EX-99.1 2 exh99_1.htm PRESS RELEASE OF THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC., DATED OCTOBER 20, 2009 Exhibit 99.1

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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 DEPARTURE OF PRESIDENT AND CEO ERIC CLAUS


COMPANY ANNOUNCES RESULTS FOR ITS SECOND QUARTER ENDED

SEPTEMBER 12, 2009


MONTVALE, N.J. October 20, 2009 - The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol:GAP) today announced Eric Claus, President and Chief Executive Officer, will be leaving the Company effective immediately. The Company has commenced a search for a successor and in the interim, Christian Haub, Executive Chairman of the Board, will reassume the Chief Executive Officer responsibilities, a position he previously held from 1998 until 2005.  


The Company also announced fiscal 2009 second quarter and year to date results for the 12 and 28 weeks ended September 12, 2009.


Sales for the second quarter were $2.1 billion versus $2.2 billion last year. Comparable store sales decreased 3.8%.  For the second quarter, excluding non-operating items, adjusted EBITDA was $64 million versus $67 million last year.  Adjusted income from operations was $6.0 million versus $6.3 million in last year’s second quarter. 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 second quarter, reported loss from continuing operations was $62.2 million compared to a loss of $4.3 million last year, which includes a $50.0 million increase in non cash mark to market adjustments related to financial liabilities.


Sales for the 28 weeks year to date were $4.9 billion versus $5.1 billion in 2008.  Comparable store sales decreased 3.6%.  Excluding non-operating items, adjusted EBITDA was $144 million versus $163 last year.   Adjusted income from operations was $8.3 million versus adjusted income from operations of $22.5 million last year. 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.  Year to date reported loss from continuing operations was $120.5 million compared to a loss from continuing operations of $1.5 million for 2008, which includes a $100.4 million increase in non cash mark to market adjustments related to financial liabilities.  


Christian Haub, Executive Chairman of the Board, said, “The current challenging economy continues to impact our business.  The macro headwinds including rising unemployment, intensifying price competition and now also deflation are creating an even more difficult short-term economic environment.  Nonetheless, we have made progress in several of our formats and many of our initiatives.


Our legacy business which is mainly comprised of our Fresh, Discount and Gourmet stores experienced negative same stores sales in the quarter but through tight expense control and stronger margins produced positive year over year segment income. Our Price Impact or Pathmark business continues to struggle as we experienced negative same store sales and negative year over year segment income. We have been making the difficult choices for the short term, such as improving our retail pricing, and will continue to work on lowering our expenses, enhancing our customer service and improve our overall brand image of this key format.


Securing over $400 million in new funds was clearly done at the right time to ensure that we have the resources to address future debt maturities and to invest in our optimization strategies.  In addition our working relationship with Yucaipa is off to a great start as we fine tune our overall business strategy.




We believe that once the economy improves these strategies will position us well to realize the tremendous strategic value of the company and to capitalize on our leadership position in the Northeast.”


Mr. Haub concluded, “I would like to thank Eric Claus for his contributions to our Company during his tenure at A&P and wish him well in his future endeavors.”


About A&P

Founded in 1859, A&P is one of the nation's first supermarket chains. The Company operates 432 stores in 8 states and the District of Columbia under the following trade names: A&P, Waldbaum's, Pathmark, Pathmark Sav-a-Center, 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’second quarter 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 November 17, 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. The Company uses the non-GAAP measures “Adjusted income (loss) from operations”, “EBITDA” and “adjusted ongoing operating EBITDA” to evaluate the Company’s liquidity and these are 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 income, taxes, depreciation, amortization, the (loss) gain on the sale of A&P Canada, the gain on the disposition of Metro, Inc., non-operating income, equity in earnings of Metro, Inc., and discontinued operations. 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: various operating factors and general economic conditions; competitive practices and pricing in the food industry generally and particularly in the Company’s principal geographic 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 capital 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 may affect the buying patterns of the Company’s customers.


###




The Great Atlantic & Pacific Tea Company, Inc.

Schedule 1 - GAAP Earnings for the 12 and 28 weeks ended September 12, 2009 and September 6, 2008

(Unaudited)

(In thousands, except share amounts and store data)



 

 

For the 12 Weeks Ended

 

For the 28 Weeks Ended

 

 

September 12, 2009

 

September 6, 2008(2)

 

September 12, 2009

 

September 6, 2008(2)

 

 

 

 

 

 

 

 

 

Sales

$

2,065,061 

$

2,182,636 

$

4,855,304 

$

5,105,301 

Cost of merchandise sold

 

(1,441,703)

 

(1,531,093)

 

(3,387,077)

 

(3,570,172)

Gross margin

 

623,358 

 

651,543 

 

1,468,227 

 

1,535,129 

Store operating, general and administrative expense

 

(631,924)

 

(663,066)

 

(1,478,629)

 

(1,544,561)

Loss from operations

 

(8,566)

 

(11,523)

 

(10,402)

 

(9,432)

Nonoperating (loss) income (1)

 

(7,079)

 

42,895 

 

(8,954)

 

91,492 

Interest expense (2)

 

(48,559)

 

(34,680)

 

(102,807)

 

(81,606)

Interest and dividend income

 

51 

 

57 

 

92 

 

467 

(Loss) income from continuing operations before income taxes

 

(64,153)

 

(3,251)

 

(122,071)

 

921 

Benefit from (provision for) income taxes

 

1,994 

 

(1,038)

 

1,608 

 

(2,422)

Loss from continuing operations

 

(62,159)

 

(4,289)

 

(120,463)

 

(1,501)

Discontinued operations:  

 

 

 

 

 

 

 

 

Loss from operations of discontinued businesses, net of tax

 

(18,150)

 

(13,995)

 

(25,006)

 

(18,158)

Income on disposal of discontinued operations, net of tax

 

 

183 

 

 

2,822 

Loss from discontinued operations

 

(18,150)

 

(13,812)

 

(25,006)

 

(15,336)

Net loss

$

(80,309)

$

(18,101)

$

(145,469)

$

(16,837)

 

 

 

 

 

 

 

 

 

Net loss per share - basic:

 

 

 

 

 

 

 

 

Continuing operations

$

(1.18)

$

(0.09)

$

(2.29)

$

(0.03)

Discontinued operations

 

(0.34)

 

(0.28)

 

(0.47)

 

(0.31)

Net loss per share - basic

$

(1.52)

$

(0.37)

$

(2.76)

$

(0.34)

 

 

 

 

 

 

 

 

 

Net loss per share - diluted:

 

 

 

 

 

 

 

 

Continuing operations

$

(3.06)

$

(1.70)

$

(5.90)

$

(2.24)

Discontinued operations

 

(0.68)

 

(0.27)

 

(1.19)

 

(0.28)

Net loss per share - diluted

$

(3.74)

$

(1.97)

$

(7.09)

$

(2.52)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding - basic

 

53,196,728 

 

49,520,525 

 

53,019,715 

 

49,493,271 

Weighted average common shares outstanding - diluted

 

26,614,466 

 

52,270,094 

 

21,044,730 

 

54,246,231 

 

 

 

 

 

 

 

 

 

Gross margin rate

 

30.19%

 

29.85%

 

30.24%

 

30.07%

Store operating, general and administrative expense rate

 

30.60%

 

30.38%

 

30.45%

 

30.25%

 

 

 

 

 

 

 

 

 

A & P Depreciation and amortization

$

57,784 

$

60,797 

$

135,572 

$

140,824 

 

 

 

 

 

 

 

 

 

Number of stores operated at end of period

 

432 

 

445 

 

432 

 

445 


(1)

Non operating income reflects the fair value adjustments related to the conversion features, financing warrants, and Series A and B warrants.

(2)

Operating results for the 12 and 28 weeks ended September 6, 2008 have been adjusted as a result of the retrospective application of FSP APB 14-1, which was adopted during the first quarter of fiscal 2009.






The Great Atlantic & Pacific Tea Company, Inc.

Schedule 2 - Condensed Balance Sheet Data

(Unaudited)

(In millions, except per share and store data)



 

 

September 12, 2009

 

February 28, 2009(1)

 

 

 

 

 

Cash and short-term investments

$

348 

$

175 

 

 

 

 

 

Other current assets

 

750 

 

744 

 

 

 

 

 

Total current assets

 

1,098 

 

919 

 

 

 

 

 

Property-net

 

1,645 

 

1,724 

 

 

 

 

 

Other assets

 

915 

 

902 

 

 

 

 

 

Total assets

$

3,658 

$

3,545 

 

 

 

 

 

Total current liabilities

$

774 

$

747 

 

 

 

 

 

Total non-current liabilities

 

2,681 

 

2,508 

 

 

 

 

 

Series A redeemable preferred stock

 

43 

 

 

 

 

 

 

Stockholders' equity

 

160 

 

290 

 

 

 

 

 

Total liabilities and stockholders' equity

$

3,658 

$

3,545 

 

 

 

 

 

Other Statistical Data

 

 

 

 

 

 

 

 

 

Total Debt and Capital Leases

$

1,143 

$

1,085 

Total Long Term Real Estate Liabilities

 

330 

 

330 

Temporary Investments and Marketable Securities

 

(256)

 

(74)

Net Debt

$

1,217 

$

1,341 

 

 

 

 

 

Total Retail Square Footage (in thousands)

 

18,182 

 

18,836 

 

 

 

 

 

Book Value Per Share

$

2.74 

$

5.03 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the 28

 

For the 28

 

 

weeks ended

 

weeks ended

 

 

September 12, 2009

 

September 6, 2008

 

 

 

 

 

Capital Expenditures

$

50

$

59



(1)

Certain balances as of February 28, 2009 have been adjusted as a result of the retrospective application of FSP APB 14-1, which was adopted during the first quarter of fiscal 2009.






The Great Atlantic & Pacific Tea Company, Inc.

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

for the 12 and 28 weeks ended September 12, 2009 and September 6, 2008

(Unaudited)

(In thousands)



 

 

For the 12 weeks ended

 

For the 28 weeks ended

 

 

September 12,

 

September 6,

 

September 12,

 

September 6,

 

 

2009

 

2008

 

2009

 

2008

 

 

 

 

 

 

 

 

 

As reported loss from operations

$

(8,566)

$

(11,523)

$

(10,402)

$

(9,432)

Adjustments:

 

 

 

 

 

 

 

 

Net restructuring and other

 

2,162 

 

10,640 

 

4,820 

 

22,570 

Real estate related activity

 

11,461 

 

5,610 

 

9,228 

 

6,360 

Pension withdrawal costs

 

 

 

2,445 

 

LIFO provision

 

928 

 

1,546 

 

2,166 

 

2,962 

Total adjustments

 

14,551 

 

17,796 

 

18,659 

 

31,892 

Adjusted income from operations

$

5,985 

$

6,273 

$

8,257 

$

22,460 

 

 

 

 

 

 

 

 

 

A&P depreciation and amortization

$

57,784 

$

60,797 

$

135,572 

$

140,824 







The Great Atlantic & Pacific Tea Company, Inc.

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

for the 12 and 28 weeks ended September 12, 2009 and September 6, 2008

(Unaudited)

(In thousands)



 

 

12 Weeks Ended

 

28 Weeks Ended

 

 

September 12, 2009

 

September 6, 2008(1)

 

September 12, 2009

 

September 6, 2008(1)

 

 

 

 

 

 

 

 

 

Net cash provided by (used in) operating activities

$

23,846 

$

(25,409)

$

20,537 

$

(30,824)

Adjustments to calculate EBITDA:

 

 

 

 

 

 

 

 

Net interest expense

 

48,508 

 

34,623 

 

102,715 

 

81,139 

Non-cash interest expense

 

(14,516)

 

(6,092)

 

(27,393)

 

(13,955)

Asset disposition initiatives

 

(10,010)

 

(6,675)

 

(8,998)

 

(4,918)

Other property impairments

 

(2,683)

 

(1,004)

 

(3,739)

 

(1,785)

Occupancy charges for normal store closures

 

(17,114)

 

(4,255)

 

(18,374)

 

(7,155)

Gain (loss) on disposal of owned property

 

324 

 

(91)

 

3,580 

 

441 

Loss from operations of discontinued operations

 

18,150 

 

13,995 

 

25,006 

 

18,158 

Provision for income taxes

 

(1,994)

 

1,038 

 

(1,608)

 

2,422 

Pension withdrawal costs

 

 

 

(2,445)

 

LIFO reserve

 

(928)

 

(1,546)

 

(2,166)

 

(2,962)

Stock compensation expense

 

(1,190)

 

(2,159)

 

(4,043)

 

(7,005)

Working capital changes

 

 

 

 

 

 

 

 

Accounts receivable

 

(1,506)

 

12,340 

 

(21,454)

 

15,817 

Inventories

 

21,299 

 

4,797 

 

17,236 

 

22,744 

Prepaid expenses and other current assets

 

13,769 

 

4,344 

 

19,430 

 

18,767 

Accounts payable

 

(53,840)

 

(3,475)

 

(60,147)

 

(50,298)

Accrued salaries, wages, benefits and taxes

 

1,956 

 

(1,290)

 

14,282 

 

22,241 

Other accruals

 

(12,091)

 

2,835 

 

8,712 

 

2,554 

Other assets

 

10,421 

 

5,144 

 

15,552 

 

13,718 

Other non-current liabilities

 

25,274 

 

20,533 

 

46,303 

 

50,984 

Other, net

 

1,543 

 

1,621 

 

2,184 

 

1,309 

Total A&P EBITDA

 

49,218 

 

49,274 

 

125,170 

 

131,392 

Adjustments:

 

 

 

 

 

 

 

 

Net restructuring and other

 

2,162 

 

10,640 

 

4,820 

 

22,570 

Real estate related activity

 

11,461 

 

5,610 

 

9,228 

 

6,360 

Pension withdrawal costs

 

 

 

2,445 

 

LIFO provision

 

928 

 

1,546 

 

2,166 

 

2,962 

Total adjustments

 

14,551 

 

17,796 

 

18,659 

 

31,892 

Adjusted A&P ongoing operating EBITDA

$

63,769 

$

67,070 

$

143,829 

$

163,284 


(1)

Certain balances for the 12 and 28 weeks ended September 6, 2008 have been adjusted as a result of the retrospective application of FSP APB 14-1, which was adopted during the first quarter of fiscal 2009.