-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, jl+TrovPcK1cwpVjYOoLvqerZpku4wROQDfP4yF6NEGwUyvRQ9guo4sq8WmKq2/r zRIwUbKvkW8T2FNa9nMpmA== 0000043300-95-000023.txt : 19950727 0000043300-95-000023.hdr.sgml : 19950727 ACCESSION NUMBER: 0000043300-95-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950617 FILED AS OF DATE: 19950726 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREAT ATLANTIC & PACIFIC TEA CO INC CENTRAL INDEX KEY: 0000043300 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-GROCERY STORES [5411] IRS NUMBER: 131890974 STATE OF INCORPORATION: MD FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04141 FILM NUMBER: 95556246 BUSINESS ADDRESS: STREET 1: 2 PARAGON DR CITY: MONTVALE STATE: NJ ZIP: 07645 BUSINESS PHONE: 2015739700 MAIL ADDRESS: STREET 1: 2 PARAGON DRIVE CITY: MONTVALE STATE: NJ ZIP: 07645 10-Q 1 DRAFT, JULY 25, 1995 W:10Q195.DOC THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. FORM 10-Q 1ST QUARTER ENDED JUNE 17, 1995 Conformed Copy FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended June 17, 1995 Commission File Number 1-4141 THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. ---------------------------------------------- (Exact name of registrant as specified in 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) (Zip Code) Registrant's telephone number, including area code 201-573-9700 ------------ - ------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 XXX NO --------- --------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at June 17, 1995 ----- ----------------------------- Common stock - $1 par value 38,220,333 shares Executed Copy FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended June 17, 1995 Commission File Number 1-4141 THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. ---------------------------------------------- (Exact name of registrant as specified in 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) (Zip Code) Registrant's telephone number, including area code 201-573-9700 ------------ - ------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report. 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 XXX NO --------- --------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at June 17, 1995 ----- ----------------------------- Common stock - $1 par value 38,220,333 shares THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS STATEMENTS OF CONSOLIDATED OPERATIONS & RETAINED EARNINGS (Dollars in thousands, except per share figures) (Unaudited) 16 Weeks Ended June 17, June 18, 1995 1994 ---------- ---------- Sales $3,135,514 $3,225,359 Cost of merchandise sold (2,225,702) (2,312,715) ---------- ---------- Gross margin 909,812 912,644 Store operating, general and administrative expense (862,928) (880,866) ---------- ---------- Income from operations 46,884 31,778 Interest expense (22,346) (20,476) ---------- ---------- Income before income taxes and cumulative effect of accounting changes 24,538 11,302 Provision for income taxes (9,988) (4,057) ---------- ---------- Income before cumulative effect of accounting changes 14,550 7,245 Cumulative effect on prior years of change in accounting principle: Postemployment benefits - (4,950) ---------- ---------- Net income 14,550 2,295 Retained earnings at beginning of period 332,800 529,179 Cash dividends (1,911) (7,644) ---------- ---------- Retained earnings at end of period $ 345,439 $ 523,830 ========== ========== Earnings per share: Income before cumulative effect of accounting changes $ .38 $ .19 Cumulative effect on prior years of change in accounting principle: Postemployment benefits - (.13) ---------- ---------- Net income $ .38 $ .06 ========== ========== Cash dividends $ .05 $ .20 ========== ========== Weighted average number of shares outstanding 38,220,333 38,220,333 ========== ========== See Notes to Quarterly Report on Page 5. - 1 - THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars in thousands) June 17, 1995 Feb. 25,1995 ------------- ------------ (Unaudited) ASSETS - ------ Current assets: Cash and short-term investments $ 122,785 $ 128,930 Accounts receivable 188,786 205,619 Inventories 803,553 811,964 Prepaid expenses and other assets 56,936 47,218 ---------- ---------- Total current assets 1,172,060 1,193,731 ---------- ---------- Property: Property owned 1,451,140 1,466,243 Property leased 103,633 107,494 ---------- ---------- Property-net 1,554,773 1,573,737 Other assets 130,317 127,320 ---------- ---------- Total Assets $2,857,150 $2,894,788 ========== ========== See Notes to Quarterly Report on Page 5. -2- THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. CONSOLIDATED BALANCE SHEETS --------------------------- (Dollars in thousands) June 17, 1995 Feb. 25,1995 -------------- ------------ (Unaudited) LIABILITIES & SHAREHOLDERS' EQUITY - ---------------------------------- Current liabilities: Current portion of long-term debt $ 32,865 $ 112,821 Current portion of obligations under capital leases 14,186 14,492 Accounts payable 487,410 447,081 Book overdrafts 158,965 157,521 Accrued salaries, wages and benefits 150,315 158,109 Accrued taxes 53,219 51,345 Other accruals 162,139 155,085 ---------- ---------- Total current liabilities 1,059,099 1,096,454 ---------- ---------- Long-term debt 595,367 612,473 ---------- ---------- Obligations under capital leases 142,139 146,400 ---------- ---------- Deferred income taxes 129,484 118,579 ---------- ---------- Other non-current liabilities 143,932 145,968 ---------- ---------- Shareholders' equity: Preferred stock--no par value; authorized--3,000,000 shares; issued--none - - Common stock--$1 par value; authorized-- 80,000,000 shares; issued--38,229,490 shares 38,229 38,229 Capital surplus 453,475 453,475 Cumulative translation adjustment (49,651) (49,227) Retained earnings 345,439 332,800 Treasury stock, at cost, 9,157 shares (363) (363) ---------- ---------- Total shareholders' equity 787,129 774,914 ---------- ---------- Total liabilities and shareholders' equity $2,857,150 $2,894,788 ========== ========== See Notes to Quarterly Report on Page 5. -3- THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) 16 Weeks Ended June 17, 1995 June 18, 1994 -------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 14,550 $ 2,295 Adjustments to reconcile net income to cash provided by operating activities: Cumulative effect on prior years of change in accounting principle: Postemployment benefits - 4,950 Depreciation and amortization 70,400 75,019 Deferred income tax provision (benefit) on income before cumulative effect 10,905 (529) Gain on disposal of owned property (441) (992) (Increase) decrease in receivables 16,952 (9,683) (Increase)decrease in inventories 9,317 (14,593) Increase in other current assets (9,643) (13,450) Increase in accounts payable 39,369 33,670 Decrease in accrued salaries, wages and benefits (8,050) (14,137) Increase in accrued taxes 1,917 11,400 Decrease in store closing reserves (405) (4,444) Increase (decrease) in other accruals and other liabilities 4,971 (7,458) Other (4,636) (8,822) --------- --------- Net cash provided by operating activities 145,206 53,226 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Expenditures for property (67,737) (65,395) Proceeds from disposal of property 19,255 3,438 --------- --------- Net cash used in investing activities (48,482) (61,957) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Changes in short-term debt 23,418 40,928 Proceeds under revolving lines of credit and long-term borrowings 143,340 2,338 Payments on revolving lines of credit and long-term borrowings (264,625) (3,330) Increase (decrease)in book overdrafts 1,097 (21,373) Principal payments on capital leases (4,367) (4,664) Cash dividends (1,911) (7,644) --------- --------- Net cash provided by (used in) financing activities (103,048) 6,255 --------- --------- Effect of exchange rate changes on cash and short-term investments 179 (819) --------- --------- NET DECREASE IN CASH AND SHORT-TERM INVESTMENTS (6,145) (3,295) Cash and Short-Term Investments at Beginning of Period 128,930 124,236 --------- --------- CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 122,785 $ 120,941 ========= ========= See Notes to Quarterly Report on Page 5. -4- THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. NOTES TO QUARTERLY REPORT ------------------------- 1) BASIS OF PRESENTATION The consolidated financial statements for the 16 weeks ended June 17, 1995 and June 18, 1994 are unaudited, and in the opinion of management, all adjustments necessary for a fair presentation of such financial statements have been included. Such adjustments consisted only of normal recurring items, except for the cumulative effect adjustment associated with the adoption of Statement of Financial Accounting Standards ("SFAS") No. 112. Interim results are not necessarily indicative of results for a full year. The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. This Form 10-Q should be read in conjunction with the Company's consolidated financial statements and notes incorporated by reference in the 1994 Annual Report on Form 10-K. Certain reclassifications have been made to the prior interim periods' financial statements in order to conform to the current period presentation. 2) ACCOUNTING CHANGE Effective February 27, 1994, the Company adopted SFAS No. 112 "Employers' Accounting for Postemployment Benefits". SFAS No. 112 requires the accrual of costs for preretirement postemployment benefits provided to former or inactive employees and the recognition of an obligation for these benefits. The Company's previous accounting policy had been to accrue for workers' compensation and a principal portion of long-term disability benefits and to expense other postemployment benefits, such as short- term disability, as incurred. As a result, the Company recorded a charge of $5.0 million, net of applicable income taxes of $3.9 million, as the cumulative effect of recording the obligation as of the beginning of the year. The effect of adopting the Statement had an immaterial effect on the financial results before the cumulative effect of accounting change for the fiscal year. -5- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ----------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS 16 WEEKS ENDED JUNE 17, 1995 --------------------------------- OPERATING RESULTS Sales for the first quarter ended June 17, 1995 of $3.1 billion decreased $90 million or 2.8% from the prior year first quarter. Contributing to this decrease is that the Company, in its continuing program to eliminate obsolete, unproductive stores, closed 38 stores during the first quarter of fiscal 1995, of which 8 were sold to Edwards Super Food Stores. The closure of 125 stores since the beginning of fiscal 1994 reduced comparative sales by approximately $118 million or 3.7%. The opening of 34 new stores since the beginning of fiscal 1994 added approximately $96 million or 3% to sales in the first quarter of fiscal 1995. The sale of the eight New England A&P supermarkets sold to Edwards Super Food Stores on June 16, 1995 did not have a material effect on the first quarter operating results. Average weekly sales per store were approximately $178,200 versus $172,900 for the corresponding period of the prior year for a 3% increase. Same store sales for U.S. operations declined 1.3% from the prior year as a result of competitive pricing. In Canada, same store sales declined 4.7%, due primarily to last year's aggressive sales promotions to regain market share as a result of the Miracle Food Mart labor strike which was settled on the last day of fiscal 1993. Gross margin as a percent of sales increased .72% to 29.02% in the first quarter of fiscal 1995 from 28.3% for the first quarter of fiscal 1994. The gross margin dollar decrease of $3 million is a result of a decrease in volume of $25 million and an increase in gross margin rates of $22 million. The U.S. gross margin decreased $12 million principally as a result of decreased volume of $17 million. In Canada, gross margin increased $9 million, consisting of an increase in gross margin rates of $17 million and volume declines of $8 million. Store operating, general, and administrative expense as a percent of sales increased to 27.5% from 27.3% for the corresponding period in the prior year resulting primarily from increased costs and expenses associated with customer and employee accidents in both the U.S. and Canada. The store operating, general and administrative expense dollar decrease of $18 million is a result of a decrease in labor and occupancy costs in both the U.S. and Canada. Interest expense increased $1.9 million from the previous year, principally in Canada on higher borrowings and rates. U.S. interest expense was up slightly due to higher rates, partly offset by reduced borrowings. Income before income taxes and cumulative effect of accounting changes for the first quarter ended June 17, 1995 was $24.5 million compared to $11.3 million for the comparable period in the prior year. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ------------------------------------------------ The income tax provision recorded in the first quarter of fiscal years' 1995 and 1994 reflects the Company's estimated expected annual tax rates applied to their respective domestic and foreign financial results. In the first quarter of fiscal year 1994, the income tax provision included a deferred tax benefit relating to the Canadian operating results. Subsequently, in the third quarter of fiscal year 1994, management reassessed the likelihood of realizing the Canadian net deferred income tax asset and based on all available evidence, concluded that it was not likely that such assets would be realized. Accordingly, a valuation allowance was recorded against the Company's Canadian net deferred tax assets. As of June 17, 1995 the Company is continuing to fully reserve for all Canadian deferred tax assets. Effective February 27, 1994, the Company adopted SFAS No. 112 "Employers' Accounting for Postemployment Benefits". As a result, the Company recorded a charge of $5.0 million or $.13 per share (net-of- tax) as the cumulative effect of this change on prior years. LIQUIDITY AND CAPITAL RESOURCES The Company ended the first quarter with working capital of $113 million compared to $97 million at the beginning of the fiscal year. The Company had cash and short-term investments aggregating $123 million at the end of the first quarter of fiscal 1995 compared to $129 million at the end of fiscal 1994. The Company has in excess of $300 million in various available credit facilities. These available cash resources, together with income from operations, are sufficient for the Company's capital expenditure program, mandatory scheduled debt repayments and dividend payments for fiscal 1995. -7- THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. PART II. OTHER INFORMATION ------ --------------------- Item 1. Legal Proceedings ----------------- None Item 2. Changes in Securities --------------------- None Item 3. Defaults Upon Senior Securities ------------------------------- None Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- None Item 5. Other Information ----------------- None Item 6. Exhibits and Reports on Form 8-K -------------------------------- None -8- THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SIGNATURES Pursuant to the requirements 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. Date: July 26,1995 By: /s/ Kenneth A. Uhl --------------------------------------Kenneth A. Uhl, Vice President and Controller (Chief Accounting Officer) -9- THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SIGNATURES Pursuant to the requirements 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. Date: July 26, 1995 By: --------------------------------------Kenneth A. Uhl, Vice President and Controller (Chief Accounting Officer) -9- EX-27 2
5 The schedule contains summary financial information extracted from The Great Atlantic & Pacific Tea Company, Inc. form 10-Q for the quarter ended June 17, 1995 and is qualified in its entirety by reference to such financial statements. 1000 3-mos FEB-24-1996 JUN-17-1995 122785 0 188786 0 803553 1172060 1554773 0 2857150 1059099 737506 38229 0 0 748900 2857150 3135514 3135514 2225702 2225702 862928 0 22346 24538 (9988) 14550 0 0 0 14550 .38 .38
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