8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

Current Report

Pursuant to Section or 15(d) of the

Securities Exchange Act of 1934

January 8, 2009

Date of Report (Date of earliest event reported)

THE GREAT ATLANTIC & PACIFIC

TEA COMPANY, INC.

 (Exact Name of Registrant as Specified in Charter)

Maryland	1-4141	13-1890974
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

Two Paragon Drive

Montvale, New Jersey 07645

(Address of principal executive offices)

(201) 573–9700

 (Registrant’s telephone number, including area code)

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:

[_]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[_]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[_]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[_]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02

Results of Operations & Financial Conditions

On January 8, 2009, The Great Atlantic & Pacific Tea Company, Inc. issued a press release announcing its fiscal 2008 third quarter and year to date results for the 12 and 40 weeks ended November 29, 2008. A copy of the press release is attached as Exhibit 99.1 to this Current Report.

In accordance with General Instruction B.2 of Form 8-K, the information furnished in this Item 2.02 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.

To supplement the consolidated financial results as determined in accordance with generally accepted accounting principles (“GAAP”), the press release presents non-GAAP financial measures for “EBITDA.” EBITDA is defined as earnings before interest, taxes, depreciation, amortization, minority interest, equity in earnings of Metro, Inc., discontinued operations and the (loss) gain on the sale of A&P Canada.  Ongoing, operating EBITDA is defined as EBITDA adjusted for items the Company considers non-operating in nature that management excludes when evaluating the results of the U.S. ongoing business.  The 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 the Company’s management and makes it easier to compare the Company’s results with other companies that have different financing and capital structures or tax rates. In add ition, these measures are also among the primary measures used externally by the Company’s investors, analysts and peers in its industry for purposes of valuation and comparing the results of the Company to other companies in its industry. Adjusted ongoing, operating EBITDA is reconciled to Net Cash provided by Operating Activities on Schedule 4 of this release.

Item 9.01

Financial Statements and Exhibits

 (c).   Exhibits.

Exhibit 99.1  

Press Release of The Great Atlantic & Pacific Tea Company, Inc., dated January 8, 2009.

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 hereunto duly authorized.

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By:	/s/ Brenda Galgano
Name:	Brenda Galgano
Title:	Senior Vice President And Chief Financial Officer

Dated: January 8, 2009

EXHIBIT INDEX

Exhibit No.

Description

99.1

Press Release dated January 8, 2009.

EX-99.1

News

EXHIBIT 99.1

The Great Atlantic & Pacific Tea Company, Inc.

2 Paragon Drive

Montvale, NJ  07645

Investor contact:  William J. Moss

Vice President, Treasurer

(201) 571-4019

Press contact:  Lauren La Bruno

Senior Director, Public Relations

(201) 571-4495

THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. ANNOUNCES
RESULTS FOR ITS THIRD QUARTER ENDED NOVEMBER 29, 2008

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COMPANY REPORTS ADJUSTED EBITDA OF $78 MILLION

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PATHMARK INTEGRATION COMPLETE AND SYNERGY REALIZATION ON TRACK

MONTVALE, NJ – January 8, 2009 – The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol: GAP) announced fiscal 2008 third quarter and year to date results for the 12 and 40 weeks ended November 29, 2008.

Eric Claus, President and Chief Executive Officer, stated, “I am pleased with the Company’s solid performance in the quarter. Changes in our merchandising, pricing and promotional strategies have been successful in meeting the financially strained budgets of our customers in these difficult economic times.  Our distinct formats continue to succeed as evidenced by the strong performance of our Fresh, Gourmet and Discount businesses and the improved performance of Price Impact during the quarter, as we completed the integration and transition of this business.  At the end of the quarter, our annual synergy run rate totaled $140 million and we expect to achieve the $150 million target by year end.”

Sales for the third quarter were $2.1 billion versus $1.3 billion last year. Comparable store sales increased 1.9% for A&P and decreased 0.5 % for Pathmark, when measured during the same period.     

For the third quarter, excluding non-operating items, adjusted EBITDA was $78.0 million versus $20.5 million last year. Adjusted income from operations was $17.4 million versus an adjusted loss from operations of $12.1 million in last year’s third quarter. The current quarter results include $30 million of integration synergies. The non-operating items excluded from adjusted income from operations are listed on Schedule 3 of the press release and adjusted EBITDA is reconciled to net cash from operating activities on Schedule 4.

For the third quarter, reported loss from continuing operations was $3.0 million compared to income of $73.1 million last year, which included a $106.1 million gain from the sale of Metro, Inc. shares.  Prior year’s results exclude the results of Pathmark prior to the date of acquisition.

Sales for the 40 weeks year to date were $7.2 billion versus $4.2 billion in 2007.  Comparable store sales increased 2.7% for A&P and 2.0 % for Pathmark, when measured during the same period.   

For the year to date, excluding non-operating items, adjusted EBITDA was $241.2 million versus $87.2 million last year. Adjusted income from operations was $39.9 million versus an adjusted loss from operations of $26.8 million last year. The current year to date results include $77.6 million of integration synergies. The non-operating items excluded from adjusted income from operations are listed on Schedule 3 of the press release and adjusted EBITDA is reconciled to net cash from operating activities on Schedule 4.

Reported loss from continuing operations for the year to date was $2.8 million compared to income of $131.5 million for 2007, which included a gain of $184.5 million from the sale of Metro Inc. shares. Prior year’s results exclude the results of Pathmark prior to the date of acquisition.

Christian Haub, Executive Chairman of the Board, said, “Despite the challenging economic environment, we delivered strong results in our 3rd quarter with solid sales and year-over-year earnings improvement.  We completed the integration of the Pathmark acquisition and look forward to future rewards of this strategic decision.

Clearly the US retail market is facing one of the most difficult years in 2009. Our strong strategic position in the Northeast and our successful format strategy prepare us for the challenges ahead and I remain confident in the longer-term prospects of the new A&P, as we celebrate our historic 150th Anniversary this year.”

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Founded in 1859, A&P is one of the nation's first supermarket chains. The Company operates 444 stores in 8 states and the District of Columbia under the following trade names: A&P, Waldbaum's, Pathmark, Best Cellars, The Food Emporium, Super Foodmart, Super Fresh and Food Basics.

The Company invites investors and other interested parties to listen to a live audio Webcast to be held at 11:00 AM Eastern Time today, at which members of the Company’s senior management team will discuss the Company’s third quarter financial results. The Webcast may be accessed through a link on the “Investors” page of the Company’s Website, www.aptea.com.  Listeners who cannot participate in the live broadcast will be able to hear a recorded replay of the broadcast beginning this afternoon and available through midnight on February 5, 2009.

Effective March 28, 2003, the Securities and Exchange Commission (“SEC”) adopted new rules related to disclosure of certain financial measures not calculated in accordance with Generally Accepted Accounting Principles (“GAAP”). Such new rules require all public companies to provide certain disclosures in press release and SEC filings related to non-GAAP financial measures. We use the non-GAAP measures “Adjusted income (loss) from operations”, “EBITDA” and “adjusted ongoing operating EBITDA” to evaluate the Company’s liquidity and it is among the primary measures used by management for planning and forecasting of future periods. Adjusted income (loss) from operations is defined as income (loss) from operations adjusted for items the 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 i ncome, taxes, depreciation, amortization, non-operating income, equity in earnings of Metro, Inc., discontinued operations, and the (loss) gain on the sale of A&P Canada. Adjusted ongoing, operating EBITDA is defined as EBITDA adjusted for items the Company considers non-operating in nature that management excludes when evaluating the results of the ongoing business.  The 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 the Company’s management and makes it easier to compare the 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 the Company’s investors, analysts and peers in its industry for purposes of valuation and comparing the results of the Company to other companies in its industry. Adjusted ongoing, operating EBITDA is reconciled to Net Cash used in Operating Activities on Schedule 4 of this release.

This release contains forward-looking statements about the future performance of the Company, which are based on Management’s assumptions and beliefs in light of the information currently available to it. The Company assumes no obligation to update the information contained herein. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements including, but not limited to: competitive practices and pricing in the food industry generally and particularly in the Company’s principal markets; the Company’s relationships with its employees and the terms of future collective bargaining agreements; the costs and other effects of legal and administrative cases and proceedings; the nature and extent of continued consolidation in the food industry; changes in the financial markets which may affect the Company’s cost of capital and the ability of the Company to access capital; supply or quality control problems with the Company’s vendors; and changes in economic conditions which affect the buying patterns of the Company’s customers; the failure to successfully integrate Pathmark’s business and operations and realize synergies in the expected time frame.

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The Great Atlantic & Pacific Tea Company, Inc.

Schedule 1 - GAAP Earnings for the 12 and 40 weeks ended November 29, 2008 and December 1, 2007

(Unaudited)

(In thousands, except share amounts and store data)

		12 Weeks Ended				40 Weeks Ended
		November 29, 2008		December 1, 2007		November 29, 2008		December 1, 2007
Sales	$	2,120,954	$	1,251,123	$	7,226,255	$	4,204,630
Cost of merchandise sold		(1,460,569)		(869,448)		(5,030,741)		(2,901,336)
Gross margin		660,385		381,675		2,195,514		1,303,294
Store operating, general and administrative expense		(648,476)		(402,808)		(2,193,037)		(1,323,411)
Income (loss) from operations		11,909		(21,133)		2,477		(20,117)
Gain on sale of Canadian operations		-		495		-		209
Gain on disposition of Metro, Inc.		-		106,063		-		184,451
Nonoperating income		22,777		-		114,269		-
Interest expense		(36,727)		(14,499)		(116,621)		(48,806)
Interest and dividend income		86		3,910		553		12,231
Equity in earnings of Metro, Inc.		-		-		-		7,869
(Loss) income from continuing operations before income taxes		(1,955)		74,836		678		135,837
Provision for income taxes		(1,038)		(1,754)		(3,460)		(4,288)
(Loss) income from continuing operations		(2,993)		73,082		(2,782)		131,549
Discontinued operations:
Loss from operations of discontinued businesses, net of tax		(12,466)		(13,540)		(30,624)		(179,667)
Gain (loss) on disposal of discontinued businesses, net of tax		1,831		(2,235)		4,653		(51,039)
Loss from discontinued operations		(10,635)		(15,775)		(25,971)		(230,706)
Net (loss) income	$	(13,628)	$	57,307	$	(28,753)	$	(99,157)
Net (loss) income per share - basic:
Continuing operations	$	(0.06)	$	1.74	$	(0.05)	$	3.14
Discontinued operations		(0.20)		(0.38)		(0.52)		(5.51)
Net (loss) income per share - basic	$	(0.26)	$	1.36	$	(0.57)	$	(2.37)
Net (loss) income per share - diluted:
Continuing operations	$	(1.35)	$	1.73	$	(2.33)	$	3.11
Discontinued operations		(0.26)		(0.38)		(0.46)		(5.45)
Net (loss) income per share - diluted	$	(1.61)	$	1.35	$	(2.79)	$	(2.34)
Weighted average common shares outstanding - basic		52,391,948		41,961,253		50,362,875		41,888,969
Weighted average common shares outstanding - diluted		41,462,695		42,363,903		56,190,659		42,306,348
Gross margin rate		31.14%		30.51%		30.38%		31.00%
Store operating, general and administrative expense rate		30.57%		32.20%		30.35%		31.48%
A&P depreciation and amortization	$	60,538	$	32,654	$	201,362	$	122,614
Number of stores operated at end of quarter		444		322		444		322

The Great Atlantic & Pacific Tea Company, Inc.

Schedule 2 - Condensed Balance Sheet Data

(Unaudited)

(In millions, except per share and store data)

		November 29, 2008		February 23, 2008
Cash and short-term investments	$	161	$	101
Other current assets		796		783
Total current assets		957		884
Property-net		1,785		1,901
Other assets		969		859
Total assets	$	3,711	$	3,644
Total current liabilities	$	722	$	772
Total non-current liabilities		2,537		2,454
Stockholders' equity		452		418
Total liabilities and stockholders' equity	$	3,711	$	3,644
Other Statistical Data
Total Debt and Capital Leases	$	1,140	$	940
Total Long Term Real Estate Liabilities		346		346
Temporary Excess Cash and Investments
and Marketable Securities		(57)		(25)
Net Debt	$	1,429	$	1,261
Total Retail Square Footage (in thousands)		18,650		18,813
Book Value Per Share	$	7.84	$	7.32
		For the 40 weeks ended November 29, 2008		For the 40 weeks ended December 1, 2007
Capital Expenditures	$	86	$	98

The Great Atlantic & Pacific Tea Company, Inc.

Schedule 3 - Reconciliation of GAAP (Loss) Income from Operations to Adjusted (Loss) Income from Operations

for the 12 and 40  weeks ended November 29, 2008 and December 1, 2007

(Unaudited)

(In thousands)

		12 Weeks Ended				40 Weeks Ended
		November 29,		December 1,		November 29,		December 1,
		2008		2007		2008		2007
As reported income (loss) from operations	$	11,909	$	(21,133)	$	2,477	$	(20,117)
Adjustments:
Net restructuring costs		-		168		440		4,420
Pathmark acquisition		4,274		4,392		26,404		6,761
Real estate related activity		1,720		4,449		8,080		(12,037)
Benefit related costs		481		-		481		-
Visa/Mastercard lawsuit settlement		(2,230)		-		(2,230)		-
LIFO provision		1,269		-		4,231		-
IT services agreement with Metro, Inc.		-		(16)		-		(5,792)
Total adjustments		5,514		8,993		37,406		(6,648)
Adjusted Northeast income (loss) from operations	$	17,423	$	(12,140)	$	39,883	$	(26,765)
Northeast depreciation and amortization	$	60,538	$	32,654	$	201,362	$	113,977
Discontinued operations depreciation and amortization		-		-		-		8,637
Total A&P depreciation and amortization	$	60,538	$	32,654	$	201,362	$	122,614

The Great Atlantic & Pacific Tea Company, Inc.

Schedule 4 - Reconciliation of GAAP Net Cash (Used In) Provided By Operating Activities to Adjusted EBITDA

for the 12 and 40 weeks ended November 29, 2008 and December 1, 2007

(Unaudited)

(In thousands)

		12 Weeks Ended				40 Weeks Ended
		November 29,		December 1,		November 29,		December 1,
		2008		2007		2008		2007
Net cash used in operating activities	$	(17,390)	$	(27,259)	$	(48,214)	$	(25,260)
Adjustments to calculate EBITDA:
Depreciation and amortization on discontinued operations		-		-		-		(8,637)
Net interest expense		36,641		10,589		116,068		36,575
Asset disposition initiatives		(4,906)		(141,407)		(9,824)		(120,422)
Long lived asset impairment charges		(882)		(2,437)		(2,667)		(3,551)
(Loss) gain on disposal of owned property		(79)		(1,293)		362		(2,514)
Loss from operations of discontinued operations		12,466		13,540		30,624		179,667
Provision for income taxes		1,038		1,754		3,460		4,288
Other share based awards		3,363		(1,978)		(3,642)		(7,282)
Working capital changes
Accounts receivable		(12,953)		1,089		2,634		(31,915)
Inventories		28,492		(1,181)		49,116		(72,741)
Prepaid expenses and other current assets		(16,371)		3,435		2,627		14,230
Accounts payable		28,758		(2,304)		(21,710)		27,285
Accrued salaries, wages, benefits and taxes		6,665		36,685		30,323		52,836
Other accruals		10,069		14,506		1,939		5,544
Other assets		2,747		(5,893)		11,766		3,131
Other non-current liabilities		(2,414)		112,568		49,042		42,559
Other, net		(2,797)		1,107		(8,065)		67
Total A&P EBITDA		72,447		11,521		203,839		93,860
Adjustments:
Net restructuring costs		-		168		440		4,420
Pathmark acquisition		4,274		4,392		26,404		6,761
Real estate related activity		1,720		4,449		8,080		(12,037)
Benefit related costs		481		-		481		-
Visa/Mastercard lawsuit settlement		(2,230)		-		(2,230)		-
LIFO provision		1,269		-		4,231		-
IT services agreement with Metro, Inc.		-		(16)		-		(5,792)
Total adjustments		5,514		8,993		37,406		(6,648)
Adjusted A&P ongoing operating EBITDA	$	77,961	$	20,514	$	241,245	$	87,212