operating income
in  fiscal  2000,  up  7.7%  from  $65.1  million  in  fiscal  1999.  This  improved  performance  reflects
development activities and higher net effective rental rates. Operating cash flow for the Real Estate
operation  increased  by  4%  in  2000,  to  reach  $32.7  million,  equivalent  to  11%  of  total  Empire
operating cash flow.

The occupancy rate as at April 30, 2000 was 91.8%, compared to 91.9% a year earlier. While the
occupancy rate has been relatively stable over the last four quarters, an additional 571,000 square
feet  was  leased  during  the  year.  This  included  the  leasing  of  a  120,000  square  foot  space 
to  Hudson’s  Bay  to  replace  a  vacated  Eaton’s  store  in  Moncton,  New  Brunswick.  No  other 
company-owned properties were affected by the demise of Eaton’s. Over the next five years no
more than 9% of total leased space comes up for renewal in any one year.

At Empire’s fiscal year end, the real estate portfolio consisted of 84% retail space and 16% office
space. More than 30 percent of total square footage is leased to an Empire related company. This
degree  of  integration  creates  strategic  advantages  for  both  landlord  and  tenant.  For  the  retail 
operations, it provides added flexibility to expand or modify properties in response to competitive
developments. For real estate operations, it provides top-quality anchor tenants for our shopping
centres, as well as a stable source of rental revenue and cash flow.

Major developments during fiscal 2000 included: (i) a 12-plex theatre project known as Studio 12
for  Empire  Theatres  Limited  at  Avalon  Mall,  St.  John’s,  Newfoundland;  (ii)  completion  of  a
35,000 square foot expansion to a Zellers store at County Fair Mall, New Minas, Nova Scotia;
(iii) completion of the conversion of Fundy Trail Mall in Truro, Nova Scotia to a strip centre; and
(iv) a new Sobeys food store at Sydney Shopping Centre, Sydney, Nova Scotia. 

In January 2000, Atlantic Shopping Centres completed long term debt refinancing of the Scotia
Square property, Barrington Place, and the CIBC building — all located in downtown Halifax.
The total refinanced amount was $83.1 million by way of first mortgage bonds at an average fixed
rate of 7.93%.

Assets
Real Estate 
($ in millions)

6

.

6
4
8

0

.

7
1
8

3

.

2
6
7

4

.

6
4
7

8

.

1
8
7

96 97 98 99 00

(Fiscal)

Capital Expenditures
Real Estate 
($ in millions)

7
.
1
6

7
.
5
5

6
.
2
5

3
.
3
4

7
.
8
2

96 97 98 99 00

(Fiscal)

Real Estate’s Outlook The Real Estate operation plans to continue to grow through development
projects that support Empire’s core food business. During the coming year the leasing team will

18 E M P I R E C O M P A N Y L I M I T E D

M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

Book Value and 
Unrealized Capital Gains
Empire Company
($ per share)

7
1

.

3
2

6
0

.

8
1

5
4

.

7
1

7
2

.

5
1

2
1
.
4
1

4
9
.
9

6
8
.
1
1

5
0
.
9

8
4
.
0
1

3
1
.
6

96

97 98 99

00

BV/Share

Unrealized Gain per Share 
on Marketable Securities

continue  to  aggressively  pursue  leasing  opportunities.  As  a  result,  the  unit  occupancy  level  is
expected  to  improve.  Because  of  these  factors  Empire  views  the  outlook  for  its  Real  Estate 
business as positive.

Going forward, the Real Estate operation will undertake additional redevelopments as required in
order to strengthen its position in core markets. For example, the conversion of enclosed neigh-
bourhood shopping centres to strip centres are planned for Downsview Mall, Lower Sackville and
Aberdeen Mall, New Glasgow, both located in Nova Scotia.

I N V E S T M E N T S & O T H E R O P E R AT I O N S The  third  component  of  Empire’s  business  is  its
Investments, consisting of an investment portfolio of equities and investment in other operations,
principally Empire Theatres Limited.

The  investment  portfolio  is  comprised  of  long-term  investments  where  Empire  has  significant
ownership interest in the company and other liquid investments where Empire has a smaller own-
ership  interest.  Equity  accounting  is  used  for  designated  long-term  investments.  Other  liquid
investments are accounted for by the cost method whereby Empire reports only the dividend and
interest income received from the investment.

Long-term investments, which represented 99% of the market value of the total Empire invest-
ment portfolio at fiscal year end, consisted of common shares in Hannaford Bros. Co. and Wajax
Limited respectively.

Market Value ($ in millions Canadian)
Long Term Investments
Hannaford Bros. Co.(1)
Wajax Limited

Ownership
Interest

As at 
April 30, 2000

Percent of 
Portfolio

25%

48%

$

1,116.1

35.0

1,151.1

95.7%

3.0%

98.7%

Other Investments
Total Investments
(1) The market value of Hannaford Bros. Co. reflects the closing Hannaford Share price on April 30, 2000, times the number of shares
held by Empire, multiplied by the foreign exchange rate at April 30, 2000.

1,166.1

100.0%

1.3%

15.0

$

Hannaford  Bros.  Co. At  year-end,  Empire  had  a  25.6%  equity  interest  in  Hannaford,  with  a 
market value at fiscal year end of Canadian approximately $1,116.1 million. Hannaford is a multi-
regional  food  retailer  that  has  operations  throughout  Maine,  and  in  parts  of  New  Hampshire,
Vermont,  Massachusetts,  New  York,  Virginia  and  North  Carolina.  Retail  food  sales  are  made
through the company’s 140 supermarkets operating primarily under the names Shop’n Save and
Hannaford Food and Drug Superstores.

According to its annual report, Hannaford’s 1999 (year ended is January 1, 2000 – all numbers are
in US dollars) sales and other revenues amounted to $3.46 billion, an increase of $139.4 million
or 4.2% over 1998. Identical store sales were up 1.1% for the year while comparable store sales
were up 1.7%.

Hannaford reported net earnings of $98.0 million ($2.32 per share) in 1999, up 3.6% from the
prior year’s $94.6 million. Before merger – related costs (after-tax) of $6.4 million, net earnings in
1999 were up 10.4% over the previous year. 

Net retailing selling space for its supermarkets increased 3.7% in 1999 to 5,360,000 square feet at
year  end,  an  increase  of  189,000  square  feet  over  1998  year  end  sales  area.  During  1999,
Hannaford  opened  four  new  food  stores,  expanded  four  existing  stores  and  conducted  major
remodeling projects in a number of its stores.

In February 2000 Hannaford sold a majority interest in HomeRuns.com, Inc., its internet-based
grocery delivery service. This business generated a net loss of $0.25 per share in 1999.

E M P I R E C O M P A N Y L I M I T E D

19

Wajax Limited Empire has a 48% equity interest in Wajax with a market value at April 30, 2000
of $35.0 million. Wajax is comprised of three core distribution businesses engaged in the sale and
after-sales parts and service support of mobile equipment, diesel engines and industrial components
through  a  network  of  close  to  150  branches  across  Canada  and  the  western  United  States.  Its 
customer base spans the natural resources, construction, transportation, manufacturing, industrial 
processing and utilities sectors.

For  its  fiscal  year  ended  December  31,  1999,  Wajax  reported  revenue  of  $1,038.4  million,  a 
$46.2 million or 4.7% increase over the prior year. 

Wajax  1999  net  earnings  equaled  $4.0  million,  down  58%  from  the  $9.5  million  recorded  the
prior year. This decline is primarily the result of depressed resource markets for most of 1999, par-
ticularly in forestry, oil and gas, and mining which affected the Company’s businesses operating in
western Canada. In the United States, Pacific North Equipment operated at a loss due to slower
than expected improvements as operational changes were introduced, and market demand declined.

Subsequent to Empire’s fiscal year end, on May 3, 2000, Wajax reported an increase in revenue
for its first quarter of 10% and a $1.9 million increase in net earnings from the first quarter last
year. The Company is beginning to see the positive effects of business building and cost reduc-
tion initiatives that were put in place in 1999. As well, a healthier western Canadian economy is
now contributing to improved performance.

Wajax management is optimistic in its outlook for 2000 as economic conditions, particularly in
western Canada, continue to improve and as the Company continues to reduce its debt through
better asset management.

Other Operations Other operations consist of wholly-owned Empire Theatres, the leading movie
exhibitor  in  Atlantic  Canada  operating  117  screens  in  19  locations.  During  the  year,  Empire
Theatres opened eight new screens and completed renovations at two theatre locations.

I N V E S T M E N T I N C O M E

($ in millions)
Dividend and interest income
Share of income of companies accounted 

for by the equity method 
Hannaford Bros. Co. 
Wajax Limited

Total Investment Income

2000

0.3

35.7

2.2

37.9

38.2

1999

3.2

32.9

1.2

34.1

37.3

Change

(89.2)%

8.4%

87.4%

11.1%

2.5%

Dividend  and  Interest  Income was  $0.3  million  compared  to  $3.2  million  in  fiscal  1999.  The
decrease  of  $2.9  million  is  attributed  to  the  sale  of  liquid  investments  in  the  second  quarter  of 
the year.

Net capital gains generated from the sale of investments, properties and other operations equaled
$2.1 million or $0.05 per share in fiscal 2000, a decrease of $22.0 million from last year’s recorded
net capital gains of $24.1 million or $0.65 per share. 

U N R E A L I Z E D G A I N O N I N V E S T M E N T P O R T F O L I O

($ in millions)
Market Value(1)
Book Value
Unrealized Gain

2000

1,166.1

405.7

760.4

$

$

$

$

1999

757.2

384.4

372.8

Change

54.0%

5.5%

104.0%

(1) The market value of Hannaford Bros. Co. reflects the closing Hannaford Share price on April 30, 2000, times the number of shares
held by Empire, multiplied by the foreign exchange rate at April 30, 2000.

Hannaford Common Stock Price
($ per share)

8
3
.
3
7

1
3
.
9
6

0
0
.
3
5

0
0
.
3
5

5
7
.
8
3

3
6
.
3
4

3
1
.
4
4

4
4
.
3
4

0
5
.
0
3

5
2
.
4
3

0
0
.
4
3

0
0
.
3
2

0
0
.
9
2

3
6
.
4
2

8
8
.
3
2

96

97

98

99

00

High

Low

Close

20 E M P I R E C O M P A N Y L I M I T E D

M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

The  unrealized  gain  on  investments  of  $760.4  million  is  not  reflected  in  Empire’s  shareholders
equity. The 104% increase in unrealized gain year-over-year is primarily due to the impact of the
merger announcement of August 17, 1999 between Hannaford Bros. Co. and Delhaize America,
Inc. The market value of Empire’s investment in common shares of Hannaford Bros. Co. repre-
sented 96% of the investment portfolio market value at fiscal year end.

Investments and Other Operations Division Outlook The outlook for the investments and other
operations division is positive. Management anticipates a closing date on the Hannaford merger
prior  to  August  1,  2000.  A  total  sale  consideration  of  approximately  $1.0  billion  Canadian 
is  expected.  This  total  consideration  will  consist  of  approximately  US$500  million  cash  plus 
11.7 million common shares of Delhaize American Inc. Empire’s intention for the Hannaford sale
consideration is to: (i) hold the Delhaize Class A shares; (ii) repay $365 million in bank loans; and
(iii) maintain a portfolio of liquid investments available to augment the growth and development
of food distribution and related businesses. 

Concerning Wajax, the outlook  is for improved earnings as  economic conditions  in its market 
territories continue to strengthen. Wajax’s earnings are also expected to benefit from better asset
management and systems development initiatives.

Specific to Empire Theatres, the outlook remains highly dependent on the quality and cost of films.
As a result of the quality of film releases expected in fiscal 2001, an experienced management team,
and planned screen development, Empire looks forward to continued growth in this business.

Capital Expenditures
Empire Company 
($ in millions)

0

.

6
7
2

7

.

6
4
2

5

.

7
3
1

7

.

5
2
1

7

.

2
8

96 97 98 99 00

(Fiscal)

F I N A N C I A L C O N D I T I O N Total assets at year-end of $4,171.1 million represents a $147.6 million
or 3.7% increase over fiscal 1999. This growth is primarily due to continued re-investment in our
core food distribution business.

At April 30, 2000, management calculates Empire’s consolidated net asset value at $1,574 million
($48.00 per Empire common share), an increase of $267 million or 20% from a calculated con-
solidated  net  asset  value  at  April  30,  1999  of  $1,307  million  ($33.40  per  share).  Management
calculates that on a per share basis, net asset value has increased by $14.60 per Empire share or 44%
over the prior year. The table below presents the composition of value by division. This net asset
value calculation values Sobey Inc. common shares and Hannaford Bros. Co. common shares at
their respective April 30, 2000 market values. For each dollar increase in Sobeys (SBY) share price,
Empire’s net asset value increases by $1.05 per share.

N E T A S S E T VA L U E

($ in millions)
Food Distribution
Real Estate*
Investments & Other**

Less: corporate debt
Net asset value

April 30, 2000

April 30, 1999

$ Value

% of Total

$ Value

% of Total

$

$

$

716

196

1,191

2,103

(529)

1,574

34%

9%

57%

100%

$

$

$

644

171

776

1,591

(284)

1,307

40%

11%

49%

100%

* Valued at 7 times funds from operations for fiscal 2000 and fiscal 1999 respectively. 
** Investments are valued at stated market values.

At April 30, 2000, the book value of Empire’s common shares was $17.45 compared to $18.06 at
April 30, 1999. The net asset value per share and book value per share calculations reflect the effect
of  a  successful  substantial  issuer  bid  completed  in  March  2000,  whereby  Empire  bought  back

Operating Cash Flow
Empire Company 
($ in millions)

0
.
7
9
2

5
.
1
6
1

8
.
9
0
1

9
.
3
9

0
.
3
8

96 97 98 99 00

(Fiscal)

E M P I R E C O M P A N Y L I M I T E D

21

5,503,900  Class  A  common  shares  at  a  price  of  $33.95  per  share,  along  with  the  effect  of  a 
normal course issuer bid announced in August 1999, wherein the Company has bought back close
to one million Class A common shares.

Empire finances a significant portion of its assets through the use of debt, the majority of which is
fixed rate and long term in nature. Total fixed rate, long-term debt at year-end was $1,332.4 mil-
lion, including the current portion of long term debt. Of this fixed rate long-term debt, 63% was
directly related to the food distribution segment of Empire and 36% was directly related to the real
estate segment of Empire. Empire finances its long-term assets with fixed rate debt, thereby reduc-
ing both interest rate and refinancing risk.

The  table  below  presents  the  debt  to  total  capital  ratio  and  interest  coverage  ratio  for  each 
segment of Empire along with consolidated totals.

April 30,  2000
Debt to total Capital*
Interest Coverage** (times)
April 30, 1999
Debt to total Capital*
Interest Coverage** (times)

Food 

Investments and 

Distribution

Real Estate Other Operations

53.1%

2.99

59.4%

2.41

78.6%

1.35

79.0%

1.29

37.9%

2.05

40.6%

2.29

Total

Empire

61.4%

2.35

63.4%

1.98

* Funded debt at book divided by total capitalization. Total capitalization excludes minority interest and deferred taxes. Total Empire

debt to total capital ratio reduces debt by the market value of investments, net of estimated tax payable if sold. 

** Operating income divided by interest expense.

Operating  income  increased  by  68%  in  fiscal  2000  from  the  prior  year,  while  interest  expense
increased at a slower rate, by 42%. The net effect served to increase Empire’s overall interest cover-
age to 2.35 times from 1.98 times in fiscal 1999. Funded debt less estimated after-tax proceeds on
the sale of marketable securities, to total capital, decreased by 2.0 percentage points to 61.4% from 
63.4% last year. Total equity decreased by 18% in fiscal 2000, primarily as a result of repurchasing
6.5 million Class A common shares by the Company during the year. Total funded debt, net of
cash  and  estimated  after-tax  proceeds  on  sale  of  marketable  securities,  equaled  $905  million  at
April 30, 2000, a decrease of $346 million or 27% from $1,251 million last year. In fiscal 2001,
Empire is budgeting a decrease in debt to total capital and an increase in interest coverage.

Capital Expenditures In fiscal 2000, capital expenditures of $246.7 million represented a decrease
of 10.6% over fiscal 1999. The table below presents on balance sheet capital expenditures over the
last two years by business segment.

($ in millions)
Food Distribution
Real Estate
Investments & Other
Total Capital Expenditures

2000

185.8

$

52.7

8.2

1999

216.2

55.7

4.1

246.7

$

276.0

$

$

Operating cash flow (after net change in other current items) of $272.4 million funded fiscal 2000
capital expenditures.

For fiscal 2001, a combination of budgeted operating cash flow, existing current credit facilities,
and third-party financing and operating leases, will be used to fund our planned fiscal 2001 direct
capital  spending  program  of  $475  million.  This  planned  amount  does  not  include  targeted 

Operating Cash Flow 
Per Share (1)
Empire Company
($ in millions)

6
8
.
7

1
3
.
4

7
9
.
2

4
5
.
2

2
2
.
2

96 97 98 99 00

(Fiscal)

(1) 1999 operating cash flow per 
share is before restructuring charges.

22 E M P I R E C O M P A N Y L I M I T E D

M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

spending by Sobeys franchises and landlords of $181 million. The bulk of our capital budget will
be  to  strengthen  the  corporate  retail  and  franchised  retail  store  network  across  the  country.  As
projects  are  completed,  appropriate  long-term  financing  will  be  arranged  in  order  to  prudently
match the duration of assets to debt, so as to minimize interest rate risk.

Liquidity Short-term liquidity remains strong as a result of internally generated cash flow, net cash
on hand, bank credit facilities and short term investments. On a non-consolidated basis, Empire
maintains authorized bank lines for operating, general and corporate purposes of $555 million, of
which 85% was utilized at year end.

Financial instruments are used from time to time to manage short-term interest rate fluctuations
on underlying short term lines of credit.

At year-end, on a consolidated basis, the company maintained authorized bank credit facilities in
excess  of  borrowings  of  $398  million.  The  Company,  at  its  option,  can  convert  $260  million 
of its authorized revolving-term credits into non-revolving fixed rate financing for a term up to
36 months.

Empire  maintains  direct  access  to  capital  markets  for  longer-term  capital  resources.  The  Real
Estate operation generally structures its long-term obligations with fixed rates and fully amortiz-
ing  debt  to  reduce  interest  rate  and  refinancing  risk.  The  long-term  financial  flexibility  of  the
Company is enhanced through access to capital markets. Empire maintains a corporate unsecured
debt rating of BBB (stable) from CBRS and BBB (stable) from DBRS.

Subsequent to year end, on June 22, 2000, a subsidiary of the company, Sobeys Inc., filed a short
form  shelf  prospectus  to  establish  an  unsecured  medium-term  notes  program  (MTN  Program)
which permits the issuance of up to $500 million in medium-term notes (MTN’s), from time to
time. On June 29, 2000, Sobeys Inc. refinanced $810 million in secured bank debt by: (a) issuing
$175 million unsecured medium term  Series A MTN’s with  an interest rate at 7.6%, maturing
November  1,  2005;  (b)  securitizing  $210  million  in  trade  receivables  and;  (c)  negotiating  a 
non-revolving  $250  million  unsecured  bank  credit  facility  to  be  repaid  over  five  years  and  a 
$300 million unsecured revolving bank credit facility. As a result of this refinancing, the pre-tax
borrowing costs of Sobeys Inc. are expected to be reduced by approximately $9 million per year.

A C C O U N T I N G P O L I C Y C H A N G E S S U B S E Q U E N T T O F I S C A L 2 0 0 0     The CICA has issued two
accounting  standards,  Section  3461  “Employee  Future  Benefits”  and  Section  3465  “Income
Taxes” effective for fiscal years beginning on or after January 1, 2000.

Section 3461 will redefine the way the cost of employee future benefits, including pension and
other  retirement  and  post-employment  benefits,  are  to  be  measured.  Instead  of  the  current
method of employing management’s best estimate of the effect of future events, future benefits 
are  now  measured  using  market  interest  rates  on  high  quality  debt  instruments.  In  addition, 
certain  other  retirement  and  post-employment  benefits,  currently  funded  on  a  cash  basis,  must 
be  accounted  for  an  accrual  basis  in  fiscal  2001.  The  annual  benefit  expense  will  depend  on  a 
number  of  market-driven  variables  outside  the  control  of  the  Company,  such  as  interest  rates,
future medical, health care cost trend rates, benefit plan changes and inflation rates.

Section 3465 will change the accepted method of accounting for income taxes from the deferred
to the asset liability method. Under the new method, future income taxes are recognized for the
temporary differences between the tax and accounting bases of the Company’s assets and liabilities
based on expected income tax rates and laws that are in effect during periods expected to be affected
by these temporary changes.

The Company intends to adopt both standards retroactively without restatement of prior periods. 

E M P I R E C O M P A N Y L I M I T E D

23

R I S K A N D R I S K M A N A G E M E N T Empire carries on operating business in its Food Distribution
and in its Real Estate operations, each having its own risk profile and risk management strategy.

Empire’s  Food  Distribution  business,  which  includes  retail,  franchised  retail  and  foodservice 
operations,  is  effectively  diversified  geographically.  This  ensures  a  balance  of  earnings  should 
competition  in  a  particular  region  intensify  or  the  outlook  for  an  area  change.  Management  is
committed to controlling operating risks by operating across a broad geographical base in Canada;
through continual innovation (store format and positioning; private brand development; customer
loyalty initiatives); and through the realization of lower costs from increasing economics of scale. 

Empire’s Food Distribution business utilizes a variety of store formats and store banners in order 
to ensure the optimum fit to each market area. By having operations across Canada through 419
corporate stores, and 952 franchised stores, by servicing thousands of independent accounts, and
through vertical integration of certain operations, our Food Distribution division has effectively
minimized its exposure to regional economic risk.

Empire’s Real Estate operations generate a stable source of income from tenant rent payments.
Continued growth of rental income is dependent on renewing expiring leases and finding new
tenants to fill vacancies at rental rates which will ensure an attractive return on our investment.
The success of the real estate portfolio is subject to general economic conditions, the supply and
demand  for  rental  property  in  key  markets  served,  and  the  availability  of  attractive  financing 
to  expand  the  real  estate  portfolio  where  deemed  prudent.  During  fiscal  2000,  our  Real  Estate
operations encountered relatively positive economic conditions in our key markets served and a
relative lack of new rental space resulted in improved rental rates. 

Empire’s Board of Directors has approved a formal debt management policy, which details certain
directives to ensure that prudent financial management is adhered to. The Board has also approved
a hedge policy for the use of defensive interest rate and currency risk management instruments.
This policy also has established guidelines regarding counterparty risk. In the ordinary course of
managing its debt, Empire has entered into various financial instruments, which are not reflected
on the balance sheet, to reduce or eliminate exposure to interest rate risks. Interest rate swaps, caps,
collars and forward rate contracts are used to hedge or reduce the exposure to floating interest rate
movements. At April 30, 2000, $75 million in short term obligations were covered by such instru-
ments with maximum interest rates ranging from 4.935% to 5.50% and having maturity dates from
August 1, 2000 to October 5, 2000.

Concerning  long-term  debt  management  for  the  Food  Distribution  operation,  Sobeys  Inc.  has
entered into various interest rate and currency swaps, which are not reflected on the balance sheet.
The effect of these swaps is to fix the interest rate the Company pays on its long-term debt.

To reduce the foreign exchange risk associated with our investment in US based Hannaford Bros.
Co.,  the  Company  has  entered  into  various  currency  collars  to  hedge  or  reduce  exposure 
to a stronger Canadian dollar relative to the US dollar. The Company has also hedged its currency
risk  by  entering  into  certain  short  term  borrowing  by  availing  US  banker’s  acceptances.  At 
April  30,  2000,  currency  collars  covered  US$250  million,  and  US$69  million  was  availed  by 
US bankers’ acceptance short-term obligations.

Empire’s  operating  companies  regularly  complete  a  comprehensive  environmental  compliance
report  and  the  Company  is  not  aware  of  any  significant  environmental  liabilities.  All  operating
companies are self-insured for limited risks while maintaining comprehensive loss prevention and
management programs to mitigate retained risks. The range of non-insured related risk exposure
is not expected to be material to the overall operations of the Company.

24 E M P I R E C O M P A N Y L I M I T E D

M A N A G E M E N T ’ S D I S C U S S I O N & A N A L Y S I S

Subsequent  to  year-end,  on  June  15,  2000,  16  independent  IGA  franchisees  in  Ontario  filed  a
Statement  of  Claim  against  a  subsidiary  company,  Sobeys  Inc.,  in  connection  with  an  alleged
breach of franchise agreements between these 16 dealers and The Oshawa Group Limited claim-
ing damages in the aggregate amount of approximately $262 million. The alleged breaches related
to franchisee agreements date back to 1979 and all cases predate Sobeys’ acquisition of Oshawa.
Management’s  current  assessments  of  these  claims  is  that  they  are  without  merit  and  that  the
impact of both the commencement of the action and its eventual outcome on future profitability
of Sobeys  operations  are  negligible.  No  provision  for  these  claims  has  been  made  in  the
Company’s financial statements. It should be noted that Sobeys recently negotiated a new IGA
franchise agreement for Ontario, which has been embraced by the vast majority of the 145 inde-
pendent  IGA  franchisees  in  that  province.  By  incorporating  lower  costs  and  incentive  driven
targets for Sobeys and our franchisees, the agreement is designed to enhance the sales and prof-
itability of both parties.

No significant year 2000 problems have been encountered with the Company and its subsidiaries
internal systems and equipment.

Certain forward-looking statements are included in this annual report relating to capital expen-
ditures,  cost  reduction  and  operating  performance.  Such  statements  are  subject  to  inherent
uncertainties and risks, including but not limited to: business and economic conditions generally
in  the  Company’s  operating  regions;  pricing  pressures  and  other  competitive  factors;  results  of 
the  Company’s  ongoing  efforts  to  reduce  costs;  the  ability  to  continue  to  achieve  integration 
savings  from  the  Sobeys/Oshawa  merger;  and  the  availability  and  terms  of  financing.
Consequently, actual results and events may vary significantly from those included in or contem-
plated or implied by such statements.

O U T L O O K Management  has  projected  stronger  financial  performance  in  fiscal  2001,  primarily 
as a result of continued growth in contribution from the food distribution business, along with
effective deployment of proceeds from the pending sale of Hannaford. We have assumed the con-
tinuation of intense competition in our budget and have factored in conservative cost of capital
assumptions. We are committed to achieving sustainable growth in economic value added in all
our businesses and will continue to focus on our strengths to build an even stronger Empire. 

E M P I R E C O M P A N Y L I M I T E D

25

M a n a g e m e n t ’ s   R e s p o n s i b i l i t y   f o r   F i n a n c i a l   R e p o r t i n g

Preparation of the consolidated financial statements accompanying this annual report and the presentation of all other
information in the report is the responsibility of management. The financial statements have been prepared in accor-
dance  with  appropriate  and  generally  accepted  accounting  principles  and  reflect  management’s  best  estimates  and
judgements. All other financial information in the report is consistent with that contained in the financial statements.

The Board of Directors, through its Audit Committee, oversees management in carrying out its responsibilities for finan-
cial  reporting  and  systems  of  internal  control.  The  Audit  Committee,  which  is  chaired  by  and  includes  a  majority 
of  non-management  directors,  meets  regularly  with  financial  management  and  external  auditors  to  satisfy  itself  as  to 
reliability and integrity of financial information and the safeguarding of assets. The Audit Committee reports its findings
to the Board of Directors for consideration in approving the annual financial statements to be issued to shareholders.
The external auditors have full and free access to the Audit Committee.

Paul D. Sobey
President and Chief Executive Officer
June 29, 2000

Paul V. Beesley
Senior Vice President, 
Chief Financial Officer and Secretary
June 29, 2000

A u d i t o r s ’   R e p o r t

T O T H E S H A R E H O L D E R S O F E M P I R E C O M PA N Y L I M I T E D We have audited the consolidated balance sheets of Empire
Company Limited as at April 30, 2000 and 1999, and the consolidated statements of earnings, retained earnings, and
cash flows for the years then ended. 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 an audit to obtain reasonable assurance 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.

In our opinion, these consolidated financial statements present fairly, in all material respects, the financial position of the
company as at April 30, 2000 and 1999, and the results of its operations and its cash flows for the years then ended in
accordance with generally accepted accounting principles.

New Glasgow, Nova Scotia
June 29, 2000

Chartered Accountants

26 E M P I R E C O M P A N Y L I M I T E D

C o n s o l i d a t e d   B a l a n c e   S h e e t

April 30 (in thousands)

A S S E T S

C U R R E N T
Cash
Receivables
Income taxes recoverable
Inventories
Prepaid expenses
Investments, at cost (quoted market value $14,970; 1999 $30,135)

Investments, at equity 

(quoted market value $1,151,089; 1999 $727,062) (Note 2)

Current assets and marketable investments
Property and equipment (Note 5)
Deferred income taxes
Other assets (Note 6)

L I A B I L I T I E S

C U R R E N T

Bank loans and notes payable (Note 7)
Payables and accruals
Income taxes payable
Long term debt due within one year

Long term debt (Note 8)
Deferred revenue
Minority interest
Deferred income taxes

S H A R E H O L D E R S ’ E Q U I T Y
Capital stock (Note 9)
Retained earnings
Foreign currency translation (Note 1)

See accompanying notes to the consolidated financial statements.

On behalf of the Board

2000

1999

$

54,250

$

72,050

487,767

18,161

492,531

55,094

13,840

404,075

–

471,553

37,160

24,981

1,121,643

1,009,819

391,838

359,390

1,513,481

1,740,348

–

917,258

1,369,209

1,689,656

5,086

959,547

$ 4,171,087

$ 4,023,498

$

589,120

$

435,613

1,173,877

1,050,688

–

92,775

1,855,772

1,323,700

16,643

312,572

59,632

6,958

93,892

1,587,151

1,392,435

19,421

286,809

–

3,568,319

3,285,816

212,096

360,268

30,404

602,768

285,140

425,822

26,720

737,682

$ 4,171,087

$ 4,023,498

Director

Director

C o n s o l i d a t e d   S t a t e m e n t   o f   R e t a i n e d   E a r n i n g s

Year Ended April 30 (in thousands)
Balance, beginning of year
Net earnings

Dividends paid

Preferred shares
Common shares

Excess of purchase price paid over average paid-up value of 

common shares purchased for cancellation

Costs of purchasing common shares for cancellation
Share issue costs, net of tax

Balance, end of year

See accompanying notes to the consolidated financial statements.

E M P I R E C O M P A N Y L I M I T E D

27

2000

1999

$

425,822

$

305,422

86,812

512,634

1,697

10,419

140,000

250

–

152,366

134,950

440,372

1,880

10,241

–

–

2,429

14,550

$

360,268

$

425,822

C o n s o l i d a t e d   S t a t e m e n t   o f   E a r n i n g s

Year Ended April 30 (in thousands except per share amounts)
Revenue
Cost of sales, selling and administrative expenses

2000

1999

$11,164,495

$ 6,377,651

10,707,133

6,098,147

Depreciation 

Investment income (Note 10)
Operating income
Interest expense

Long term debt
Short term debt

Gain on sale of investments and properties

Dilution gain on issue of common shares by subsidiary
Restructuring charges, food distribution segment

Income taxes (Note 11)
Restructuring charges
Other operations

Minority interest

Restructuring charges
Other operations

Earnings before goodwill amortization
Goodwill amortization (Note 1)
Net earnings
Earnings per share (Note 4)

See accompanying notes to the consolidated financial statements.

457,362

121,416

335,946

38,233

374,179

128,896

30,615

159,511

214,668

3,041

217,709

–

–

279,504

93,878

185,626

37,287

222,913

91,340

21,039

112,379

110,534

37,815

148,349

79,887

(85,143)

217,709

143,093

–

80,543

80,543

(38,017)

48,657

10,640

137,166

132,453

–

38,295

38,295

98,871

12,059

86,812

2.25

(18,015)

9,531

(8,484)

140,937

5,987

134,950

3.55

$

$

$

$

28 E M P I R E C O M P A N Y L I M I T E D

C o n s o l i d a t e d   S t a t e m e n t   o f   C a s h   F l o w s

Year Ended April 30 (in thousands except per share amounts)
Cash provided by (used for) operations

Net earnings
Items not affecting cash (Note 12)
Payment of preferred dividends
Operating cash flow before restructuring charges
Restructuring charges
Net change in other current items

Cash provided by (used for) financing

Net increase in bank loans
Net increase (decrease) in construction loans
Proceeds from issue of long term debt
Repayment of long term debt
Redemption of preferred shares
Purchase of Non-Voting Class A Shares for cancellation
Receipt of deferred revenue
Issue of Non-Voting Class A shares, net of costs
Payment of common dividends

Total cash available

Cash used for (provided by) investments

Acquisition of The Oshawa Group Limited, net of issue 
of common shares by subsidiary and net of cash acquired
Purchase of property, equipment and other assets
Proceeds from sale of property
Long term investments and advances
Net decrease in short term investments

Total cash used
Increase (decrease) in cash
Cash, beginning of year
Cash, end of year
Operating cash flow per share before restructuring charges (Note 4)

See accompanying notes to the consolidated financial statements.

2000

1999

$

86,812

$

134,950

211,865

(1,697)

296,980

–

(24,534)

272,446

153,507

1,466

95,153

(166,471)

–

(215,209)

–

2,384

(10,419)

(139,589)

28,422

(1,880)

161,492

(85,143)

226,821

303,170

149,081

(595)

945,943

(232,514)

(5,000)

–

13,200

58,966

(10,241)

918,840

132,857

1,222,010

–

1,082,452

246,727

(85,361)

–

276,044

(11,429)

5,707

(10,709)

(174,546)

150,657

1,178,228

(17,800)

72,050

54,250

7.86

$

$

$

$

43,782

28,268

72,050

4.31

N o t e s   t o   t h e   C o n s o l i d a t e d   F i n a n c i a l   S t a t e m e n t s

A p r i l   3 0 ,   2 0 0 0   ( i n   t h o u s a n d s  
e x c e p t   s h a r e   c a p i t a l )

E M P I R E C O M P A N Y L I M I T E D

29

A C C O U N T I N G P O L I C I E S

1 .

Principles  of  consolidation These  consolidated
financial statements include the accounts of the Company
and  all  subsidiary  companies.  Investments  in  which  the
company has significant influence are accounted for by the
equity  method.  Investments  in  real  estate  joint  ventures
are consolidated on a proportionate basis.

The  excess  of  cost  over  net  assets  acquired  for  equity
accounted  investments  is  amortized  to  income  on  a
straight-line basis up to 40 years.

Depreciation The sinking fund method is used to record
depreciation  of  the  real  estate  buildings,  calculated  as  an
amount which, compounded annually at the  rate  of 5%,
will fully amortize the cost of the buildings over their esti-
mated useful lives ranging from 20 to 50 years. Deferred
leasing  costs  are  amortized  over  the  terms  of  the  related
leases and included in operating expenses.

Depreciation of other property and equipment is recorded
on  a  straight-line  basis  over  the  estimated  useful  lives  of
the assets as follows:

Equipment 
Building
Leasehold improvements

3 – 10 years
15 – 40 years
7 – 10 years

Capitalization of costs A) Construction projects Certain sub-
sidiary  companies  and  joint  ventures  capitalize  interest
during the construction period until the project opening
date. The amount of interest capitalized to construction in
progress in the current year was $796 (1999 – $391).

B) Rental  properties Certain  subsidiaries  and  joint  ven-
tures capitalize the direct carrying and operating costs
applicable to the unleased areas of each new project
for a reasonable period from the project opening date
until a certain level of occupancy is reached.

C) Land held for future development A subsidiary company
capitalizes interest and real estate taxes to the extent
that they relate to properties for immediate develop-
ment. No amounts were capitalized in 2000 or 1999.
The carrying costs on the balance of properties held
for future development are expensed as incurred.

Cost  of  financing The  direct  costs  of  debt  financing  are
being amortized over the terms of the related debt.

Goodwill Goodwill represents the excess of the purchase
price  of  the  business  acquired  over  the  fair  value  of  the
underlying  net  tangible  assets  acquired  at  the  date  of
acquisition. Goodwill is amortized on a straight-line basis
over its estimated life of 40 years. Goodwill amortization
is net of income tax recovery of $648 and minority inter-
est  of  $7,305  (1999  income  taxes  of  $422  and  minority
interest of $3,433).

The  company  evaluates  the  carrying  value  of  goodwill 
for  possible  impairment  by  considering  whether  the 

amortization of the goodwill balance over the remaining
life can be recovered through undiscounted future operating
cash flow of the acquired operations.

Inventories Warehouse  inventories  are  valued  at  the
lower of cost and net realizable value with cost being sub-
stantially  determined  on  a  first-in,  first-out  basis.  Retail
inventories are valued at the lower of cost and net realiz-
able value less normal profit margins as determined by the
retail method of inventory valuation.

Leases Leases meeting certain criteria are accounted for as
capital  leases.  The  imputed  interest  is  charged  against
income and the capitalized value is depreciated on a straight-
line basis over its estimated useful life. Obligations under
capital leases are reduced by rental payments net of imputed
interest.  All  other  leases  are  accounted  for  as  operating
leases with rental payments being expensed as incurred.

Oil  and  gas  properties  and  exploration  costs The
Company follows the full cost method of accounting for
its  exploration  and  production  activities.  All  costs  of
exploring for and developing oil and gas reserves are cap-
italized,  net  of  government  grants,  and  charged  to
operations  over  the  life  of  estimated  future  production
(proved reserves) on the unit-of-production method.

Deferred  revenue Deferred  revenue  consists  of  a  long
term purchase agreement and rental revenue arising from the
sale  of  subsidiaries.  Deferred  revenue  is  being  taken  into
income over the term of the related agreement and leases.

Foreign  currency Assets  and  liabilities  of  self-sustaining
foreign  investments  are  translated  at  exchange  rates 
prevailing  at  the  balance  sheet  date.  The  revenues  and
expenses  are  translated  at  average  exchange  rates  pre-
vailing during the year. The gains and losses on translation
are  deferred  and  included  as  a  separate  component  of
shareholders’ equity titled “foreign currency translation.”

Exchange  gains  or  losses  on  monetary  items  identified 
as a hedge against long term foreign denominated invest-
ments  are  charged  to  “foreign  currency  translation”  in
shareholders’ equity.

Development  and  store  opening  expenses Development
and  opening  expenses  of  new  stores,  store  conversions 
and new warehouses are written off during the first year 
of operation.

Information  systems  development  costs Costs  directly
attributable  to  the  development  of  core  information  sys-
tem  projects  are  capitalized  and  amortized  over  the
estimated useful life of seven years. As at April 30, 2000
these  costs  were  included  in  property  and  equipment  in
the amount of $74,681. Amortization of certain of these
costs will begin effective May 2000.

Accounting  estimates The  preparation  of  consolidated
financial statements in conformity with generally accepted

30 E M P I R E C O M P A N Y L I M I T E D

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

accounting principles requires management to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. These estimates are based on management’s best knowledge
of current events and actions that the Company may undertake in the future.

2 .

3 .

S A L E O F H A N N A F O R D B R O S .   C O .

Under  an  agreement  dated  August  17,  1999  the  Company  has  agreed  to  sell  the  Hannaford  Bros.  Co. 
investment in exchange for 11,666,666 Class A common shares of Delhaize America Inc. and cash of $508,067 US. At 
April 30, 2000, the value of the proceeds would be approximately $1,057,000. It is anticipated that this sale will close
before August 1, 2000.

A C Q U I S I T I O N O F T H E O S H AWA G R O U P L I M I T E D

During the 1999 fiscal year all the shares of The Oshawa Group Limited (“Oshawa”) were purchased by Sobeys
Inc.  (“Sobeys”),  the  company’s  food  distribution  and  foodservice  subsidiary.  Consideration  for  the  purchase  was
$1,137,819 cash and 21,252,502 shares of Sobeys valued at $379,888. This acquisition has been accounted for by the
purchase method under which results from operations of Oshawa, since the date of acquisition, have been included in
the financial statements. Details of the acquisition are as follows:

Fair value of identifiable assets acquired
Less identifiable liabilities assumed
Fair value of identifiable net assets acquired
Goodwill
Total purchase consideration
Consideration representing

Cash
Common shares of subsidiary

$ 1,494,543

713,044

781,499

736,208

$ 1,517,707

$ 1,137,819

379,888

$ 1,517,707

$24,406 of the cash consideration was represented by shares owned at April 30, 1998.

The shares of Sobeys valued at $379,888 had a book value of $300,001 resulting in a gain of $79.887 which is included
in earnings for the 1999 fiscal year.

E A R N I N G S A N D C A S H F L O W P E R S H A R E

4 .

Earnings and cash flow per share amounts are calculated on the weighted average number of shares outstanding 
(2000  –  37,786,000  shares;  1999  –  37,502,000  shares)  after  providing  for  preference  share  dividends  accrued  to  the 
balance sheet date. Fully diluted earnings per share have been calculated on the assumption that all the outstanding stock
options were exercised at the beginning of the year.

Earnings applicable to common shares is comprised of the following:

Earnings before income taxes, gain on dilution, restructuring charges, 

minority interest and goodwill amortization

Income taxes on other operations

Preferred share dividends and minority interest

Goodwill amortization
Earnings applicable to common shares
Earnings per share is comprised of the following:

Earnings before certain items
Dilution gain and restructuring charges

Earnings before goodwill amortization
Goodwill amortization
Net earnings per share
Fully diluted earnings per share
Other cash flow information

Net interest paid
Net income taxes paid

2000

1999

$

217,709

$

148,349

80,543

137,166

39,992

97,174

12,059

85,115

2.57

–

2.57

(0.32)

2.25

2.25

166,099

40,298

$

$

$

$

$

$

48,657

99,692

11,411

88,281

5,987

82,294

2.35

1.35

3.70

(0.15)

3.55

3.53

107,805

51,150

$

$

$

$

$

$

5 .

P R O P E R T Y A N D E Q U I P M E N T

Real estate segment

Land
Land held for future development
Buildings

Food distribution and other

Land
Land held for future development
Buildings
Information systems development costs
Equipment
Leasehold improvements
Assets under capital leases

Total

6 .

O T H E R A S S E T S

E M P I R E C O M P A N Y L I M I T E D

31

Cost

Accumulated
Depreciation

2000
Net
Book Value

1999
Net
Book Value

$

115,188

$

8,862

831,330

955,380

83,511

60,030

338,279

74,681

1,079,289

191,683

8,238

1,835,711

–

–

136,843

136,843

–

–

98,401

–

709,978

102,309

3,212

913,900

$

115,188

$

108,651

8,862

694,487

818,537

83,511

60,030

239,878

74,681

369,311

89,374

5,026

921,811

9,139

668,897

786,687

93,880

60,151

257,019

47,290

358,044

82,278

4,307

902,969

$ 2,791,091

$ 1,050,743

$ 1,740,348

$ 1,689,656

Mortgages and loans
Goodwill (less accumulated amortization of $45,085, 1999 – $25,073)
Deferred charges

2000

1999

$

103,632

$

144,633

720,653

92,973

740,625

74,289

$

917,258

$

959,547

B A N K L O A N S A N D N O T E S PAYA B L E

7 .

As security for certain bank loans, the Company has provided an assignment of certain marketable securities and,
in certain divisions and subsidiaries, general assignments of receivables and leases, first floating charge debentures on assets
and the assignment of proceeds of fire insurance policies.

Under the terms of a subsidiary’s credit agreement entered into between the Company and a banking syndicate arranged by
the Bank of Nova Scotia, a revolving term credit facility was established. This facility will expire on December 6, 2000,
however various provisions of the agreement provide the Company with the ability to extend the facility for a mini-
mum  period  of  two  years.  Interest  is  payable  on  this  facility  at  rates  which  fluctuate  with  changes  in  the  bankers’
acceptance  rate  and  the  prime  rate  as  applicable.  As  security  for  this  facility  and  the  secured  bank  loan  provided 
under the credit agreement, the Company has provided a fixed and floating charge over all assets, subject to permitted
encumbrances, a general assignment of book debts and the assignment of proceeds of insurance policies.

In the ordinary course of managing its debt, the Company uses various financial instruments, which are not reflected on
the balance sheet, to reduce or eliminate exposure to interest rate and foreign currency risks. Interest rate swaps, caps,
collars and forward contracts are used to hedge or reduce the exposure to floating interest rates and foreign currency
fluctuations associated with short-term obligations. At April 30, 2000, $75,000 in short-term obligations were covered by
such  instruments  with  maximum  interest  rates  from  4.93%  to  5.50%  having  maturity  dates  from  August  1,  2000  to
October 5, 2000.

Loans of $69,712 US have been designated as a hedge against a US long term investment.

32 E M P I R E C O M P A N Y L I M I T E D

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

8 .

L O N G T E R M D E B T

First mortgage loans, average interest 

rate 9.7%, due 2000–2024

Secured loans, average interest rate 7.9%, 

due December 9, 2005

Debentures, average interest rate 10.7%, 

due 2002–2016

Notes payable and other debt at interest rates 

fluctuating with the prime rate

Construction loans at interest rates 
fluctuating with the prime rate

Capital lease obligations, due 2001–2009, 

net of imputed interest

Less amount due within one year

Real

Food
Estate Distribution and
Foodservice

Segment

2000

1999

Total

Total

$

401,633

$

36,254

$

437,887

$

389,052

–

691,490

691,490

800,000

89,665

102,775

192,440

202,616

49,246

540,544

21,477

70,723

69,710

851,996

1,392,540

1,461,378

13,307

–

13,307

11,842

–

553,851

20,491

10,628

862,624

72,284

10,628

13,107

1,416,475

1,486,327

92,775

93,892

$

533,360

$

790,340

$ 1,323,700

$ 1,392,435

The  company  has  fixed  the  interest  rate  on  $10,000  of  its  long  term  bank  operating  line  at  6.84%  by  utilizing  an 
interest  exchange  agreement  for  3  years.  The  company  has  fixed  the  interest  rate  on  $104,600  of  its  long  term 
debt  at  8.0%  for  2  years  and  has  fixed  the  interest  rate  on  $586,900  of  its  long  term  debt  at  7.9%  for  5  years  by 
utilizing interest exchange agreements.

As  security  for  certain  construction  loans,  the  Company  has  provided  a  first  charge  on  land  and  buildings  under 
construction. These loans become due for refinancing at various dates in 2000. It is intended that these loans will be
refinanced by long term borrowings.

Long term debt is secured by land and buildings, specific charges on certain assets and additional security as described in
Note 7. Debt retirement payments and capital lease obligations in each of the next five fiscal years are:

2001
2002
2003
2004
2005

Long term
Debt

$

90,903

$

137,695

118,585

127,254

116,570

Capital
Leases

1,872

1,808

1,463

1,378

1,071

Operating leases The aggregate, annual, minimum rent payable under operating leases by the Company and subsidiaries
is approximately $142,000.

E M P I R E C O M P A N Y L I M I T E D

33

9 .

C A P I TA L S T O C K

Authorized
Preferred shares, par value of $25 each, issuable in series as a class. Series 2 cumulative, 

redeemable, rate of 75% of prime. Series 3 cumulative, redeemable, rate 8%.

Non-voting Class A shares, without par value
Class B common shares, without par value, voting

Number of 
Shares

34,261,305

136,583,367

20,400,000

Issued and outstanding
Preferred shares, Series 2
Preferred shares, Series 3
Non-voting Class A
Class B common

Loans receivable from employees and directors 

under share purchase plan

No. of Shares

No. of Shares

2000

1999

976,900

$

24,422

976,900

$

24,422

262,352

15,325,929

17,448,728

6,559

262,352

178,865

21,684,406

7,748

17,448,728

217,594

(5,498)

$

212,096

6,559

251,440

7,748

290,169

(5,029)

$

285,140

In 1999, the Company purchased for cancellation 200,000 of its Series 2 preferred shares for $4,960.

During  the  year,  the  Company  purchased  6,478,750  Non-Voting  Class  A  shares.  The  purchase  price  was  $215,209
including $250 of costs. $140,250 of the purchase price was charged to retained earnings.

On  March  11,  1999  the  Company  issued  2,000,000  Non-Voting  Class  A  shares  for  $58,000  cash.  Issue  costs  were
$2,429 net of income tax recovery of $241.

During  the  year  63,004  (1999  –  35,000)  options  were  exercised  resulting  in  63,004  (1999  –  35,000)  Non-Voting 
Class A shares being issued for $826 (1999 – $459). Options allow holders to purchase Non-Voting Class A shares at
$13.11 per share. Options expire at dates from June 2000 to October 2006. There were 123,875 options outstanding 
at April 30, 2000.

During the year 57,269 (1999 – 113,500) Non-Voting Class A were issued under the Company’s share purchase plan
to certain officers and employees for $1,558 (1999 – $2,936), the average trading price of the non-voting Class A shares
on the Toronto Stock Exchange for the five previous trading days.

Loans receivable from officers and employees of $5,498 (1999 – $5,029) under the Company’s share purchase plan are
classified  as  a  reduction  of  Shareholders’  Equity.  Loan  repayments  will  result  in  a  corresponding  increase  in  Share
Capital.  The  loans  are  non-interest  bearing  and  non-recourse,  secured  by  277,831  (1999  –  311,193)  Non-Voting 
Class A shares. Market value of the shares at April 30, 2000 was $8,918 (1999 – $8,247).

Under certain circumstances, where an offer (as defined in the share conditions) is made to purchase Class B common
shares, the holders of the Non-Voting Class A shares shall be entitled to receive a follow-up offer at the highest price
per share paid, pursuant to such offer to purchase Class B common shares.

1 0 .

I N V E S T M E N T I N C O M E

Dividend and interest income
Share of income of companies accounted for by the equity method

2000

345

37,888

38,233

$

$

1999

3,190

34,097

37,287

$

$

I N C O M E TA X E S

1 1 .

The effective rate of corporate income taxes is different than statutory rates as a result of certain items not being
deductible for income tax purposes, the income from companies accounted for by the equity method and receipt of 
dividends which are not taxable, and the large corporation tax of $3,917 (1999 – $3,131).

34 E M P I R E C O M P A N Y L I M I T E D

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

1 2 .

I T E M S N O T A F F E C T I N G C A S H

Depreciation
Goodwill amortization
Deferred income taxes
Amortization of deferred items
Equity in earnings of other companies, net of dividends received
Minority interest
Dilution gain on issue of common shares by subsidiary
Restructuring charges, net of taxes of $38,017 and minority interest of $18,015
Gain on sale of oil and gas properties, net of income taxes of $2,771
Reduction of book value of real estate assets, net of income taxes of $1,954

2000

1999

$

121,416

$

93,878

20,012

64,718

8,288

(28,332)

25,763

–

–

–

–

9,842

(2,084)

(846)

(24,988)

4,823

(79,887)

29,111

(3,830)

2,403

$

211,865

$

28,422

1 3 .

R E A L E S TAT E J O I N T V E N T U R E S

The  financial  statements  include  the  Company’s  proportionate  share  of  the  accounts  of  incorporated  and 

unincorporated real estate joint ventures. A summary of these amounts is as follows:

Assets
Liabilities
Equity and advances

Revenues
Expenses
Income before income taxes
Cash provided (used)
Operating activities
Financing activities

2000

14,594

632

13,962

14,594

4,148

2,330

1,818

3,428

(1,280)

2,148

$

$

$

$

$

$

$

1999

16,264

2,066

14,198

16,264

3,043

2,166

877

(655)

1,032

377

$

$

$

$

$

$

$

1 4 .

S E G M E N T E D I N F O R M AT I O N

E M P I R E C O M P A N Y L I M I T E D

35

Revenues
Food

Food distribution
Foodservice

Real estate
Outside
Inter-segment

Other operations

Elimination

Operating income

Food

Food distribution
Foodservice

Real estate
Other operations
Investment income
Corporate expenses

Identifiable assets

Food

Food distribution
Foodservice
Goodwill

Real estate
Investments
Other 

Depreciation

Food

Food distribution
Foodservice

Real estate
Corporate and other 

Capital expenditure

Food

Food distribution
Foodservice

Real estate
Corporate and other

2000

1999

$ 8,936,259

$ 5,173,516

2,069,890

1,058,322

11,006,149

6,231,838

112,351

44,709

157,060

45,995

107,750

40,275

148,025

38,063

11,209,204

6,417,926

(44,709)

(40,275)

$11,164,495

$ 6,377,651

$

231,785

$

103,477

33,801

265,586

70,071

5,730

38,233

(5,441)

17,602

121,079

65,061

4,455

37,287

(4,969)

$

374,179

$

222,913

$ 1,776,427

$ 1,752,669

365,994

714,871

377,644

734,335

2,857,292

2,864,648

846,584

405,678

61,533

728,553

384,371

45,926

$ 4,171,087

$ 4,023,498

$

86,529

11,526

98,055

19,914

3,447

$

64,915

7,500

72,415

18,275

3,188

$

121,416

$

93,878

$

171,057

$

199,547

14,715

185,772

52,666

8,289

16,680

216,227

55,717

4,100

$

246,727

$

276,044

The Company operates principally in three business segments: food distribution, foodservice and real estate. The food
distribution segment consists of distribution of food products in Canada. The foodservice segment supplies the institu-
tional,  chain  and  independent  restaurant  markets  in  Canada.  The  real  estate  segment  consists  of  development,  rental 
and management of shopping centres and office buildings located principally in the Atlantic Provinces. Intersegment
transactions are at market values.

36 E M P I R E C O M P A N Y L I M I T E D

N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S

F I N A N C I A L I N S T R U M E N T S

1 5 .

Interest rate contracts The Company has entered into certain interest rate agreements as outlined in Notes 7 
and 8. The face value of the interest rate agreements approximates their value as calculated by referring to prevailing
interest rates at April 30, 2000.

Foreign exchange contracts The Company utilizes financial instruments which are not reflected on the balance sheet,
to reduce foreign exchange risks on its US long term investment. At April 30, 2000, $250,000 US (1999 – $250,000
US) was covered by such instruments with $50,000 maturing in 2000, $50,000 maturing in 2001 and $150,000 matur-
ing in 2002. The fair value of the foreign exchange agreements represents the amount that the Company would pay or
receive  to  terminate  the  agreements.  At  April  30,  2000,  the  estimated  payout  on  termination  is  $15,700  US  (1999
$13,800 US) based on market conditions.

The Company utilizes financial instruments which are not reflected on the balance sheet to reduce foreign exchange
risks on its US long term debt. At April 30, 2000, $186,800 US was covered by such instruments with $43,200 US
maturing in 2002 and $143,600 US maturing in 2005. The fair value of the foreign exchange agreements represents the
amount the Company would pay or receive to terminate the agreements. At April 30, 2000, the estimated receipt on
termination is $2,900 based on market conditions.

All the financial instrument contracts noted above are with Canadian Schedule 1 Banks.

Credit risk There is no significant concentration of credit risk. The credit risk exposure is considered normal for the business.

Other financial instruments The book value of cash, payables and accruals, receivables, income taxes recoverable, bank
loans and notes payable approximate fair values as at April 30, 2000. The fair value of investments at cost and invest-
ments at equity is $1,166,059 (1999 – $757,000) as noted on the Consolidated Schedule of Investments. The total fair
value of long term debt is estimated to be $1,451,000 (1999 – $1,625,000). The fair value of variable rate long term debt
is assumed to approximate its carrying amount. The fair value of other long term debt has been estimated by discounting
future cash flows at a rate currently offered for debt of similar maturities and credit quality.

P E N S I O N P L A N

1 6 .

The company’s subsidiaries maintain a defined contribution plan and a number of defined benefit pension plans.
Current actuarial estimates indicate the pension benefits under the defined benefit plan at April 30, 2000 are $167,975
and the pension fund assets, using the moving average market value, are $185,768.

R E S T R U C T U R I N G A N D I N T E G R AT I O N C H A R G E

1 7 .

Subsequent to the acquisition of The Oshawa Group Limited on November 30, 1998, Sobeys Inc. commenced
a comprehensive review of its strategic direction, facilities and staffing levels of all operations of the combined organi-
zations. This integration initiative was undertaken to create operating efficiencies, cost savings and revenue enhancement
opportunities. This project, which was substantially completed in April 1999, brought together the operating groups of
both business units and generated a new business plan for the future. In connection with the integration initiative, the
Company recorded an $85,143 charge ($29,111 after tax and minority interest) in the fourth quarter of fiscal 1999 for
restructuring and integration. The amount remaining in liabilities as at April 30, 2000 is $56,500 (1999 – $69,200).

Foodservice  Segment $45,200  of  the  restructuring  and  integration  charge  related  to  the  Foodservice  segment  and
involved the rationalization of operations and modernization of the distribution supply network. These activities com-
menced in late 1999 and will continue in 2001. The charge to exit these activities was comprised of severance and other
obligations to employees, lease commitments for closed locations and other charges.

Food Distribution Segment The remaining charge of $39,900 related to the Food Distribution segment. The rational-
ization  of  Ontario  operations  accounted  for  the  majority  of  this  charge.  It  included  severance  and  other  obligations 
to employees and other charges resulting from the closure of 17 marginal stores in Ontario, the franchising of 56 cor-
porate owned stores and the streamlining of certain department operations in Ontario. These activities commenced in
late 1999 and will continue in 2001. The remaining charge for the Food Distribution segment included severance and
other costs associated with the roll out of Sobeys’ common information systems across acquired business units.

1 8 .

C O N T I N G E N T L I A B I L I T I E S

Guarantees  and  commitments At  April  30,  2000  a  subsidiary  company  was  contingently  liable  for  letters  of

credit issued in the aggregate amount of $27,500.

A  subsidiary  company  has  guaranteed  the  reimbursement  of  certain  bank  loans  contracted  by  its  franchisees.  As  at 
April 30, 2000, these loans amounted to approximately $23,300. 

E M P I R E C O M P A N Y L I M I T E D

37

Legal proceedings Subsequent to year end a subsidiary company, Sobeys Inc., received notice that a Statement of Claim
had been filed against it and its subsidiary, Sobeys Capital Inc., by 16 of its independent IGA retail dealers in the Province
of Ontario. The legal action is in connection with an alleged breach of franchise agreements between these 16 dealers
and  the  former  Oshawa  Group  Limited  and  claims  damages  of  up  to  $262,000  for  breach  of  contract,  general  and 
punitive damages. Sobeys Inc. purchased all of the outstanding shares of The Oshawa Group Limited in December 1998
and  January  1999,  and  completed  an  amalgamation  of  The  Oshawa  Group  Limited  and  Sobeys  Capital  Inc.  in 
May 1999. Sobeys disagrees with each of the claims raised by the 16 independent IGA dealers in the Statement of Claim
and believes that this action is frivolous and without merit; therefore no provision for these claims has been made in its
financial statements.

1 9 .

S U B S E Q U E N T E V E N T

A subsidiary company has restructured its debt and credit facilities as follows:

a) On  June  22,  2000  a  short  form  prospectus  was  filed  providing  for  the  issuance  of  up  to  $500,000  of  unsecured

medium term notes.

b) The Company received $210,000 in cash proceeds from an accounts receivable securitization which will be applied

against existing debt.

c) The Company negotiated a new unsecured $550,000 credit facility consisting of $250,000 of non-revolving debt to

be repaid over 5 years plus a $300,000 revolving line of credit.

2 0 .

C O M PA R AT I V E F I G U R E S

Comparative figures have been reclassified, where necessary, to reflect the current year’s presentation.

C o n s o l i d a t e d   S c h e d u l e   o f   I n v e s t m e n t s

April 30, 2000

Company

L O N G T E R M I N V E S T M E N T S
Hannaford Bros. Co. (Note 2)
Wajax Limited
Investments at equity

C U R R E N T I N V E S T M E N T S
Listed investments
Unlisted investments, at cost

Number of

Realizable 

Value

Shares

(in thousands)

10,418,565

$ 1,116,060

7,452,994

35,029

1,151,089

11,909

3,061

14,970

$ 1,166,059

Realizable value is the quoted market value for shares listed on a recognized stock exchange, and cost which is less than
fair market value, for other investments.

38 E M P I R E C O M P A N Y L I M I T E D

E l e v e n - Ye a r   F i n a n c i a l   R e v i e w

(Years ended)

Operations ($ in millions)
Revenue
Cost of sales, selling and 

2000

1999

1998

1997

1996

1995

1994

1993

1992

1991

1990

11,164.5 6,377.7 3,320.0 3,149.7 2,915.2 2,699.5 2,577.4 2,358.4 2,235.5 2,087.9 1,803.7

administrative expenses 10,707.1 6,098.2 3,127.1 2,971.9 2,746.0 2,521.5 2,409.9 2,209.6 2,101.4 1,959.7 1,689.1

Depreciation 

Operating income before 
investment income

Investment income

Operating income
Gain (loss) on sale of 

457.4

121.4

279.5

192.9

177.8

169.2

178.0

167.5

148.8

134.1

128.2

114.6

93.9

68.6

63.6

59.1

55.5

49.9

44.1

39.6

33.9

28.7

336.0

185.6

124.3

114.2

110.1

122.5

117.6

104.7

38.2

37.3

41.3

35.6

32.7

30.1

27.0

27.6

94.5

21.1

94.3

28.1

85.9

28.4

374.2

222.9

165.6

149.8

142.8

152.6

144.6

132.3

115.6 

122.4

114.3

properties and investments

3.0

37.8

6.5

1.4

2.1

(2.8)

5.4

1.7

0.2

0.8

–

Earnings before interest 

expense and income taxes 377.2
159.5

Interest expense
Income taxes
Minority interest

Earnings from continuing 

operations, before goodwill 
and other items 

Goodwill
Other items/discontinued 

operations

Net earnings
Cash flow from 

operating activities
Capital expenditures

260.7

112.4

48.6

9.5

80.5

38.3

98.9

12.1

90.2

6.0

–

50.8

86.8

135.0

172.1

151.2

144.9

149.8

150.0

134.0

115.8

123.2

114.3

76.7

25.1

–

70.3

1.8

19.3

87.8

79.2

16.9

0.4

87.7

13.7

0.5

89.3

16.8

0.5

81.4

19.4

0.5

73.4

15.6

0.3

76.1

11.0

1.5

76.8

12.0

2.7

68.6

10.4

3.3

54.7

1.8

43.0

0.9

43.2

2.0

48.7

0.8

44.7

0.6

27.2

0.6

31.7

0.6

32.0

0.4

–

(20.4)

–

–

(15.6)

(5.6)

(16.7)

(23.0)

52.9

21.7

41,2

47.9

28.5

21.0

14.4

8.6

272.4

246.7

303.2

276.0

133.1

137.5

107.2

85.2

82.7

125.7

103.0

120.1

68.0

98.1

66.2

40.5

67.1

93.0

38.2

97.5

58.0

77.4

Financial Position ($ in millions)
Net working capital 

(including marketable 
investments)

Property and equipment
Total assets
Long term debt (excluding 

current position)
Shareholders’ equity

(342.3)

(217.9)

153.1

128.8

178.5

1,740.3 1,689.7 1,069.0 1,001.9 1,004.5

183.6

968.8

204.3

909.9

240.4

714.5

189.6

720.3

228.0

673.4

256.1

583.7

4,171.1 4,023.5 1,907.2 1,797.4 1,731.4 1,761.1 1,696.9 1,426.5 1,421,9 1,402.0 1,291.4

1,323.7 1,392.4

602.8

737.7

616.6

558.3

606.8

479.6

656.1

474.9

648.0

469.5

633.6

447.9

514.9

401.6

472.6

398.9

430.7

398.0

386.7

417.8

Per Share Information ($ per share)
Earnings from continuing 

operations, before goodwill 
and other items
Net earnings (loss)
Operating cash flow 
Dividend paid

2.57

2.25

7.86

2.36

3.55

4.31

1.81

2.33

2.97

Non-voting Class A Shares  0.28
Class B common shares
0.28

0.2725

0.2425

0.2725

0.2325

1.33

1.33

2.54

0.22

0.18

17.45

18.06

14.12

11.86

Book value

Financial Ratios
Return on equity – 

continuing operations, 
before unusual items

Return on equity

0.96

0.41

2.22

0.93

0.93

2.17

0.215

0.165

10.48

0.20

0.12

10.24

1.09

1.09

2.33

0.20

0.12

9.59

0.98

0.52

2.11

0.18

0.09

7.66

0.44

0.28

1.57

0.16

0.06

7.35

0.49

0.01

1.32

0.16

0.06

7.23

0.52

(0.17)

1.23

0.16

0.06

7.29

13.0%

13.4%

13.9%

11.9%

13.3%

21.7%

17.9%

11.9%

9.3%

3.9%

9.4%

9.4%

12.2%

12.7%

12.2%

6.8%

5.9%

3.7%

6.6%

0.1%

7.1%

–2.3%

Share Price, Non-voting Class A Shares ($ per share)
High
Low
Close

24.65

33.95

32.55

25.00

26.00

32.10

28.50

15.60

27.25

15.70

12.25

15.70

15.75

11.50

12.30

16.50

13.00

13.38

17.75

12.25

16.13

14.75

10.00

14.25

13.75

11.00

13.50

8.75

12.63 

11.88

17.50

12.25

12.50

C o r p o r a t e   a n d   D i r e c t o r   I n f o r m a t i o n

E M P I R E C O M P A N Y L I M I T E D

39

Officers

DONALD R. SOBEY
Chairman

PAUL D. SOBEY
President and CEO

PAUL V. BEESLEY
Senior Vice President, Chief
Financial Officer and Secretary

STEWART H. MAHONEY
Vice President,
Treasury and Investor Relations

CAROL A. CAMPBELL
Vice President, Risk Management

CHESTER D. THOMPSON
Comptroller

Executive Directors

DAVID F. SOBEY 4
New Glasgow, Nova Scotia
Director since 1963. Chairman 
of Sobeys Inc. and has been with
the Company for 48 years.

DONALD R. SOBEY 4
New Glasgow, Nova Scotia
Director since 1963. Chairman 
of Empire Company Limited 
and has been with the Company 
for 42 years.

FRANK C. SOBEY
Stellarton, Nova Scotia
Director since 1990. Chairman 
of Atlantic Shopping Centres
Limited, has been with the
Company for 22 years.

JOHN R. SOBEY
Stellarton, Nova Scotia
Director since 1979. President
and COO of Sobeys Inc., has been
with the Company for 31 years.

PAUL D. SOBEY
New Glasgow, Nova Scotia
Director since 1993. President 
and CEO of Empire Company
Limited, has been with the
Company for 18 years.

ROBERT G. SOBEY
Stellarton, Nova Scotia
Director since 1998. Director,
Planning and Analysis of 
Sobeys Inc., has been with 
the Company for 11 years.

DOUGLAS B. STEWART
Pictou, Nova Scotia
Director since 1992. Vice-
Chairman and CEO of 
Sobeys Inc., has been with 
the Company for 10 years.

Independent Directors

JOHN BRAGG 4
Collingwood, Nova Scotia
Director since 1999. Director and
President Oxford Frozen Foods Ltd.

SIR GRAHAM DAY 1,5
Hantsport, Nova Scotia
Director since 1991. Counsel to
Stewart McKelvey Stirling Scales.

ROBERT P. DEXTER 4,6
Halifax, Nova Scotia
Director since 1987. Chairman 
and CEO of Maritime Travel
(Group) Limited.

PETER C. GODSOE 2
Toronto, Ontario
Director since 1993. Chairman and
CEO of The Bank of Nova Scotia.

JAMES W. GOGAN 2
New Glasgow, Nova Scotia
Director since 1972. 
Corporate Director.

DR. ELIZABETH
PARR-JOHNSTON 2
Fredericton, New Brunswick
Director since 1994. President 
and Vice Chancellor of the
University of New Brunswick.

JAMES L. MOODY, JR 3
Cape Elizabeth, Maine
Director Since 1998. 
Corporate Director

E. COURTNEY PRATT 4,6
Toronto, Ontario
Director since 1995. President 
and CEO of Hydro One 
Networks Inc.

J. WILLIAM SINCLAIR 4
Westville, Nova Scotia
Director since 1980. 
Forestry Technician.

1 Audit Committee Chairman
2 Audit Committee Member
3 Human Resources 

Committee Chairman

4 Human Resources 

Committee Member
5 Corporate Governance
Committee Chairman
6 Corporate Governance
Committee Member

Directors of 
Operating Companies 

Sobeys Inc. 
Executive Directors

DAVID F. SOBEY
Chairman, Sobeys Inc.

DONALD R. SOBEY
Chairman, 
Empire Company Limited

JOHN R. SOBEY
President and COO, Sobeys Inc.

KARL R. SOBEY
President, Atlantic Division

PAUL D. SOBEY
President and CEO, 
Empire Company Limited

DOUGLAS B. STEWART
Vice-Chairman and CEO, 
Sobeys Inc.

Independent Directors

JOHN L. BRAGG
President, 
Oxford Frozen Foods Limited

MARCEL C(cid:239)T(cid:131)
Senior Partner, Secor Inc.

SIR GRAHAM DAY
Counsel to Stewart McKelvey
Sterling Scales

ROBERT P. DEXTER
Chairman and CEO, 
Maritime Travel (Group) Limited

HUGH G. FARRINGTON
President and CEO, 
Hannaford Bros. Co.

RONALD V. JOYCE
Senior Chairman, 
The TDL Group Limited

LAWRENCE N. STEVENSON
CEO, Chapters Inc.

ANNETTE VERSCHUREN
President, Home Depot Canada

Atlantic Shopping 
Centres Limited

Executive Directors

J. STUART BLAIR
President and CEO, 
Atlantic Shopping Centres Limited

DAVID F. SOBEY
Chairman, Sobeys Inc.

DONALD R. SOBEY
Chairman, 
Empire Company Limited

FRANK C. SOBEY
Chairman, 
Atlantic Shopping Centres Limited

Officers of Operating
Companies

Sobeys Inc.

DAVID F. SOBEY
Chairman

DOUGLAS B. STEWART
Vice-Chairman and CEO

JOHN R. SOBEY
President and COO

ALLAN D. ROWE
Executive Vice President and CFO

KARL R. SOBEY
President, 
Atlantic Division

PIERRE CROTEAU
President, Quebec Division

BRUCE WEST
President, Ontario Division

WAYNE A. WAGNER
President, Western Division

GARY H. SEAMAN
President, SERCA, 
Foodservice Inc.

JOHN K. LYNN
Executive Vice President, 
Planning and Development

DARREL R. EWERT
General Counsel and Secretary

Atlantic Shopping Centres
Limited

FRANK C. SOBEY
Chairman

J. STUART BLAIR
President and CEO

JOHN G. MORROW
Vice President, 
Finance and Secretary

ALLAN K. MACDONALD
Vice President, Leasing

SCOTT R. MACLEAN
Vice President, Operations

JOHN R. SOBEY
President and COO, Sobeys Inc.

PAUL W. WIGGINTON
Comptroller

Empire Theatres Limited

STUART G. FRASER
President and CEO

KEVIN J. MACLEOD
Vice President, Operations

PAUL D. SOBEY
President and CEO, 
Empire Company Limited

Independent Directors

KEN C. ROWE
Chairman and CEO, 
IMP Group Ltd.

DAVID J. HENNIGAR
Chairman, Annapolis Basin Group
Incorporated

JOHN B. ROY
President, Roycom Securities Ltd.

DAVID G. GRAHAM
President, 
Atlantic Developments Inc.

40 E M P I R E C O M P A N Y L I M I T E D

Transfer Agents
Montreal Trust Company of Canada

Telephone: (902) 420-2211

Non-voting Class A shares

Series 3 Preferred shares

CIBC Mellon Trust Company

Telephone: (902) 420-3821

Series 2 Preferred shares

Bankers
Bank of Montreal

Bank of Nova Scotia

Canadian Imperial Bank of Commerce

National Bank of Canada

Royal Bank of Canada

Toronto-Dominion Bank

Solicitors
Stewart McKelvey Stirling Scales

Halifax, Nova Scotia

Auditors
Grant Thornton

New Glasgow, Nova Scotia

Multiple Mailings
If you have more than one account, you may 

receive a separate annual report for each. If 

this occurs, please contact Montreal Trust at 

(902) 420-2211 to eliminate the multiple mailings.

Exemplaire français
Vous pouvez obtenir un exemplaire fran(cid:141)ais 

de ce rapport annuel en (cid:142)crivant (cid:136) :

Empire Company Limited

Investor Relations

115 King Street

Stellarton, Nova Scotia

B0K 1S0

I n v e s t o r   I n f o r m a t i o n

Empire Company Limited
Head Office

115 King Street 

Stellarton, Nova Scotia

B0K 1S0

Telephone: (902) 755-4440

Fax: (902) 755-6477

Internet: www.empireco.ca
www.emp-a.com

Investor Relations 
For additional information 

please write to the company,

c/o Stewart H. Mahoney,

Vice President, Treasury 

and Investor Relations

Affiliated Company web addresses
www.sobeys.ca

www.sobeys.com

www.empiretheatres.com

Shareholders’ Annual Meeting
September 7, 2000 at 11:00 a.m.

Aberdeen Cinemas

610 East River Road

New Glasgow, Nova Scotia

Stock Exchange Listings
The Toronto Stock Exchange

Stock Symbols
Non-voting Class A shares - EMP.A 

Preferred shares:

Series 2 - EMP.PR.B

Series 3 - EMP.PR.C

Average Daily Trading Volume (TSE)
34,000

Common Dividend Record and Payment

Dates for Fiscal 2001*
Record Date

Payment Date

July 14, 2000

Oct. 13, 2000

Jan. 15, 2001

Apr. 13, 2001

July 31, 2000

Oct. 31, 2000

Jan. 31, 2001

Apr. 30, 2001

* subject to approval by Board of Directors

Outstanding Shares 
As of July 7, 2000

Non-Voting Class A common

15,340,529

Options excercisable with
Class A common shares

Class B common, voting

109,275

17,448,728