Exhibit 99.1
Investor contact:
Krystyna Lack
Vice President, Treasury Services
(201) 571-4320
Press contact:
Eric C. Andrus or Scot Hoffman
Robinson Lerer & Montgomery
(201) 571-4453
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. ANNOUNCES
THIRD QUARTER 2010 RESULTS
Results In Line With Expectations
Recent Sales Trends Improved
Stores Open and In-Stock
No Current Significant Vendor/Supplier Issues
MONTVALE, N.J. — January 13, 2011 — The Great Atlantic & Pacific Tea Company (A&P, Other OTC: GAPTQ) today announced fiscal 2010 third quarter results, and provided an update on its comprehensive financial and operational restructuring, which is designed to restore the Company to long-term financial health.
Third Quarter 2010 Financial Results
· Sales for the third quarter were $1.8 billion versus $2.0 billion in last fiscal year’s third quarter. Comparable store sales decreased 4.9 percent.
· For the third quarter, reported loss from continuing operations was $181 million versus last year’s third quarter reported loss from continuing operations of $502 million.
· EBITDA was negative $94 million for the third quarter versus negative $413 million for the last fiscal year’s third quarter.
· Excluding certain non-cash and non-operating items (detailed on Schedule 3), net adjusted EBITDA was $20 million versus $44 million for last fiscal year’s third quarter.
· The Company has access to $800 million in Debtor-in-Possession (DIP) financing, which enables it to continue paying local suppliers, vendors, employees and others in the ordinary course of business.
Sam Martin, President and Chief Executive Officer, said, “We saw modest improvement in certain of our third quarter financial results due to the steps we’ve taken to implement our turnaround plan and the continued dedication of our talented Associates. Chapter 11 will allow us to restructure our debt, reduce our structural costs, and address our legacy issues. With access to a significant amount of liquidity, we are making strategic decisions that will enable us to complete our turnaround and emerge with a new capital structure and an enhanced ability to provide value to our customers.”
Turnaround Plan
As announced on December 12, 2010, the Company filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. On December 13, 2010, the Bankruptcy Court granted the Company’s motions seeking approval of various “first day orders” on an interim basis, with such orders becoming final on January 10, 2011. The relief granted in these orders ensures that the Company has the ability to operate during the Chapter 11 cases. In this regard, the Bankruptcy Court approved the Company’s $800 million DIP financing facility provided by JPMorgan Chase & Co. Of the total DIP facility, a $350 million term loan was immediately funded. On January 10, 2011, the Court granted final approval of the entire DIP facility, providing the Company with access to the remaining $450 million of the $800 million DIP facility.
With the protection of the Bankruptcy Code and a new management team in place, the Company continues to implement and accelerate the basic elements of the turnaround plan announced last October, including:
· Reducing structural and operating costs;
· Improving the A&P value proposition for customers; and
· Enhancing the customer experience in stores.
Mr. Martin continued, “With our restructuring underway, our stores have operated normally with fully stocked shelves and the excellent service our customers expect. I’m pleased that our Associates have continued to deliver great value and service to our customers every day, especially during the busy holiday period and with the additional challenge posed by last month’s blizzard.”
About A&P
Founded in 1859, A&P is one of the nation’s first supermarket chains. The Company operates 395 stores in eight states and the District of Columbia under the following names: A&P, Waldbaum’s, Pathmark, Best Cellars, The Food Emporium, Super Fresh and Food Basics.
We are required to provide certain reconciliations to GAAP financial measures for any non-GAAP financial measures presented in our press releases and SEC filings. The Company uses the non-GAAP measures “Adjusted loss from operations”, “EBITDA” and “Adjusted EBITDA” to evaluate the 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 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 and discontinued operations. Adjusted EBITDA is defined as EBITDA adjusted to exclude the following, if applicable: (i) Goodwill, trademark, and long-lived asset impairment, (ii) net restructuring and other charges, (iii) real estate related activity, (iii) stock-based compensation, (iv) pension withdrawal costs, (v) LIFO provision adjustments, (vi) nonoperating (loss) income and (vii) other items that management considers nonoperating in nature and 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 loss from o perations and Adjusted EBITDA are reconciled to Net Loss on Schedule 3 of this release. In addition, EBITDA and Adjusted EBITDA are 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: the ability to timely and effectively implement the turnaround strategy; the ability to access capital and capitalize on unencumbered and under-encumbered assets; the ability to enter into sale-leaseback transactions or sell non-core assets; 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; certain actions may require Bankruptcy Court approval; the risk that the bankruptcy filing and the related cases disrupt the Company’s current plans and operations; the costs and other effects of legal and administrative cases and proceedings; the nature and extent of continued consolidation in the food industry; capital market conditions that may negatively affect the Company’s cost of capital and the ability of the Company to access capital; availability of capital to the Company; supply or quality control problems with the Company’s vendors; and changes in economic conditions that 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 40 weeks ended December 4, 2010 and December 5, 2009
(Unaudited)
(In thousands, except share amounts and store data)
|
| For the 12 Weeks Ended |
| For the 40 Weeks Ended |
| ||||||||
|
| December 4, 2010 |
| December 5, 2009 |
| December 4, 2010 |
| December 5, 2009 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Sales |
| $ | 1,793,805 |
| $ | 1,962,692 |
| $ | 6,277,014 |
| $ | 6,817,996 |
|
Cost of merchandise sold |
| (1,259,568 | ) | (1,372,108 | ) | (4,416,258 | ) | (4,759,185 | ) | ||||
Gross margin |
| 534,237 |
| 590,584 |
| 1,860,756 |
| 2,058,811 |
| ||||
Store operating, general and administrative expense |
| (635,586 | ) | (631,175 | ) | (2,087,826 | ) | (2,109,804 | ) | ||||
Goodwill, trademark and long-lived asset impairment |
| (42,036 | ) | (412,560 | ) | (77,684 | ) | (412,560 | ) | ||||
Loss from operations |
| (143,385 | ) | (453,151 | ) | (304,754 | ) | (463,553 | ) | ||||
Nonoperating (loss) income (1) |
| (213 | ) | (15,944 | ) | 10,241 |
| (24,898 | ) | ||||
Interest expense, net |
| (40,038 | ) | (45,718 | ) | (147,306 | ) | (148,433 | ) | ||||
Loss from continuing operations before income taxes |
| (183,636 | ) | (514,813 | ) | (441,819 | ) | (636,884 | ) | ||||
Benefit from income taxes |
| 2,953 |
| 12,375 |
| 2,708 |
| 13,983 |
| ||||
Loss from continuing operations |
| (180,683 | ) | (502,438 | ) | (439,111 | ) | (622,901 | ) | ||||
Discontinued operations: |
|
|
|
|
|
|
|
|
| ||||
Loss from operations of discontinued businesses, net of tax |
| (18,687 | ) | (57,148 | ) | (36,655 | ) | (82,154 | ) | ||||
Gain on disposal of discontinued businesses, net of tax |
| — |
| — |
| 79 |
| — |
| ||||
Loss from discontinued operations |
| (18,687 | ) | (57,148 | ) | (36,576 | ) | (82,154 | ) | ||||
Net loss |
| $ | (199,370 | ) | $ | (559,586 | ) | $ | (475,687 | ) | $ | (705,055 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Net Loss per share - basic: |
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| $ | (3.44 | ) | $ | (9.43 | ) | $ | (8.45 | ) | $ | (11.76 | ) |
Discontinued operations |
| (0.34 | ) | (1.07 | ) | (0.68 | ) | (1.55 | ) | ||||
Net loss per share - basic |
| $ | (3.78 | ) | $ | (10.50 | ) | $ | (9.13 | ) | $ | (13.31 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Net loss per share - diluted: |
|
|
|
|
|
|
|
|
| ||||
Continuing operations |
| $ | (3.44 | ) | $ | (12.85 | ) | $ | (32.09 | ) | $ | (22.36 | ) |
Discontinued operations |
| (0.34 | ) | (1.50 | ) | (2.53 | ) | (3.06 | ) | ||||
Net loss per share - diluted |
| $ | (3.78 | ) | $ | (14.35 | ) | $ | (34.62 | ) | $ | (25.42 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Weighted average common shares outstanding - basic |
| 53,852,470 |
| 53,420,248 |
| 53,688,540 |
| 53,139,840 |
| ||||
Weighted average common shares outstanding - diluted |
| 53,852,470 |
| 37,993,212 |
| 14,448,398 |
| 26,844,195 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Gross margin rate |
| 29.78 | % | 30.09 | % | 29.64 | % | 30.20 | % | ||||
Store operating, general and administrative expense rate |
| 35.43 | % | 32.16 | % | 33.26 | % | 30.94 | % | ||||
|
|
|
|
|
|
|
|
|
| ||||
Depreciation and amortization |
| $ | 49,945 |
| $ | 55,813 |
| $ | 171,841 |
| $ | 191,385 |
|
|
|
|
|
|
|
|
|
|
| ||||
Number of stores operated at end of period |
| 395 |
| 433 |
| 395 |
| 433 |
| ||||
(1) Nonoperating income (loss) 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 4, 2010 |
| February 27, 2010 |
| ||
|
|
|
|
|
| ||
Cash and short-term investments |
| $ | 92 |
| $ | 252 |
|
|
|
|
|
|
| ||
Other current assets |
| 651 |
| 679 |
| ||
|
|
|
|
|
| ||
Total current assets |
| 743 |
| 931 |
| ||
|
|
|
|
|
| ||
Property-net |
| 1,305 |
| 1,488 |
| ||
|
|
|
|
|
| ||
Other assets |
| 376 |
| 408 |
| ||
|
|
|
|
|
| ||
Total assets |
| $ | 2,424 |
| $ | 2,827 |
|
|
|
|
|
|
| ||
Total current liabilities |
| $ | 901 |
| $ | 730 |
|
|
|
|
|
|
| ||
Total non-current liabilities |
| 2,404 |
| 2,493 |
| ||
|
|
|
|
|
| ||
Series A redeemable preferred stock |
| 138 |
| 133 |
| ||
|
|
|
|
|
| ||
Stockholders’ deficit |
| (1,019 | ) | (529 | ) | ||
|
|
|
|
|
| ||
Total liabilities and stockholders’ deficit |
| $ | 2,424 |
| $ | 2,827 |
|
|
|
|
|
|
| ||
Other Statistical Data |
|
|
|
|
| ||
|
|
|
|
|
| ||
Total Debt and Capital Leases |
| $ | 1,127 |
| $ | 1,141 |
|
Total Real Estate Liabilities |
| 420 |
| 334 |
| ||
Temporary Investments and Marketable Securities |
| — |
| (169 | ) | ||
Net Debt |
| $ | 1,547 |
| $ | 1,306 |
|
|
|
|
|
|
| ||
Total Retail Square Footage (in thousands) |
| 16,519 |
| 18,107 |
| ||
|
|
|
|
|
| ||
Book Value Per Share |
| $ | (18.11 | ) | $ | (9.47 | ) |
|
|
|
|
|
| ||
|
| For the 40 |
| For the 40 |
| ||
|
| weeks ended |
| weeks ended |
| ||
|
| December 4, 2010 |
| December 5, 2009 |
| ||
|
|
|
|
|
| ||
Capital Expenditures |
| $ | 63 |
| $ | 72 |
|
The Great Atlantic & Pacific Tea Company, Inc.
Schedule 3 - Reconciliation of GAAP Net Loss to Adjusted (Loss) Income from Operations and Adjusted EBITDA
and Reconciliation of GAAP to Adjusted Store Operating, General and Administrative Expense
for the 12 and 40 weeks ended December 4, 2010 and December 5, 2009
(Unaudited)
(In thousands)
|
| For the 12 Weeks Ended |
| For the 40 Weeks Ended |
| ||||||||
|
| December 4, 2010 |
| December 5, 2009 |
| December 4, 2010 |
| December 5, 2009 |
| ||||
Net loss, as reported |
| $ | (199,370 | ) | $ | (559,586 | ) | $ | (475,687 | ) | $ | (705,055 | ) |
Loss from discontinued operations |
| 18,687 |
| 57,148 |
| 36,576 |
| 82,154 |
| ||||
Benefit from income taxes |
| (2,953 | ) | (12,375 | ) | (2,708 | ) | (13,983 | ) | ||||
Interest expense, net |
| 40,038 |
| 45,718 |
| 147,306 |
| 148,433 |
| ||||
Nonoperating loss (income) |
| 213 |
| 15,944 |
| (10,241 | ) | 24,898 |
| ||||
As reported loss from operations |
| $ | (143,385 | ) | $ | (453,151 | ) | $ | (304,754 | ) | $ | (463,553 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
Goodwill, trademark and long-lived asset impairment |
| 42,036 |
| 412,560 |
| 77,684 |
| 412,560 |
| ||||
Net restructuring and other |
| 11,682 |
| 1,243 |
| 24,914 |
| 4,140 |
| ||||
Real estate related activity |
| 48,115 |
| 20,584 |
| 47,881 |
| 29,812 |
| ||||
Pension withdrawal costs |
| — |
| — |
| — |
| 2,445 |
| ||||
Self insurance reserve |
| — |
| — |
| 16,152 |
| — |
| ||||
Stock-based compensation |
| 1,347 |
| 640 |
| 1,246 |
| 4,683 |
| ||||
LIFO adjustment |
| 642 |
| (981 | ) | 2,139 |
| 1,185 |
| ||||
Total adjustments |
| 103,822 |
| 434,046 |
| 170,016 |
| 454,825 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Adjusted loss from operations |
| $ | (39,563 | ) | $ | (19,105 | ) | $ | (134,738 | ) | $ | (8,728 | ) |
Depreciation and amortization |
| 49,945 |
| 55,813 |
| 171,841 |
| 191,385 |
| ||||
Adjusted EBITDA |
| 10,382 |
| 36,708 |
| 37,103 |
| 182,657 |
| ||||
Effect of closed stores |
| 10,081 |
| 6,856 |
| 28,076 |
| 17,550 |
| ||||
Net adjusted EBITDA |
| $ | 20,463 |
| $ | 43,564 |
| $ | 65,179 |
| $ | 200,207 |
|
|
| For the 12 Weeks Ended |
| For the 40 Weeks Ended |
| ||||||||
|
| December 4, 2010 |
| December 5, 2009 |
| December 4, 2010 |
| December 5, 2009 |
| ||||
Store operating, general and administrative expense, as reported |
| $ | 635,586 |
| $ | 631,175 |
| $ | 2,087,826 |
| $ | 2,109,804 |
|
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
Net restructuring and other |
| (11,682 | ) | (1,243 | ) | (24,914 | ) | (4,140 | ) | ||||
Real estate related activity |
| (48,115 | ) | (20,584 | ) | (47,881 | ) | (29,812 | ) | ||||
Pension withdrawal costs |
| — |
| — |
| — |
| (2,445 | ) | ||||
Self insurance reserve |
| — |
| — |
| (16,152 | ) | — |
| ||||
Stock-based compensation |
| (1,347 | ) | (640 | ) | (1,246 | ) | (4,683 | ) | ||||
Total adjustments |
| $ | (61,144 | ) | $ | (22,467 | ) | $ | (90,193 | ) | $ | (41,080 | ) |
|
|
|
|
|
|
|
|
|
| ||||
Adjusted store operating, general and administrative expense |
| $ | 574,442 |
| $ | 608,708 |
| $ | 1,997,633 |
| $ | 2,068,724 |
|
|
|
|
|
|
|
|
|
|
| ||||
Adjusted store operating, general and administrative expense rate |
| 32.02 | % | 31.01 | % | 31.82 | % | 30.34 | % | ||||
The Great Atlantic & Pacific Tea Company, Inc.
Schedule 4 - Reconciliation of GAAP Net Cash Used in Operating Activities to Adjusted EBITDA
for the 12 and 40 weeks ended December 4, 2010 and December 5, 2009
(Unaudited)
(In thousands)
|
| For the 12 Weeks Ended |
| For the 40 Weeks Ended |
| ||||||||
|
| December 4, 2010 |
| December 5, 2009 |
| December 4, 2010 |
| December 5, 2009 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Net cash used in operating activities |
| $ | (85,841 | ) | $ | (72,235 | ) | $ | (180,264 | ) | $ | (51,009 | ) |
Adjustments to calculate EBITDA: |
|
|
|
|
|
|
|
|
| ||||
Impairment of long-lived and intangible assets |
| (42,036 | ) | (413,987 | ) | (78,828 | ) | (417,726 | ) | ||||
Nonoperating income (loss) |
| (213 | ) | (15,944 | ) | 10,241 |
| (24,898 | ) | ||||
Net interest expense |
| 40,038 |
| 45,718 |
| 147,306 |
| 148,433 |
| ||||
Non-cash interest expense |
| (4,400 | ) | (7,708 | ) | (27,658 | ) | (35,101 | ) | ||||
Asset disposition initiatives |
| 121 |
| (48,767 | ) | 117 |
| (57,765 | ) | ||||
Occupancy charges for normal store closures |
| (6,558 | ) | (20,215 | ) | (7,024 | ) | (38,589 | ) | ||||
Gain (loss) on disposal of owned property |
| 2,224 |
| (2,352 | ) | 4,031 |
| 1,228 |
| ||||
Amortization of deferred real estate income |
| 1,022 |
| 1,103 |
| 3,434 |
| 3,938 |
| ||||
Loss from operations of discontinued operations |
| 18,687 |
| 57,148 |
| 36,655 |
| 82,154 |
| ||||
Benefit from income taxes |
| (2,953 | ) | (12,375 | ) | (2,708 | ) | (13,983 | ) | ||||
Deferred income tax benefit |
| 3,058 |
| 12,013 |
| 3,058 |
| 12,013 |
| ||||
Pension withdrawal costs |
| — |
| — |
| — |
| (2,445 | ) | ||||
Self insurance reserve |
| (929 | ) | — |
| (22,590 | ) | (1,613 | ) | ||||
Employee benefit related costs |
| (7,015 | ) | (4,290 | ) | (13,728 | ) | (4,290 | ) | ||||
LIFO reserve |
| (642 | ) | 981 |
| (2,139 | ) | (1,185 | ) | ||||
Stock compensation expense |
| (1,347 | ) | (640 | ) | (1,246 | ) | (4,683 | ) | ||||
Working capital changes |
|
|
|
|
|
|
|
|
| ||||
Accounts receivable |
| (269 | ) | 3,508 |
| (17,803 | ) | (17,946 | ) | ||||
Inventories |
| (17,676 | ) | 2,621 |
| (10,467 | ) | 19,857 |
| ||||
Prepaid expenses and other current assets |
| 5,408 |
| 7,889 |
| 12,968 |
| 32,943 |
| ||||
Accounts payable |
| 42,520 |
| 36,376 |
| 29,201 |
| (23,771 | ) | ||||
Accrued salaries, wages, benefits and taxes |
| 31,285 |
| 29,605 |
| 28,977 |
| 41,703 |
| ||||
Other accruals |
| (36,235 | ) | (24,857 | ) | (44,128 | ) | (16,145 | ) | ||||
Other assets |
| 7,404 |
| (2,382 | ) | 10,203 |
| 5,512 |
| ||||
Other non-current liabilities |
| (40,228 | ) | 14,861 |
| (1,300 | ) | 62,705 |
| ||||
Other, net |
| 922 |
| 647 |
| 1,020 |
| 194 |
| ||||
EBITDA |
| (93,653 | ) | (413,282 | ) | (122,672 | ) | (297,066 | ) | ||||
|
|
|
|
|
|
|
|
|
| ||||
Adjustments: |
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Goodwill, trademark and long-lived assets impairment |
| 42,036 |
| 412,560 |
| 77,684 |
| 412,560 |
| ||||
Net restructuring and other |
| 11,682 |
| 1,243 |
| 24,914 |
| 4,140 |
| ||||
Real estate related activity |
| 48,115 |
| 20,584 |
| 47,881 |
| 29,812 |
| ||||
Pension withdrawal costs |
| — |
| — |
| — |
| 2,445 |
| ||||
Self insurance reserve |
| — |
| — |
| 16,152 |
| — |
| ||||
Stock-based compensation |
| 1,347 |
| 640 |
| 1,246 |
| 4,683 |
| ||||
LIFO adjustment |
| 642 |
| (981 | ) | 2,139 |
| 1,185 |
| ||||
Nonoperating loss (income) |
| 213 |
| 15,944 |
| (10,241 | ) | 24,898 |
| ||||
Total adjustments |
| 104,035 |
| 449,990 |
| 159,775 |
| 479,723 |
| ||||
Adjusted EBITDA |
| $ | 10,382 |
| $ | 36,708 |
| $ | 37,103 |
| $ | 182,657 |
|
Effect of closed stores |
| 10,081 |
| 6,856 |
| 28,076 |
| 17,550 |
| ||||
|
| $ | 20,463 |
| $ | 43,564 |
| $ | 65,179 |
| $ | 200,207 |
|