UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): January 18, 2012
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
(Exact name of registrant as specified in its charter)
|
Maryland |
|
1-4141 |
|
13-1890974 |
|
(State or other jurisdiction of incorporation or organization) |
|
(Commission File Number) |
|
(IRS Employer Identification No.) |
|
Two Paragon Drive Montvale, New Jersey |
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07645 |
|
(Address of principal executive offices) |
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(Zip Code) |
Registrant’s telephone number, including area code: (201) 573-9700
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 7.01 Regulation FD Disclosure.
The following results for the last twelve months ended December 3, 2011 (“LTM”) have been derived from the quarterly Consolidated Financial Statements for the period then ended, which have not been audited.
As detailed on Schedule 4, after excluding certain non-cash, non-recurring and non-operating items, as well as adjustments to include the net impact of actions taken during the period as if enacted at the beginning of the LTM period, LTM Adjusted EBITDA was $117.0 million for the period ended December 3, 2011, which amount reflects the actions that our Company has taken to implement our turnaround plan to emerge out of the Bankruptcy currently scheduled on February 25, 2012. The LTM Adjusted EBITDAR, after excluding the contractual rent expenses, amounted to $342.9 million for the same period.
In accordance with General Instruction B.2 of Form 8-K, the information furnished in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Our Company is required to provide certain reconciliations to GAAP financial measures for any non-GAAP financial measures presented in our press releases and SEC filings. Our Company uses the non-GAAP measures “Adjusted loss from operations”, “EBITDA”, “Adjusted EBITDA”, “Current Store Footprint Adjusted EBITDA”, “LTM Adjusted EBITDA” and “LTM Adjusted EBITDAR” to evaluate our Company’s liquidity and performance of our business and these are among the primary measures used by management for planning and forecasting of future periods. Adjusted loss from operations is defined as loss from operations adjusted for items our Company considers non-operating in nature that management excludes when evaluating the results of the ongoing business. EBITDA is defined as earnings before interest expense, interest and dividend income, taxes, depreciation, amortization and discontinued operations. Adjusted EBITDA is defined as EBITDA adjusted to exclude the following, if applicable: (i) goodwill, long-lived asset and intangible asset impairment, (ii) net restructuring and other charges, (iii) real estate related activity, (iv) pension withdrawal costs, (v) insurance reserve adjustments, (vi) stock based compensation, (vii) LIFO provision adjustments, (viii) non-operating income and (ix) other items that management considers non-operating in nature and excludes when evaluating the results of the ongoing business.
Current Store Footprint Adjusted EBITDA excludes the actual results of those stores that were closed during the period presented as if the stores were closed at the beginning of the period presented, adjusted for certain corporate or overhead costs that will not be eliminated.
LTM Adjusted EBITDA is defined as Current Store Footprint Adjusted EBITDA adjusted to include: (i) the impact of contractual supply and logistics contracts as if enacted as of the beginning of the LTM period, (ii) the impact of negotiated labor contracts that would have resulted had the contracts been in place at the beginning of the LTM period, (iii) the impact of bankruptcy and other disruption such as the impact of vendor funding below historical average experienced during the bankruptcy period, labor protests at store locations and triple coupon promotions and (iv) the impact of reductions in contractual store lease payments that would have resulted had the contracts been in place at the beginning of the LTM period, offset by (v) the impact of store lease payments that are classified as principal payments and interest expense for purposes of US GAAP.
LTM Adjusted EBITDAR is defined as LTM Adjusted EBITDA adjusted to include the contractual rent payments for the period.
Our Company believes the presentation of these measures is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by our Company’s management and makes it easier to compare our Company’s results with other companies that have different financing and capital structures or tax rates. In addition, these measures are also among the primary measures used externally by our Company’s investors, analysts and peers in its industry for purposes of valuation and comparing the results of our Company to other companies in its industry. Adjusted loss from operations, Adjusted EBITDA, Current Store Footprint Adjusted EBITDA, LTM Adjusted EBITDA and LTM Adjusted EBITDAR are reconciled to
Net Loss on Schedule 3 of this release. In addition, EBITDA, Adjusted EBITDA, Current Store Footprint EBITDA, LTM Adjusted EBITDA and LTM Adjusted EBITDAR are reconciled to Net Cash provided by /(used in) Operating Activities on Schedule 4 of this release.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
|
Exhibit No. |
|
Description |
|
99.1 |
|
Schedules of Financial Statements |
SIGNATURE
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 hereunto duly authorized.
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THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. | ||
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|
| ||
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Date: January 18, 2012 |
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By: |
/s/ Christopher W. McGarry |
|
|
|
Name: |
Christopher W. McGarry |
|
|
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Title: |
Senior Vice President and General Counsel |
INDEX TO EXHIBITS
|
Exhibit No. |
Description |
|
99.1 |
Schedules of Financial Statements |
Exhibit 99.1
The Great Atlantic & Pacific Tea Company, Inc.
Schedule 1 - GAAP Earnings for the Last Twelve Months (LTM) ended December 3, 2011
(Unaudited)
(In thousands, except share amounts and store data)
|
|
|
LTM ended |
| |
|
|
|
December 3, 2011 |
| |
|
|
|
|
| |
|
Sales |
|
$ |
7,242,123 |
|
|
Cost of merchandise sold |
|
(5,178,287 |
) | |
|
Gross margin |
|
2,063,836 |
| |
|
Store operating, general and administrative expense |
|
(2,444,506 |
) | |
|
Goodwill, trademark and long-lived asset impairment |
|
(141,179 |
) | |
|
Loss from operations |
|
(521,849 |
) | |
|
Nonoperating income (1) |
|
3,688 |
| |
|
Interest expense, net ` |
|
(191,845 |
) | |
|
Reorganization items, net |
|
62,531 |
| |
|
Loss from continuing operations before income taxes |
|
(647,475 |
) | |
|
Benefit from income taxes |
|
15,360 |
| |
|
Loss from continuing operations |
|
(632,115 |
) | |
|
Discontinued operations: |
|
|
| |
|
Loss from operations of discontinued businesses, net of tax |
|
(22,897 |
) | |
|
Loss on disposal of discontinued businesses, net of tax |
|
(526 |
) | |
|
Reorganization items, net |
|
153,105 |
| |
|
Income from discontinued operations |
|
129,682 |
| |
|
Net loss |
|
$ |
(502,433 |
) |
|
|
|
|
| |
|
Gross margin rate |
|
28.50 |
% | |
|
Store operating, general and administrative expense rate |
|
33.75 |
% | |
|
|
|
|
| |
|
Depreciation and amortization |
|
$ |
188,501 |
|
|
|
|
|
| |
|
Number of stores operated at end of period |
|
335 |
| |
(1) Nonoperating income reflects the fair value adjustments related to the Series B warrants.
The Great Atlantic & Pacific Tea Company, Inc.
Schedule 2 - Condensed Balance Sheet Data
(Unaudited)
(In millions, except per share and store data)
|
|
|
December 3, 2011 |
| |
|
|
|
|
| |
|
Cash and short-term investments |
|
$ |
197 |
|
|
|
|
|
| |
|
Other current assets |
|
627 |
| |
|
|
|
|
| |
|
Total current assets |
|
824 |
| |
|
|
|
|
| |
|
Property-net |
|
995 |
| |
|
|
|
|
| |
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Other assets |
|
318 |
| |
|
|
|
|
| |
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Total assets |
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$ |
2,137 |
|
|
|
|
|
| |
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Total current liabilities |
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$ |
723 |
|
|
|
|
|
| |
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Total non-current liabilities |
|
2,778 |
| |
|
|
|
|
| |
|
Series A redeemable preferred stock |
|
148 |
| |
|
|
|
|
| |
|
Stockholders’ deficit |
|
(1,512 |
) | |
|
|
|
|
| |
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Total liabilities and stockholders’ deficit |
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$ |
2,137 |
|
|
|
|
|
| |
|
Other Statistical Data |
|
|
| |
|
|
|
|
| |
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Total debt and capital leases |
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$ |
1,358 |
|
|
Total Real Estate Liabilities |
|
375 |
| |
|
Subtotal |
|
1,732 |
| |
|
Less: liabilities subject to compromise |
|
(1,100 |
) | |
|
Net debt |
|
$ |
633 |
|
|
|
|
|
| |
|
Total retail square footage (in thousands) |
|
13,990 |
| |
|
|
|
|
| |
|
Book value per share |
|
$ |
(28 |
) |
|
|
|
LTM ended |
| |
|
|
|
December 3, 2011 |
| |
|
Capital expenditures |
|
$ |
41 |
|
The Great Atlantic & Pacific Tea Company, Inc.
Schedule 3 - Reconciliation of GAAP Net Loss to Adjusted Loss from Operations and Adjusted EBITDA
and Reconciliation of GAAP to Adjusted Store Operating, General and Administrative Expense
for the Last Twelve Months (LTM) periods ended December 3, 2011
(Unaudited)
(In thousands)
|
|
|
LTM ended |
| |
|
|
|
December 3, 2011 |
| |
|
|
|
|
| |
|
Net loss, as reported |
|
$ |
(502,433 |
) |
|
Income from discontinued operations |
|
(129,682 |
) | |
|
Benefit from income taxes |
|
(15,360 |
) | |
|
Reorganization items relating to continuing operations |
|
(62,531 |
) | |
|
Interest expense, net |
|
191,845 |
| |
|
Nonoperating income |
|
(3,688 |
) | |
|
As reported loss from operations |
|
$ |
(521,849 |
) |
|
|
|
|
| |
|
Adjustments: |
|
|
| |
|
Goodwill, trademark and long-lived asset impairment |
|
142,675 |
| |
|
Net restructuring and other |
|
8,604 |
| |
|
Real estate related activity |
|
60,036 |
| |
|
Pension withdrawal costs |
|
13,923 |
| |
|
Self insurance reserve |
|
66,286 |
| |
|
Stock-based compensation |
|
2,461 |
| |
|
Insurance deductible - snow storm |
|
500 |
| |
|
Losses relating to Hurricane Irene |
|
1,000 |
| |
|
Inventory-related |
|
406 |
| |
|
C&S contract effect |
|
9,930 |
| |
|
Other |
|
5,131 |
| |
|
Total EBITDA adjustments |
|
310,952 |
| |
|
Adjusted loss from operations |
|
$ |
(210,897 |
) |
|
Depreciation and amortization |
|
188,501 |
| |
|
Adjusted EBITDA |
|
(22,396 |
) | |
|
Effect of closed stores |
|
32,823 |
| |
|
Current Store Footprint Adjusted EBITDA |
|
$ |
10,427 |
|
|
|
|
|
| |
|
LTM EBITDA Adjustments: |
|
|
| |
|
Contractual supply and logistics savings |
|
43,933 |
| |
|
Contractual labor savings |
|
68,750 |
| |
|
Bankruptcy and other disruption |
|
46,070 |
| |
|
Contractual lease savings |
|
3,941 |
| |
|
Lease payments classified as principal payments and interest expense |
|
(56,163 |
) | |
|
Total LTM EBITDA adjustments |
|
106,531 |
| |
|
LTM Adjusted EBITDA |
|
116,958 |
| |
|
Contractual rent payments |
|
225,986 |
| |
|
LTM Adjusted EBITDAR |
|
$ |
342,944 |
|
The Great Atlantic & Pacific Tea Company, Inc.
Schedule 4 - Reconciliation of GAAP Net Cash Used in Operating Activities to Adjusted EBITDA
for the Last Twelve Months (LTM) ended December 3, 2011
(Unaudited)
(In thousands)
|
|
|
LTM Ended |
| |
|
|
|
December 3, 2011 |
| |
|
|
|
|
| |
|
Net cash used in operating activities |
|
$ |
(79,491 |
) |
|
Adjustments to calculate EBITDA: |
|
|
| |
|
Goodwill, trademark and long-lived asset impairment |
|
(144,815 |
) | |
|
Nonoperating income |
|
3,688 |
| |
|
Net interest expense |
|
191,845 |
| |
|
Non-cash interest expense |
|
(11,751 |
) | |
|
Noncash occupany charges in the normal course of business |
|
(15,326 |
) | |
|
Adjustments to occupancy reserves |
|
(149,025 |
) | |
|
Losses relating to Hurricane Irene |
|
(1,000 |
) | |
|
Gain on disposal of owned property |
|
128 |
| |
|
Recognition of deferred real estate income |
|
4,157 |
| |
|
Loss from operations of discontinued operations |
|
23,423 |
| |
|
Benefit from income taxes |
|
(15,360 |
) | |
|
Deferred income tax benefit |
|
14,584 |
| |
|
Pension withdrawal costs |
|
(13,923 |
) | |
|
Self insurance reserve |
|
(84,090 |
) | |
|
Employee benefit related costs |
|
(4,122 |
) | |
|
Stock compensation expense |
|
(2,461 |
) | |
|
Reorganization items relating to discontinued operations |
|
153,105 |
| |
|
Reorganization items relating to continuing operations |
|
62,531 |
| |
|
Gain on sale of pharmacy assets |
|
4,785 |
| |
|
Gain on sale of assets held for sale |
|
29,120 |
| |
|
Gain on surrender of COLI Policies |
|
917 |
| |
|
Payment for reorganization items |
|
35,744 |
| |
|
C&S contract effect |
|
(9,930 |
) | |
|
Financing fees |
|
(44,550 |
) | |
|
Working capital changes |
|
|
| |
|
Accounts receivable |
|
(4,153 |
) | |
|
Inventories |
|
(31,523 |
) | |
|
Prepaid expenses and other current assets |
|
7,971 |
| |
|
Accounts payable |
|
(92,835 |
) | |
|
Accrued salaries, wages, benefits and taxes |
|
26,018 |
| |
|
Other accruals |
|
(113,833 |
) | |
|
Other assets |
|
39,087 |
| |
|
Other non-current liabilities |
|
107,929 |
| |
|
Other, net |
|
(884 |
) | |
|
EBITDA |
|
(114,040 |
) | |
|
|
|
|
| |
|
Adjustments: |
|
|
| |
|
Goodwill, trademark and long-lived assets impairment |
|
142,675 |
| |
|
Net restructuring and other |
|
8,604 |
| |
|
Real estate related activity |
|
60,036 |
| |
|
Pension withdrawal costs |
|
13,923 |
| |
|
Self insurance reserve |
|
66,286 |
| |
|
Hurricane Irene - Insurance deductible |
|
1,000 |
| |
|
Other insurance deductible |
|
500 |
| |
|
Stock-based compensation |
|
2,461 |
| |
|
C&S Contract effect |
|
9,930 |
| |
|
Inventory-related |
|
406 |
| |
|
Reorganization items relating to discontinued operations |
|
(153,089 |
) | |
|
Reorganization items in the normal course of business, net |
|
(62,531 |
) | |
|
Other |
|
5,131 |
| |
|
Nonoperating income |
|
(3,688 |
) | |
|
Total adjustments |
|
91,644 |
| |
|
Adjusted EBITDA |
|
$ |
(22,396 |
) |
|
Effect of closed stores |
|
32,823 |
| |
|
Current Store Footprint Adjusted EBITDA |
|
$ |
10,427 |
|
|
|
|
|
| |
|
LTM Adjusted EBITDA Adjustments: |
|
|
| |
|
Contractual supply and logistics savings |
|
43,933 |
| |
|
Contractual labor savings |
|
68,750 |
| |
|
Bankruptcy and other disruption |
|
46,070 |
| |
|
Contractual lease savings |
|
3,941 |
| |
|
Lease payments classified as interest expense |
|
(56,163 |
) | |
|
Total adjustments |
|
106,531 |
| |
|
LTM Adjusted EBITDA |
|
116,958 |
| |
|
Contractual rent expense |
|
225,986 |
| |
|
LTM Adjusted EBITDAR |
|
$ |
342,944 |
|
The Great Atlantic & Pacific Tea Company, Inc.
Schedule 5 - Real Estate Appraised Values
(Unaudited)
(Dollars in thousands)
Valuable leaseholds
|
Banner |
|
Locations (1) |
|
Appraised Value |
| |
|
Pathmark |
|
104 |
|
$ |
186.5 |
|
|
A&P |
|
88 |
|
117.6 |
| |
|
Waldbaums |
|
49 |
|
44.9 |
| |
|
Food Emporium |
|
16 |
|
41.0 |
| |
|
Other (2) |
|
37 |
|
23.9 |
| |
|
Total leasehold estate interests (3) (4) |
|
294 |
|
$ |
413.9 |
|
|
|
|
|
|
|
| |
|
Total leased fee (5) |
|
9 |
|
$ |
69.1 |
|
|
|
|
|
|
|
| |
|
Total value for continuing properties |
|
|
|
$ |
483.0 |
|
|
|
|
|
|
|
| |
|
Total leasehold estate interests - closing properties |
|
14 |
|
$ |
14.2 |
|
Notes:
(1) We also lease 18 liquor store locations that have not been valued and are therefore not included in this table.
(2) Includes leasehold estate value for one warehouse.
(3) We hired an independent third party real estate valuation firm to estimate the market value of certain leasehold estate interests for purposes of securing collateral-backed financing. These appraisals were prepared for the 292 store locations and one warehouse expected to continue operating and 15 store locations that are anticipated to close during fiscal 2012, in conformity with Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation and the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute over a period from April through November 2011. Such appraisals were not prepared in accordance with US GAAP rules which require leasehold interests to be valued under Fresh-Start accounting as of the bankruptcy emergence date, currently expected to be February 25, 2012. Values under Fresh-Start accounting may be significantly different than those values shown in this table.
(4) Reflects NPV of spread between market rents and contractual lease payments of below-market leases for the duration using a 13% discount rate.
(5) Our DIP lender JPMorgan Chase hired an independent third party real estate valuation firm to estimate the market value of our leased fee properties for purposes of securing collateral-backed financing. These appraisals were prepared for nine locations in conformity with Title XI of the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA), and the Uniform Standards of Professional Appraisal Practice (USPAP) over a period from January through February 2011. Such appraisals were not prepared in accordance with US GAAP rules which require leasehold interests to be valued under Fresh-Start accounting as of the bankruptcy emergence date, currently expected to be February 25, 2012. Values under Fresh-Start accounting may be significantly different than those values shown in this table. These nine locations consist of five stand-alone store locations, of which one is closed, and four shopping centers, which contain operating Pathmark bannered stores. We have one additional leased fee operating store location that was not valued.