10-K 6 f10kfiscal2000.txt FORM 10-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) [ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 24, 2001 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period to Commission file number 1-4141 THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. ---------------------------------------------- (Exact name of registrant as specified in its charter) Maryland 13-1890974 --------------------------- --------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2 Paragon Drive Montvale, New Jersey 07645 (Address of principal executive offices) Registrant's telephone number, including area code: 201-573-9700 Securities registered pursuant to Section 12 (b) of the Act: Title of each class Name of each exchange on which registered ------------------- ----------------------------------------- Common Stock - $1 par value New York Stock Exchange Securities registered pursuant to Section 12 (g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] The aggregate market value of the voting stock held by non-affiliates of the Registrant at May 7, 2001 was approximately $195,674,000. The number of shares of common stock outstanding at May 7, 2001 was 38,347,216. DOCUMENTS INCORPORATED BY REFERENCE The information required by Part I, Items 1(d) and 3, and Part II, Items 5, 6, 7, 7A, 8 and 14(a)1) are incorporated by reference from the Registrant's 2000 Annual Report to Stockholders. The Registrant has filed with the S.E.C. since the close of its last fiscal year ended February 24, 2001, a definitive proxy statement. Certain information required by Part III, Items 10, 11, 12 and 13 is incorporated by reference from the proxy statement in this Form 10-K. PART I ITEM 1 - Business General The Great Atlantic & Pacific Tea Company, Inc. ("A&P" or the "Company") is engaged in the retail food business. The Company operated 752 stores averaging approximately 37,100 square feet per store as of February 24, 2001. In addition, the Company served as wholesaler to 68 franchise stores in Canada averaging approximately 29,700 square feet per store as of February 24, 2001. On the basis of reported sales for fiscal 2000, the Company believes that it is one of the 10 largest retail food chains in the United States. Operating under the trade names A&P, Super Fresh, Sav-A-Center, Farmer Jack, Kohl's, Waldbaum's, Super Foodmart, Ultra Food & Drug, Dominion, Food Basics, The Barn Markets and Food Emporium, the Company sells groceries, meats, fresh produce and other items commonly offered in supermarkets. In addition, many stores have bakery, delicatessen, pharmacy, floral, fresh fish and cheese departments, and on-site banking. National, regional and local brands are sold as well as private label merchandise. In support of its retail operations, the Company also operates one coffee roasting plant in the United States. Through its Compass Foods Division, the Company manufactures and distributes a line of whole bean coffees under the Eight O'Clock, Bokar and Royale labels, for sale through its own stores as well as other food and convenience retailers. The other private label products sold in the Company's stores are sold under the Company's own brand names which include America's Choice, Master Choice, Health Pride, Savings Plus and The Farm. Building upon a broad base of A&P supermarkets, the Company has historically expanded and diversified within the retail food business through the acquisition of other supermarket chains and the development of several alternative store types. The Company now operates its stores with merchandise, pricing and identities tailored to appeal to different segments of the market, including buyers seeking gourmet and ethnic foods, unusual produce, a wide variety of premium quality private label goods and health and beauty aids along with the array of traditional grocery products. Modernization of Facilities The Company is engaged in a continuing program of modernizing its operations including retail stores, warehousing and distribution facilities, supply and logistics and processes. In support of its modernizing program, on March 13, 2000, the Company announced its Great Renewal - Phase II supply chain and business process initiative ("GR II"), a plan to develop a state of the art supply chain and business management infrastructure over the next four years. During fiscal 2000, the Company expended approximately $416 million for capital projects which included 47 new supermarkets, 10 new franchised stores and 45 major remodels or enlargements. The Company's plans for fiscal 2001 anticipate capital expenditures of approximately $100 million relating to GR II and $275 million relating to ongoing capital projects which include the opening of 25 new supermarkets. In addition, the Company plans to continue with similar levels of capital expenditures in fiscal 2002 and several years thereafter. Sources of Supply The Company obtains the merchandise sold in its stores from a variety of suppliers located primarily in the United States and Canada. The Company has long-standing and satisfactory relationships with its suppliers. The Company maintains a processing facility that produces coffee products. The main ingredients for coffee products are purchased principally from Brazilian and Central American sources. Other ingredients are obtained from domestic suppliers. Employees As of February 24, 2001, the Company had approximately 83,000 employees, of which 69% were employed on a part-time basis. Approximately 88% of the Company's employees are covered by union contracts. Competition The supermarket business is highly competitive throughout the marketing areas served by the Company and is generally characterized by low profit margins on sales with earnings primarily dependent upon rapid inventory turnover, effective cost controls and the ability to achieve high sales volume. The Company competes for sales and store locations with a number of national and regional chains as well as with many independent and cooperative stores and markets. Foreign Operations The information required is contained under the captions "Management's Discussion and Analysis", "Note 4 - Wholesale Franchise Business", "Note 5 - Indebtedness", "Note 6 - Fair Value of Financial Instruments", "Note 8 - Income Taxes", "Note 9 - Retirement Plans and Benefits", and "Note 13 - Operating Segments" in the 2000 Annual Report to Stockholders and is herein incorporated by reference. ITEM 2 - Properties At February 24, 2001, the Company owned 139 properties consisting of the following: Stores Not Including Stores in Owned Shopping Centers ----------------------------------------------------- Land and building owned 32 Building owned and land leased 17 --- Total stores 49 Shopping Centers Land and building owned 17 Building owned and land leased 4 --- Total shopping centers 21 Warehouses Land and building owned 7 Building owned and land leased - --- Total warehouses 7 Administrative and Other Properties Land and building owned 20 Building owned and land leased 3 Property under development building owned and land leased 10 Property under development land and building owned 2 Property under development land only 2 Undeveloped land 25 --- Total other properties 62 --- Total Properties 139 === At February 24, 2001, the Company operated 752 retail stores and serviced 68 franchised stores. These stores are geographically located as follows: Company Stores: New England States: Connecticut 39 Massachusetts 18 New Hampshire 1 Vermont 2 --- Total 60 --- Middle Atlantic States: District of Columbia 1 Delaware 10 Maryland 41 New Jersey 105 New York 152 Pennsylvania 29 --- Total 338 --- Midwestern States: Michigan 101 Ohio 3 Wisconsin 37 --- Total 141 --- Southern States: Louisiana 21 Mississippi 5 North Carolina 1 Virginia 11 --- Total 38 --- Total United States 577 --- Ontario, Canada 175 --- Total Stores 752 === Franchised Stores: Ontario, Canada 68 --- Total Franchised Stores 68 === The total area of all Company operated retail stores is 27.9 million square feet averaging approximately 37,100 square feet per store. Excluding liquor and Food Emporium stores, which are generally smaller in size, the average store size is approximately 39,400 square feet. The total area of all franchised stores is 2.0 million square feet averaging approximately 29,700 square feet per store. The 47 new stores added in fiscal 2000 consisted of 45 supermarkets, of which 4 were Food Emporium stores, and 2 liquor stores. Excluding the Food Emporium and liquor stores, the supermarkets opened in fiscal 2000 had a range in size from 21,400 to 70,500 square feet, with an average size of approximately 51,400 square feet. The stores built by the Company over the past several years and those planned for fiscal 2001 and thereafter, generally range in size from 50,000 to 60,000 square feet. The selling area of new stores is approximately 74% of the total square footage. The Company operates one coffee roasting plant in the United States. In addition, the Company maintains 14 warehouses that service its store network. These warehouses are geographically located as follows: Indiana 1 Louisiana 1 Maryland 1 Michigan 2 New Jersey 2 New York 2 Pennsylvania 1 Wisconsin 1 --- Total United States 11 Ontario, Canada 3 --- Total Warehouses 14 === The net book value of real estate pledged as collateral for all mortgage loans amounted to $4.5 million as of February 24, 2001. The net book value of real estate pledged as collateral for the Company's $425 million Secured Revolving Credit Agreement expiring December 31, 2003 amounted to $88.1 million as of February 24, 2001. ITEM 3 - Legal Proceedings The information required is contained under the caption "Note 11 - Litigation" in the 2000 Annual Report to Stockholders and is herein incorporated by reference. ITEM 4 - Submission of Matters to a Vote of Security Holders There were no matters submitted to a vote of security holders during the fourth quarter of fiscal 2000. PART II ITEM 5 - Market for the Registrant's Common Stock and Related Security Holder Matters The information required is contained under the captions "Summary of Quarterly Results", "Five Year Summary of Selected Financial Data", and "Stockholder Information" in the 2000 Annual Report to Stockholders and is herein incorporated by reference. ITEM 6 - Selected Financial Data The information required is contained under the caption "Five Year Summary of Selected Financial Data" in the 2000 Annual Report to Stockholders and is herein incorporated by reference. ITEM 7 - Management's Discussion and Analysis The information required is contained under the caption "Management's Discussion and Analysis" in the 2000 Annual Report to Stockholders and is herein incorporated by reference. ITEM 7A - Quantitative and Qualitative Disclosures About Market Risk The information required is contained in the section "Market Risk" under the caption "Management's Discussion and Analysis" the in the 2000 Annual Report to Stockholders and is herein incorporated by reference. ITEM 8 - Financial Statements and Supplementary Data (a) Financial Statements: The financial statements required to be filed herein are described in Part IV, Item 14 of this report. Except for the sections included herein by reference, the Company's 2000 Annual Report to Stockholders is not deemed to be filed as part of this report. (b) The information required is contained under the caption "Summary of Quarterly Results" in the 2000 Annual Report to Stockholders and is herein incorporated by reference. ITEM 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None PART III ITEMS 10 and 11 - Directors and Executive Officers of the Registrant and Executive Compensation Executive Officers of the Company are as follows: Name Age Current Position ------------------ --- -------------------------- Christian W.E. Haub 36 Chairman of the Board, President and Chief Executive Officer Fred Corrado 61 Vice Chairman of the Board and Chief Financial Officer Elizabeth Culligan 51 Executive Vice President, Chief Operating Officer William P. Costantini 53 Senior Vice President, General Counsel & Secretary Mitchell P. Goldstein 40 Senior Vice President, Finance & Treasurer Nicholas L. Ioli, Jr. 57 Senior Vice President, Chief Information Officer Laurane S. Magliari 50 Senior Vice President, People Resources and Services Brian Pall 41 Senior Vice President, Chief Development Officer Brian Piwek 54 Vice Chairman, President and Chief Executive Officer, The Great Atlantic & Pacific Company of Canada, Limited Don Sommerville 42 Senior Vice President, Chief Marketing Officer Craig C. Sturken 57 President and Chief Executive Officer, Atlantic Region Operations Executive officers of the Company are chosen annually and serve at the pleasure of the Chief Executive Officer with the consent of the Board of Directors. Mr. Haub was elected a director on December 3, 1991, President and Chief Operating Officer of the Company on December 7, 1993 and Co-Chief Executive Officer on April 2, 1997. He was elected President and Chief Executive Officer effective May 1, 1998. He was elected Chairman of the Board of Directors on March 20, 2001, effective May 1, 2001. He is Chairman of the Executive Committee and a member of the Finance Committee. Mr. Corrado has been a director since 1990. During the past five years, Mr. Corrado has served as Vice Chairman of the Board and Chief Financial Officer. He is Vice Chairman of the Executive Committee and a member of the Finance Committee. Ms. Culligan was elected Executive Vice President and Chief Operating Officer effective January 8, 2001. Prior to joining the Company, Ms. Culligan was President, Nabisco International at Nabisco Holdings Corporation since 1998 and, before that, Senior Vice President, Marketing, Nabisco Biscuit Division. Mr. Costantini was elected Senior Vice President, General Counsel & Secretary effective April 24, 2000. Prior to joining the Company, Mr. Costantini was Executive Vice President & General Counsel of Olsten Corporation and, before that, Senior Vice President & General Counsel of Olsten. Mr. Goldstein was elected Senior Vice President, Finance & Treasurer effective January 17, 2000. Prior to joining the Company, Mr. Goldstein was Chief Financial Officer at Vlasic Foods International, and, before that, Vice President of Strategic Planning and Corporate Development at Vlasic Foods International. Before that, he was Vice President of Strategic Planning at Campbell Soup Company. Mr. Ioli was elected Senior Vice President, Chief Information Officer on July 13, 1999. Prior to joining the Company, Mr. Ioli was Vice President, Chief Information Officer, Citizens Utilities Company. Ms. Magliari was elected Senior Vice President, People Resources and Services on February 16, 1999. Prior to joining the Company, Ms. Magliari was Vice President, Human Resources, Publishers Clearing House and, before that, Vice President, Global Marketing, The Chase Manhattan Bank. Mr. Pall was appointed Chief Development Officer of the Company on May 1, 2000. Prior to that, Mr. Pall was Senior Vice President, Development and, before that, Corporate Vice President, Real Estate Development. Mr. Piwek was appointed Vice Chairman, President and Chief Executive Officer of The Great Atlantic & Pacific Company of Canada, Limited on February 14, 2000. Before that, Mr. Piwek was Vice Chairman and Co-Chief Executive Officer of The Great Atlantic & Pacific Company of Canada, Limited. Prior to joining the Company, he was President of Overwaitea Food Group, a retailer and franchisor in British Columbia and Alberta, Canada. Mr. Sommerville was appointed Senior Vice President, Chief Marketing Officer on October 4, 2000. Prior to that, Mr. Sommerville was Vice President and General Manager of the Company's Compass Foods division since 1998. Prior to joining the Company, Mr. Sommerville was Director of Marketing at the Lipton Company. Mr. Sturken was appointed President and Chief Executive Officer, Atlantic Region on October 25, 2000. Prior to that, he was Chief Executive Officer, Midwestern Operations. The Company has filed with the Commission since the close of its fiscal year ended February 24, 2001 a definitive proxy statement pursuant to Regulation 14A, involving the election of directors. Accordingly, the information required in Items 10 and 11, except as provided above, appears in the Company's fiscal 2000 definitive proxy statement and is herein incorporated by reference. ITEM 12 - Security Ownership of Certain Beneficial Owners and Management The information required is contained under the captions "Certain Beneficial Owners" and "Security Ownership of Directors and Management" in the Company's fiscal 2000 definitive proxy statement and is herein incorporated by reference. ITEM 13 - Certain Relationships and Related Transactions The information required is contained under the captions "Certain Beneficial Owners" and "Certain Relationships and Transactions" in the Company's fiscal 2000 definitive proxy statement and is herein incorporated by reference. PART IV ITEM 14 - Exhibits, Financial Statement Schedules and Reports on Form 8-K (a) Documents filed as part of this report 1) Financial Statements: The financial statements required by Item 8 are included in the fiscal 2000 Annual Report to Stockholders. The following required items are herein incorporated by reference: Statements of Consolidated Operations Statements of Consolidated Stockholders' Equity and Comprehensive (Loss) Income Consolidated Balance Sheets Statements of Consolidated Cash Flows Notes to Consolidated Financial Statements Independent Auditors' Report 2) Financial Statement Schedules are omitted because they are not required or do not apply, or the information is included elsewhere in the financial statements or notes thereto. 3) Exhibits: Exhibit Incorporation by reference Numbers Description (If applicable) --------- ------------------------------ ------------------------ 2) Not Applicable 3) Articles of Incorporation and By-Laws a) Articles of Incorporation as Exhibit 3)a) to Form amended through July 1987 10-K for fiscal year ended February 27, 1988 b) By-Laws as amended through Exhibit 3)b) to Form March 1989 10-K for fiscal year ended February 25, 1989 4) Instruments defining the rights of Exhibit 4.1 to Form 8-K security holders, including dated as of January 1, indentures * 1991 9) Not Applicable 10) Material Contracts a) Management Compensation and Exhibit 10)b) to Form Termination Agreements 10-K for the fiscal years ended February 25, 1989, February 24, 1990, Exhibit 10)a) for the fiscal years ended February 26, 1994, February 25, 1995, February 22, 1997, February 28, 1998, February 27, 1999, February 26, 2000 and Exhibit 10 of Form 10-Q for the quarterly periods ending June 17, 2000, September 9, 2000 and December 2, 2000 b) Supplemental Executive Exhibit 10)b) to Form Retirement Plan, amended 10-K for the fiscal years and restated ended February 27, 1993, February 28, 1998 and attached * Agreements with respect to long-term debt where the total amount of securities authorized thereunder does not exceed 10% of the total assets of the Registrant and its subsidiaries on a consolidated basis shall be furnished to the Commission on request. c) 1984 Stock Option Plan, Exhibit 10)e) to Form as amended 10-K for the fiscal year ended February 23, 1991 d) 1994 Stock Option Plan Exhibit 10)e) to Form 10-K for the fiscal year ended February 25, 1995 e) 1994 Stock Option Plan Exhibit 10)f) to Form for Non-Employee Directors 10-K for the fiscal year ended February 25, 1995 f) Directors' Deferred Exhibit 10)h) to Form Payment Plan 10-K for the fiscal year ended February 22, 1997 g) Competitive Advance and Exhibit 10) to Form 8-K Revolving Credit Facilities filed on June 12, 1997; Agreement dated as of Exhibit 10)i) to Form June 10, 1997 and amendment 10-K for the fiscal year dated February 17, 1999 ended February 27, 1999 h) Project Great Renewal - Exhibit 99.1) to Form 8-K Phase I dated as of filed December 9, 1998; December 8, 1998; Phase II Exhibit 99) to Form 8-K dated March 13, 2000 filed March 24, 2000 i) 1998 Long Term Incentive Exhibit 10)k) to Form and Share Award plan 10-K for the fiscal year ended February 27, 1999 j) Supplemental Retirement and Benefit Restoration Plan k) Credit Agreement dated as of February 23, 2001 11) Not Applicable 12) Not Applicable 13) 2000 Annual Report to Stockholders 18) Not Applicable 21) Subsidiaries of Registrant 22) Not Applicable 23) Independent Auditors' Consent 24) Not Applicable (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. The Great Atlantic & Pacific Tea Company, Inc. (registrant) Date: May 15, 2001 By: /s/ Fred Corrado ------------------------------------ Fred Corrado, Vice Chairman of the Board and Chief Financial Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and as of the date indicated. /s/ Christian W.E. Haub Chairman of the Board, President ------------------------ and Chief Executive Officer Christian W.E. Haub /s/ Fred Corrado Vice Chairman of the Board, Chief ------------------------ Financial Officer and Director Fred Corrado /s/ John D. Barline Director ------------------------ John D. Barline /s/ Rosemarie Baumeister Director ------------------------ Rosemarie Baumeister /s/ Helga Haub Director ------------------------ Helga Haub /s/ Dan Kourkoumelis Director ------------------------ Dan Kourkoumelis /s/ Edward Lewis Director ------------------------ Edward Lewis /s/ Richard L. Nolan Director ------------------------ Richard L. Nolan /s/ R.L. "Sam" Wetzel Director ------------------------ R.L. "Sam" Wetzel The above-named persons signed this report on behalf of the registrant on May 15, 2001. /s/ Kenneth A. Uhl Vice President, Controller ------------------------ Kenneth A. Uhl May 15, 2001