Exhibit 99.1
News
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 million 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 continue to look at ways to improve 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 11:30 AM Eastern Time today, at which members of the Company’s senior management team will discuss the Company’s 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.
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| 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, | September 6, | September 12, | September 6, | ||||||||||||||
| 2009 | 2008 (2) | 2009 | 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 | (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 | ) | |||||
| 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 Series 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 | 0 | ||||
| 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 | 18,386 | ||||
| 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, | September 6, | September 12, | September 6, | ||||||||||||||
| 2009 | 2008 (1) | 2009 | 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. | |||||||||||||||||