EXHIBIT 99.1
News
Investor contact:William J. Moss
Vice President, Treasurer
(201) 571-4019
Vice President, Treasurer
(201) 571-4019
Press contact:Richard P. De Santa
Senior Director, Communications
(201) 571-4495
Senior Director, Communications
(201) 571-4495
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. ANNOUNCES
NET INCOME OF $27 MILLION FOR ITS FISCAL YEAR ENDED
FEBRUARY 24, 2007
NET INCOME OF $27 MILLION FOR ITS FISCAL YEAR ENDED
FEBRUARY 24, 2007
OPERATING INCOME CONTINUES TO IMPROVE IN ITS CORE
NORTHEAST OPERATIONS
NORTHEAST OPERATIONS
MONTVALE, NJ – April 25, 2007 – The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol: GAP) announced fiscal 2006 fourth quarter and full year results for the 12 and 52 weeks ended February 24, 2007.
Sales for the fourth quarter were $1.6 billion, comparable to $1.6 billion in the fourth quarter of last year. Comparable store sales decreased 1.5% vs. year-ago mainly due to last year’s sales lift post Hurricane Katrina in its New Orleans operations and difficult economic conditions in its Midwest operations. Comparable store sales in its core Northeast operations increased 0.9% in the fourth quarter. Net loss for the quarter was $7 million or $.17 per diluted share this year versus a loss of $39 million or $.95 per diluted share last year.
The results for the fourth quarter of fiscal years 2006 and 2005 include items the Company considers non-operating in nature that management excludes when evaluating the results of the ongoing business. These items are listed on Schedule 3 of the press release. Excluding these items, adjusted loss from operations was $7.6 million in the fourth quarter of fiscal 2006 versus income of $1.7 million in last year’s fourth quarter. Adjusted ongoing operating EBITDA, which is reconciled to net cash from operating activities on Schedule 4 of the press release, was $34 million in the fourth quarter of fiscal 2006 versus $41 million in last year’s fourth quarter. EBITDA in its core Northeast operations was $30 million for the fourth quarter, an increase of 26% versus the fourth quarter of last year.
U.S. sales for the full year were $6.9 billion versus $7.0 billion in 2005. Total sales of $8.7 billion for last year included sales of $1.7 billion related to A&P Canada which was sold in August 2005. U.S. total comparable store sales decreased 0.5% for the year. Comparable store sales for the Northeast increased 0.6%. Net income for fiscal 2006 was $27 million or $.64 per diluted share compared to income of $393 million or $9.64 per diluted share for 2005, which included the gain on the sale of A&P Canada.
Fiscal 2006 and fiscal 2005 results include the non-operating items listed on Schedule 3 of the press release. Excluding these items, adjusted U.S. loss from operations was $26 million for 2006 versus a loss of $65 million for 2005. Adjusted U.S. ongoing operating EBITDA, which is reconciled to net cash from operating activities on Schedule 4, was $151 million for 2006 versus $127 million in 2005. EBITDA from its core Northeast operations was $125 million for the year, an increase of 20% versus last year.
Christian Haub, Executive Chairman of the Board, said, “Our Fiscal 2006 fourth quarter completed a year of excellent progress for A&P, as we improved operating results, increased shareholder value, and just beyond year-end, took a defining step toward the transformation of our Company with the agreement to acquire Pathmark Stores Inc.
“The improvements set in motion by our divestiture of A&P Canada in 2005, and subsequent management, organization and support structure changes, were reflected in top and bottom line results overall and specifically in our core Northeast operations. Additionally, the Canadian sale and our improving results enabled us to reward investors with a special dividend as well as increased share value.
“Going forward in Fiscal 2007, we anticipate a year of both continuity and dynamic change. Management’s commitment to the strategies and practices underlying our current improving trends will remain fully in place. Alongside that focus, we are assembling a careful and comprehensive plan for the integration of the Pathmark operations, upon the anticipated completion of that transaction in the second half.
“With Pathmark’s operations reflecting an ideal fit with our Company, we are confident that the financial and strategic benefits of this landmark transaction will put A&P firmly on the road to improved performance in the future,” Mr. Haub said.”
Eric Claus, President & Chief Executive Officer, said, “Our management team and associates did an excellent job in making Fiscal 2007 a successful transition year for A&P, as we:
| • | Improved sales trends in core Northeast operating banners. | ||
| • | Achieved a positive EBITDA performance with improving contribution from our core market operations. | ||
| • | Converted 24 conventional stores to our successful new fresh format. | ||
| • | Successfully launched our improved Food Basics discount format. |
| • | Introduced our new generation Food Emporium Fine Foods concept in New York City. | ||
| • | Maintained the bottom line benefits of previous cost reduction initiatives, and the ongoing cost control emphasis embedded in all Company activities. |
“We were very pleased with our bottom line progress, which was the result of better operations and more disciplined cost control throughout the organization; a discipline that will remain a part of everything we do. Our sales improvement, driven by improved merchandising, was also on track with plan, although generated primarily in our northeastern core markets which benefited most from our capital development during the year.
“Our Farmer Jack operations in Michigan again presented our most difficult challenge in Fiscal 2006, and as just announced, we are resolving that situation through the potential divestiture of that business. We thank our management and associates in Michigan for their enthusiastic efforts over the years. Their consistent support and hard work made this a painful decision. But it is clearly the right one, given the region’s difficult economy, and A&P’s increased focus on the development and upcoming expansion of our business in the Northeast.
“Overall, our positive results were in line with internal forecasts in most key measurements. With continued focus on current strategies and the successful integration of Pathmark, we are confident of accelerated improvement in Fiscal 2007,” Mr. Claus said.
Founded in 1859, A&P is one of the nation’s first supermarket chains. The Company operates 406 stores in 9 states and the District of Columbia under the following trade names: A&P, Waldbaum’s, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-A-Center 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 fourth 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 until May 23, 2007.
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 (loss) income from operations” and “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 (loss) income from operations is defined as (loss) income from
operations adjusted for items the Company considers non-operating in nature that management excludes when evaluating the results of the U.S. ongoing business. 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 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. Ongoing, operating EBITDA is reconciled to Net Cash provided by 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 Great Atlantic & Pacific Tea Company, Inc.
Schedule 1 — GAAP Earnings for the 12 and 52 weeks ended February 24, 2007 and February 25, 2006
(Unaudited)
(In thousands, except share amounts and store data)
Schedule 1 — GAAP Earnings for the 12 and 52 weeks ended February 24, 2007 and February 25, 2006
(Unaudited)
(In thousands, except share amounts and store data)
| 12 Weeks Ended | 52 Weeks Ended | |||||||||||||||
| February 24, | February 25, | February 24, | February 25, | |||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Sales | $ | 1,608,119 | $ | 1,607,523 | $ | 6,850,268 | $ | 8,740,347 | ||||||||
| Cost of merchandise sold | (1,127,779 | ) | (1,121,616 | ) | (4,785,821 | ) | (6,235,275 | ) | ||||||||
| Gross margin | 480,340 | 485,907 | 2,064,447 | 2,505,072 | ||||||||||||
| Store operating, general and administrative expense | (483,360 | ) | (541,802 | ) | (2,074,522 | ) | (2,825,730 | ) | ||||||||
| (Loss) income from operations | (3,020 | ) | (55,895 | ) | (10,075 | ) | (320,658 | ) | ||||||||
| (Loss) gain on sale of Canadian operations | (409 | ) | (339 | ) | (1,299 | ) | 912,129 | |||||||||
| Interest expense | (17,593 | ) | (15,465 | ) | (73,814 | ) | (92,248 | ) | ||||||||
| Interest income | 1,141 | 4,311 | 9,613 | 13,457 | ||||||||||||
| Minority interest in earnings of consolidated franchisees | — | — | — | (1,131 | ) | |||||||||||
| Equity in earnings of Metro, Inc. | 9,163 | 4,404 | 40,003 | 7,801 | ||||||||||||
| (Loss) income from continuing operations before income taxes | (10,718 | ) | (62,984 | ) | (35,572 | ) | 519,350 | |||||||||
| Benefit from (provision for) income taxes | 3,504 | 23,958 | 62,088 | (128,927 | ) | |||||||||||
| (Loss) income from continuing operations | (7,214 | ) | (39,026 | ) | 26,516 | 390,423 | ||||||||||
| Discontinued operations: | ||||||||||||||||
| (Loss) income from operations of discontinued businesses, net of tax | 20 | (78 | ) | 377 | 1,626 | |||||||||||
| Gain (loss) on disposal of discontinued operations, net of tax | — | 4 | — | 581 | ||||||||||||
| (Loss) income from discontinued operations | 20 | (74 | ) | 377 | 2,207 | |||||||||||
| Net (loss) income | $ | (7,194 | ) | $ | (39,100 | ) | $ | 26,893 | $ | 392,630 | ||||||
| Net (loss) income per share — basic: | ||||||||||||||||
| Continuing operations | $ | (0.17 | ) | $ | (0.95 | ) | $ | 0.64 | $ | 9.69 | ||||||
| Discontinued operations | 0.00 | (0.00 | ) | 0.01 | 0.05 | |||||||||||
| Net (loss) income per share — basic | $ | (0.17 | ) | $ | (0.95 | ) | $ | 0.65 | $ | 9.74 | ||||||
| Net (loss) income per share — diluted: | ||||||||||||||||
| Continuing operations | $ | (0.17 | ) | $ | (0.95 | ) | $ | 0.63 | $ | 9.59 | ||||||
| Discontinued operations | 0.00 | (0.00 | ) | 0.01 | 0.05 | |||||||||||
| Net (loss) income per share — diluted | $ | (0.17 | ) | $ | (0.95 | ) | $ | 0.64 | $ | 9.64 | ||||||
| Weighted average common shares outstanding — basic | 41,521,449 | 41,042,838 | 41,430,600 | 40,301,132 | ||||||||||||
| Weighted average common shares outstanding — diluted | 41,521,449 | 41,042,838 | 41,902,358 | 40,725,942 | ||||||||||||
| Gross margin rate | 29.87 | % | 30.23 | % | 30.14 | % | 28.67 | % | ||||||||
| Store operating, general and administrative expense rate | 30.06 | % | 33.70 | % | 30.28 | % | 32.33 | % | ||||||||
| United States depreciation and amortization | $ | 41,979 | $ | 43,287 | $ | 177,754 | $ | 196,387 | ||||||||
| Canada depreciation and amortization | — | — | — | 10,942 | ||||||||||||
| Total A&P depreciation and amortization | $ | 41,979 | $ | 43,287 | $ | 177,754 | $ | 207,329 | ||||||||
| Number of stores operated at end of quarter | 406 | 405 | 406 | 405 | ||||||||||||
The Great Atlantic & Pacific Tea Company, Inc.
Schedule 2 — Condensed Balance Sheet Data
(Unaudited)
(In millions, except per share and store data)
Schedule 2 — Condensed Balance Sheet Data
(Unaudited)
(In millions, except per share and store data)
| February 24, 2007 | February 25, 2006 | |||||||
| Cash and short-term investments | $ | 86 | $ | 230 | ||||
| Other current assets | 663 | 980 | ||||||
| Total current assets | 749 | 1,210 | ||||||
| Property-net | 919 | 898 | ||||||
| Equity investment in Metro, Inc. | 369 | 339 | ||||||
| Other assets | 75 | 52 | ||||||
| Total assets | $ | 2,112 | $ | 2,499 | ||||
| Total current liabilities | $ | 558 | $ | 610 | ||||
| Total non-current liabilities | 1,123 | 1,217 | ||||||
| Stockholders’ equity | 431 | 672 | ||||||
| Total liabilities and stockholders’ equity | $ | 2,112 | $ | 2,499 | ||||
| Other Statistical Data | ||||||||
| Total Debt and Capital Leases | $ | 348 | $ | 282 | ||||
| Total Long Term Real Estate Liabilities | 301 | 297 | ||||||
| Restricted Cash, Temporary Investments and Marketable Securities | (77 | ) | (465 | ) | ||||
| Net Debt | $ | 572 | $ | 114 | ||||
| Total Retail Square Footage (in thousands) | 16,538 | 16,509 | ||||||
| Book Value Per Share | $ | 10.36 | $ | 16.32 | ||||
| For the 52 | For the 52 | |||||||
| weeks ended | weeks ended | |||||||
| February 24, 2007 | February 25, 2006 | |||||||
| Capital Expenditures | $ | 208 | $ | 191 | ||||
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 52 weeks ended February 24, 2007 and February 25, 2006
(Unaudited)
(In thousands, except share amounts and store data)
Schedule 3 — Reconciliation of GAAP (Loss) Income from Operations to Adjusted (Loss) Income from Operations
for the 12 and 52 weeks ended February 24, 2007 and February 25, 2006
(Unaudited)
(In thousands, except share amounts and store data)
| 12 Weeks Ended | 52 Weeks Ended | |||||||||||||||
| February 24, | February 25, | February 24, | February 25, | |||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| As reported (loss) income from operations | $ | (3,020 | ) | $ | (55,895 | ) | $ | (10,075 | ) | $ | (320,658 | ) | ||||
| Adjustments: | ||||||||||||||||
| Midwest exit costs | — | 10,375 | 77 | 115,271 | ||||||||||||
| Net restructuring costs | 2,371 | 29,241 | 5,616 | 118,648 | ||||||||||||
| Labor buyout costs | 60 | — | 4,534 | — | ||||||||||||
| Long-lived asset impairment | — | — | — | 17,728 | ||||||||||||
| Early extinguishment of debt and write-off of deferred financing fees | — | — | — | 33,031 | ||||||||||||
| Impact of Hurricane Katrina | (4,832 | ) | 867 | (9,180 | ) | 19,034 | ||||||||||
| Workers compensation state assessment charges | — | 9,689 | — | 9,689 | ||||||||||||
| Real estate related activity | (2,161 | ) | 7,410 | (17,423 | ) | (14,863 | ) | |||||||||
| Visa / Mastercard lawsuit settlement | — | — | — | (1,547 | ) | |||||||||||
| Canadian dollar hedge | — | — | — | 15,446 | ||||||||||||
| Canada income from operations | — | — | — | (57,224 | ) | |||||||||||
| Total adjustments | (4,562 | ) | 57,582 | (16,376 | ) | 255,213 | ||||||||||
| Adjusted United States income (loss) from operations | $ | (7,582 | ) | $ | 1,687 | $ | (26,451 | ) | $ | (65,445 | ) | |||||
| As reported United States depreciation and amortization | $ | 41,979 | $ | 43,287 | $ | 177,754 | $ | 196,387 | ||||||||
| Adjustments: | ||||||||||||||||
| Accelerated depreciation on leasehold improvements | — | (4,250 | ) | — | (4,250 | ) | ||||||||||
| Adjusted United States depreciation and amortization | $ | 41,979 | $ | 39,037 | $ | 177,754 | $ | 192,137 | ||||||||
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 52 weeks ended February 24, 2007 and February 25, 2006
(Unaudited)
(In thousands, except share amounts and store data)
Schedule 4 — Reconciliation of GAAP Net Cash (Used In) Provided By Operating Activities to Adjusted EBITDA
for the 12 and 52 weeks ended February 24, 2007 and February 25, 2006
(Unaudited)
(In thousands, except share amounts and store data)
| 12 Weeks Ended | 52 Weeks Ended | |||||||||||||||
| February 24, | February 25, | February 24, | February 25, | |||||||||||||
| 2007 | 2006 | 2007 | 2006 | |||||||||||||
| Net cash provided by (used in) operating activities | $ | 79,586 | $ | 81,455 | $ | 36,722 | $ | (76,007 | ) | |||||||
| Adjustments to calculate EBITDA: | ||||||||||||||||
| Net interest expense | 16,452 | 11,154 | 64,201 | 78,791 | ||||||||||||
| Asset disposition initiatives | 1,423 | (22,014 | ) | (2,296 | ) | (185,122 | ) | |||||||||
| Long lived asset impairment charges | (1,258 | ) | (5,067 | ) | (4,668 | ) | (34,175 | ) | ||||||||
| Loss on extinguishment of debt | — | — | — | (28,623 | ) | |||||||||||
| Loss on derivatives | — | — | — | (15,446 | ) | |||||||||||
| Gain (loss) on disposal of owned property | 4,897 | (1,049 | ) | 28,135 | 24,787 | |||||||||||
| (Benefit from) provision for income taxes | (3,504 | ) | (23,958 | ) | (62,088 | ) | 128,927 | |||||||||
| Decrease (increase) in income tax reserve | 4,890 | 21,564 | 66,435 | (98,079 | ) | |||||||||||
| Other share based awards | (1,482 | ) | (2,008 | ) | (8,134 | ) | (8,978 | ) | ||||||||
| Proceeds from dividends from Metro, Inc. | (1,791 | ) | (1,647 | ) | (6,858 | ) | (4,708 | ) | ||||||||
| Working capital changes | ||||||||||||||||
| Accounts receivable | (12,961 | ) | 30,360 | (62,741 | ) | 56,130 | ||||||||||
| Inventories | (31,137 | ) | (76,089 | ) | 1,264 | (109,521 | ) | |||||||||
| Prepaid expenses and other current assets | (19,548 | ) | (16,475 | ) | (3,062 | ) | (585 | ) | ||||||||
| Accounts payable | 8,978 | 11,625 | 19,199 | 101,342 | ||||||||||||
| Accrued salaries, wages, benefits and taxes | (21,306 | ) | (4,738 | ) | 9,202 | 31,414 | ||||||||||
| Other accruals | 4,332 | (40,373 | ) | 61,395 | (48,931 | ) | ||||||||||
| Other assets | (5,941 | ) | 7,300 | (3,044 | ) | 7,344 | ||||||||||
| Other non-current liabilities | 17,260 | 16,588 | 37,641 | 76,309 | ||||||||||||
| Other, net | 69 | 764 | (3,624 | ) | (8,198 | ) | ||||||||||
| Total A&P EBITDA | 38,959 | (12,608 | ) | 167,679 | (113,329 | ) | ||||||||||
| Adjustments: | ||||||||||||||||
| Midwest exit costs | — | 10,375 | 77 | 115,271 | ||||||||||||
| Net restructuring costs | 2,371 | 24,991 | 5,616 | 114,398 | ||||||||||||
| Labor buyout costs | 60 | — | 4,534 | — | ||||||||||||
| Long-lived asset impairment | — | — | — | 17,728 | ||||||||||||
| Early extinguishment of debt and write-off of deferred financing fees | — | — | — | 33,031 | ||||||||||||
| Impact of Hurricane Katrina | (4,832 | ) | 867 | (9,180 | ) | 19,034 | ||||||||||
| Workers compensation state assessment charges | — | 9,689 | — | 9,689 | ||||||||||||
| Real estate related activity | (2,161 | ) | 7,410 | (17,423 | ) | (14,863 | ) | |||||||||
| Visa / Mastercard lawsuit settlement | — | — | — | (1,547 | ) | |||||||||||
| Canadian dollar hedge | — | — | — | 15,446 | ||||||||||||
| Canada EBITDA | — | — | — | (68,166 | ) | |||||||||||
| Total adjustments | (4,562 | ) | 53,332 | (16,376 | ) | 240,021 | ||||||||||
| Adjusted United States ongoing operating EBITDA | $ | 34,397 | $ | 40,724 | $ | 151,303 | $ | 126,692 | ||||||||