expenses reflects improvements in labor productivity, an increase in gains in real estate and various other cost savings
initiatives in the area of administrative and selling expenses. Excluding the impact of currency exchange rates, operating
income would have increased by EUR 45 million, or 12.4%, in fiscal 2002 compared to operating income in fiscal 2001.
- Fiscal 2001
In fiscal 2001, Giant-Landover net sales increased by EUR 518 million, or 10.0%, to EUR 5.7 billion, compared to fiscal
2000. Excluding the impact of currency exchange rates, net sales would have increased by EUR 374 million, or 7.0%, in
fiscal 2001 compared to net sales in fiscal 2000. The increase in net sales was mainly attributable to a focus on more
effective promotions, a store remodeling program, a change in product mix and the opening of four new and replacement
stores, along with the transfer of four stores from the Edwards division to Giant-Landover in January 2001.
Operating income at Giant-Landover increased by EUR 90 million, or 31.0%, to EUR 382 million in fiscal 2001 compared
to fiscal 2000. As a percentage of net sales, operating income increased from 5.6% in fiscal 2000 to 6.7% in fiscal
2001. In addition to the net sales growth, the increase in operating income reflects lower operating expenses, as a
percentage of net sales, largely due to a real estate gain related to the sale and leaseback of four shopping centers, as well
as improvements in labor productivity and leverage of economies of scale with respect to fixed costs. Currency exchange
rates did not have a significant effect on operating income in fiscal 2001 compared to fiscal 2000.
Retail trade: Other United States
Giant-Carlisle
We acquired Giant-Carlisle, based in Carlisle, Pennsylvania, in 1981. Established in 1923, Giant-Carlisle operated 113
supermarkets as of the end of fiscal 2002. The stores operate under the name "Giant" in Pennsylvania and under the name
"Martin's" in Maryland, Virginia and West Virginia. The supermarkets range in size from approximately 44,000 sq. ft. to
64,000 sq. ft. In August 2003, Giant-Carlisle and Tops substantially completed the integration of certain of their
administrative functions and other back-office activities through the implementation of a shared services arrangement.
We acquired Tops, based in Buffalo, New York, in March 1991. The company was established in 1962. In February 2001,
Tops acquired 20 supermarkets from C&S Wholesale Distributors, which previously purchased the locations from Grand
Union. These supermarkets are located in New York and were converted to the Tops format during the first quarter of fiscal
2001. As of the end of fiscal 2002, Tops owned and operated 151 supermarkets under the name "Tops Friendly Markets"
and 206 neighborhood food stores under the name "Wilson Farms." As of the end of fiscal 2002, Tops also had 15
supermarket franchisees operating under the "Tops Friendly Markets" and "Wilson Farms" names. Tops' primary markets
are Buffalo and Rochester, both in New York, as well as markets in Cleveland, Ohio, and northern Pennsylvania. As
discussed above, in August 2003, Tops substantially completed the implementation of a shared services arrangement with
Giant-Carlisle.
We acquired BI-LO, based in Mauldin, South Carolina in 1977. BI-LO, established in 1961, was Ahold's first U.S.
acquisition, then comprising 96 stores. As of the end of fiscal 2002, BI-LO operated 303 supermarkets and 138 Golden
Gallon convenience stores in South Carolina, North Carolina, Tennessee and Georgia. BI-LO has begun the process of
integrating most of Bruno's merchandising and administrative functions with BI-LO's. The integration is expected to be
substantially completed by the end of fiscal 2004. In August 2003, we announced that we had reached an agreement to
sell Golden Gallon to The Pantry, Inc. and the sale was completed in October 2003. BI-LO acquired the Golden Gallon
chain in May 2002, which operates convenience stores in Tennessee and Georgia. For additional information, please see
"Divestments" above.
Bruno's
We acquired Bruno's, based in Birmingham, Alabama in December 2001. Bruno's was established in 1932. As of the end
of fiscal 2002, Bruno's operated a chain of 187 stores under the banners of Bruno's (superstores), Food World and Food
Max (value-oriented supermarkets), and Food Fair (neighborhood stores) in Alabama, Florida, Mississippi and Georgia.
Bruno's is currently integrating most of its merchandising and administrative functions with BI-LO as described in our
discussion of BI-LO above.
Peapod
In June 2000, we acquired convertible preferred stock and common stock warrants of Peapod, giving us a controlling
interest in Peapod. In July 2001, we acquired the remaining issued and outstanding shares of common stock of Peapod.
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