News
The Great Atlantic & Pacific Tea Company, Inc.
2 Paragon Drive
Montvale, NJ 07645
For financial questions, call William Moss
Vice President, Treasurer
(201) 571-4019
For non-financial questions, call Richard De Santa
Vice President, Corporate Affairs (201) 571-4495
THE GREAT ATLANTIC & PACIFIC TEA COMPANY INC. ANNOUNCES
RESULTS FOR 2002 FOURTH QUARTER AND FULL YEAR
Company reports loss of $.54 per share for the fourth quarter 2002
MONTVALE, NJ — April 25, 2003 — The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol:GAP) announced unaudited fiscal 2002 fourth quarter and annual results for the 12 and 52 weeks ended February 22, 2003.
Sales for the fourth quarter were $2.52 billion, compared with $2.51 billion in the fourth quarter of fiscal 2001. Comparable store sales increased .5%. Earnings per share were a loss of $.54 for the quarter, compared with a profit of $.52 in the prior year.
During the fourth quarter of fiscal 2002, the Company recorded an extraordinary gain of $12.9 million or $.34 per share for the repurchase of $57.5 million of its Notes. The Company also recorded an adjustment to its restructuring reserves, improving earnings by $3.3 million after-tax or $.09 per share. Excluding these adjustments, ongoing operating loss per share in the quarter was $.97 compared with ongoing operating earnings of $.23 per share for fourth quarter last year. Ongoing operating earnings for the fourth quarters of fiscal years 2002 and 2001 are reconciled to reported earnings on Schedules 2 and 4 of this release.
For the full year, sales were $10.79 billion, compared with $10.97 billion in fiscal 2001. Comparable store sales increased .4%. Earnings per share were a loss of $5.03 for fiscal year 2002, compared with a loss of $1.88 in the prior year.
Excluding certain non-operating items, ongoing operating loss for the 52 weeks of fiscal 2002 was $2.15 per share compared with ongoing operating earnings of $.32 per share for
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fiscal 2001. Ongoing operating earnings for fiscal years 2002 and 2001 are reconciled to reported earnings on Schedules 3 and 5 of this release.
EBITDA for the fourth quarter of fiscal 2002, based on ongoing operating earnings as shown on Schedule 4 of this release, was $50 million compared to $91 million in the prior year’s fourth quarter. EBITDA for fiscal year 2002, based on ongoing operating earnings as shown on Schedule 5 of this release, was $263 million compared to $372 million for fiscal year 2001.
Christian Haub, Chairman of the Board, President & Chief Executive Officer, said, “We have taken decisive action to halt the decline of our overall results, and to ensure the Company’s on-going financial health. We restructured our organization, reduced costs, commenced the sale of non-strategic assets to lower our debt, and secured financing necessary to meet our needs going forward. We believe that our management changes and these actions have begun to stabilize our business in the U.S. I remain confident that we will improve our U.S. operations while continuing to drive success in Canada.”
Founded in 1859, A&P was one of the nation’s first supermarket chains, and is today among North America’s largest. In the fourth quarter, the Company opened 5 new stores and remodeled or expanded 7 stores. The Company operates 695 stores in 15 states, the District of Columbia and Ontario, Canada under the following trade names: A&P, Waldbaum’s, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Kohl’s, Sav-A-Center, Dominion, The Barn Markets and Food Basics and Ultra Food & Drug. The Company also manufactures and distributes the Eight O’Clock line of whole bean coffees. The Company invites investors to listen to an audio Webcast of its quarterly discussion of earnings by accessing a link on the “Investor Relations” page of its Website, www.aptea.com. The live broadcast is on Friday, April 25, 2003 at 11 AM Eastern Time, with replays available from the afternoon of April 25 through May 25.
Effective March 28, 2003, the Securities and Exchange Commission 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 “ongoing operating earnings” and “ongoing operating loss” to reflect what the company’s earnings would have been excluding certain identified major items, which we believe are of a non-operating or one-time nature. These items are reconciled to reported earnings on Schedules 2, 3, 4 and 5 of this release. We use the non-GAAP measure “EBITDA” to reflect a measure that we believe is of interest to investors. EBITDA is reconciled to Net Cash provided by Operating Activities on Schedules 4 and 5 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
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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. |
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The Great Atlantic & Pacific Tea Company, Inc.
Schedule 1 — GAAP Earnings for the 12 and 52 weeks ended February 22, 2003 and February 23, 2002
(Unaudited)
(In thousands, except share amounts and store data)
12 Weeks Ended | 52 Weeks Ended | ||||||||||||
February 22, 2003 | February 23, 2002 | February 22, 2003 | February 23, 2002 | ||||||||||
Sales (1) | $ | 2,520,179 | $ | 2,512,043 | $ | 10,794,370 | $ | 10,973,315 | |||||
Cost of merchandise sold (2) | (1,813,402 | ) | (1,796,099 | ) | (7,738,337 | ) | (7,822,649 | ) | |||||
Gross margin | 706,777 | 715,944 | 3,056,033 | 3,150,666 | |||||||||
Store operating, general and administrative expense (2) (3) | (716,522 | ) | (710,691 | ) | (3,048,775 | ) | (3,234,796 | ) | |||||
Gain on proceeds from the demutualization of a mutual insurance company (3) | — | 60,606 | — | 60,606 | |||||||||
(Loss) income from operations | (9,745 | ) | 65,859 | 7,258 | (23,524 | ) | |||||||
Interest expense | (18,471 | ) | (19,753 | ) | (84,679 | ) | (91,722 | ) | |||||
Interest income | 1,602 | 1,788 | 7,897 | 6,972 | |||||||||
(Loss) income before income taxes and extraordinary item (2) | (26,614 | ) | 47,894 | (69,524 | ) | (108,274 | ) | ||||||
(Provision for) benefit from income taxes (2) (4) (6) | (7,219 | ) | (20,230 | ) | (136,166 | ) | 43,590 | ||||||
Net (loss) income before extraordinary item (2) | (33,833 | ) | 27,664 | (205,690 | ) | (64,684 | ) | ||||||
Extraordinary gain (loss) on early extinguishment of debt (5) | 12,865 | (7,222 | ) | 12,181 | (7,222 | ) | |||||||
Net (loss) income | $ | (20,968 | ) | $ | 20,442 | $ | (193,509 | ) | $ | (71,906 | ) | ||
Net (loss) income per share — basic: (2) | |||||||||||||
(Loss) income before extraordinary item | $ | (0.88 | ) | $ | 0.72 | $ | (5.34 | ) | $ | (1.69 | ) | ||
Extraordinary gain (loss) on early extinguishment of debt | 0.34 | (0.19 | ) | 0.31 | (0.19 | ) | |||||||
Net (loss) income per share — basic | $ | (0.54 | ) | $ | 0.53 | $ | (5.03 | ) | $ | (1.88 | ) | ||
Net (loss) income per share — diluted: (2) | |||||||||||||
(Loss) income before extraordinary item | $ | (0.88 | ) | $ | 0.70 | $ | (5.34 | ) | $ | (1.69 | ) | ||
Extraordinary gain (loss) on early extinguishment of debt | 0.34 | (0.18 | ) | 0.31 | (0.19 | ) | |||||||
Net (loss) income per share — diluted | $ | (0.54 | ) | $ | 0.52 | $ | (5.03 | ) | $ | (1.88 | ) | ||
Weighted average common shares outstanding: | |||||||||||||
Basic | 38,515,806 | 38,361,941 | 38,494,812 | 38,350,616 | |||||||||
Diluted | 38,515,806 | 39,478,296 | 38,494,812 | 38,350,616 | |||||||||
Gross margin rate | 28.04% | 28.50% | 28.31% | 28.71% | |||||||||
Store operating, general and administrative expense rate | 28.43% | 28.29% | 28.24% | 29.48% | |||||||||
Number of stores operated at end of quarter | 695 | 702 | 695 | 702 | |||||||||
Number of franchised stores served at end of quarter | 65 | 67 | 65 | 67 | |||||||||
(1) | Included in sales for the 12 and 52 weeks ended February 22, 2003 were wholesale sales to franchisees of $166.0 million and $712.5 million, respectively, compared to $158.1 million and $676.5 million, respectively, for the 12 and 52 weeks ended February 23, 2002. |
(2) | Cost of merchandise sold for the 12 week period ended February 23, 2002 and 52 week periods ended February 22, 2003 and February 23, 2002 and store operating, general and administrative expense for the 12 and 52 week periods ended February 22, 2003 and February 23, 2002 include amounts related to the Company’s asset disposition initiatives. These amounts and their impact on income before income taxes and extraordinary item, (provision for) benefit from income taxes, net (loss) income and net (loss) income per share are detailed on Schedules 2 and 3 attached. |
(3) | During the fourth quarter of fiscal 2001, the Company received cash and common stock in the amount of $60.6 million related to the demutualization of a mutual insurance company. As a result of the sale of the remaining shares of stock, the Company recognized a gain of $1.7 million which is included in store operating, general and administrative expense for the 52 week period ended February 22, 2003. |
(4) | During the 52 weeks ended February 23, 2002, the Canadian federal government reduced corporate income tax rates, which benefits the Company’s ongoing net income and cash flow. The Company’s tax provision for the 52 weeks ended February 23, 2002, however, was increased to reflect the reduction in value of its deferred Canadian tax asset resulting from lower rates. This one-time adjustment of the tax asset lowered earnings by $1.2 million ($0.03 per share). |
(5) | During the 52 weeks ended February 22, 2003, the Company purchased in the open market $50.7 million of its 7.75% Notes due April 15, 2007 and $44.5 million of its 9.125% Notes due December 15, 2011. As a result, the Company recognized an extraordinary gain of $12.2 million during the 52 weeks ended February 22, 2003. |
(6) | (Provision for) benefit from income taxes for the 52 week period ended February 22, 2003 includes a charge to record a valuation allowance for the Company’s entire U.S. deferred tax asset as a result of an assessment of the likelihood of future recognition of such deferred tax assets. |
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The Great Atlantic & Pacific Tea Company, Inc.
Schedule 2 — Adjustments to GAAP Earnings for the 12 Weeks Ended February 22, 2003 and February 23, 2002
(Unaudited)
(In thousands, except share amounts and store data)
12 Weeks Ended February 22, 2003 | 12 Weeks Ended February 23, 2002 | |||||||||||||||||||||
Asset disposition initiative | Extraordinary gain on early extinguishment of debt | Total adjustments | Asset disposition initiative | Extraordinary loss on early extinguishment of debt | Gain on proceeds from the demutualization of a mutual insurance company | Total adjustments | ||||||||||||||||
Sales | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||
Cost of merchandise sold | — | — | — | (3,707 | ) | — | — | (3,707 | ) | |||||||||||||
Gross margin | — | — | — | (3,707 | ) | — | — | (3,707 | ) | |||||||||||||
Store operating, general and administrative expense | 3,532 | — | 3,532 | (24,887 | ) | — | — | (24,887 | ) | |||||||||||||
Gain on proceeds from the demutualization of a mutual insurance company | — | — | — | — | — | 60,606 | 60,606 | |||||||||||||||
Income (loss) from operations | 3,532 | — | 3,532 | (28,594 | ) | — | 60,606 | 32,012 | ||||||||||||||
Interest expense | — | — | — | — | — | — | — | |||||||||||||||
Interest income | — | — | — | — | — | — | — | |||||||||||||||
Income (loss) before income taxes and extraordinary items | 3,532 | — | 3,532 | (28,594 | ) | — | 60,606 | 32,012 | ||||||||||||||
(Provision for) benefit from income taxes | (201 | ) | — | (201 | ) | 11,981 | — | (25,455 | ) | (13,474 | ) | |||||||||||
Net income (loss) before extraordinary items | 3,331 | — | 3,331 | (16,613 | ) | — | 35,151 | 18,538 | ||||||||||||||
Extraordinary items: | ||||||||||||||||||||||
Gain on early extinguishment of debt | — | 12,865 | 12,865 | — | — | — | — | |||||||||||||||
Loss on early extinguishment of debt, net of $5,230 tax benefit | — | — | — | — | (7,222 | ) | — | (7,222 | ) | |||||||||||||
Net income (loss) | $ | 3,331 | $ | 12,865 | $ | 16,196 | $ | (16,613 | ) | $ | (7,222 | ) | $ | 35,151 | $ | 11,316 | ||||||
Net income (loss) per share — basic: | ||||||||||||||||||||||
Net income (loss) before extraordinary items | $ | 0.09 | $ | — | $ | 0.09 | $ | (0.43 | ) | $ | — | $ | 0.92 | $ | 0.49 | |||||||
Extraordinary gain (loss) on early extinguishment of debt | — | 0.34 | 0.34 | $ | — | $ | (0.19 | ) | $ | — | $ | (0.19 | ) | |||||||||
Net income (loss) per share — basic | $ | 0.09 | $ | 0.34 | $ | 0.43 | $ | (0.43 | ) | $ | (0.19 | ) | $ | 0.92 | $ | 0.30 | ||||||
Net income (loss) per share — diluted: | ||||||||||||||||||||||
Net income (loss) before extraordinary items | $ | 0.09 | $ | — | $ | 0.09 | $ | (0.42 | ) | $ | — | $ | 0.89 | $ | 0.47 | |||||||
Extraordinary gain (loss) on early extinguishment of debt | — | 0.34 | 0.34 | — | (0.18 | ) | — | (0.18 | ) | |||||||||||||
Net income (loss) per share — diluted | $ | 0.09 | $ | 0.34 | $ | 0.43 | $ | (0.42 | ) | $ | (0.18 | ) | $ | 0.89 | $ | 0.29 | ||||||
Weighted average common shares outstanding: | ||||||||||||||||||||||
Basic | 38,515,806 | 38,515,806 | 38,515,806 | 38,361,941 | 38,361,941 | 38,361,941 | 38,361,941 | |||||||||||||||
Diluted | 38,515,806 | 38,515,806 | 38,515,806 | 39,478,296 | 39,478,296 | 39,478,296 | 39,478,296 | |||||||||||||||
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The Great Atlantic & Pacific Tea Company, Inc.
Schedule 3 — Adjustments to GAAP Earnings for the 52 Weeks Ended February 22, 2003 and February 23, 2002
(Unaudited)
(In thousands, except share amounts and store data)
52 Weeks Ended February 22, 2003 | 52 Weeks Ended February 23, 2002 | |||||||||||||||||||||||||||
Asset disposition initiative | Extraordinary gain on early extinguishment of debt | Deferred Tax Asset Valuation Allowance | Gain on proceeds from the demutalization of a mutual insurance company | Total adjustments | Asset disposition initiative | Extraordinary loss on early extinguishment of debt | Gain on proceeds from the demutualization of a mutual insurance company | Total adjustments | ||||||||||||||||||||
Sales | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Cost of merchandise sold | (1,263 | ) | — | — | — | (1,263 | ) | (3,889 | ) | — | — | (3,889 | ) | |||||||||||||||
Gross margin | (1,263 | ) | — | — | — | (1,263 | ) | (3,889 | ) | — | — | (3,889 | ) | |||||||||||||||
Store operating, general and administrative expense | 7,657 | — | — | 1,717 | 9,374 | (189,579 | ) | — | — | (189,579 | ) | |||||||||||||||||
Gain on proceeds from the demutualization of a mutual insurance company | — | — | — | — | — | — | — | 60,606 | 60,606 | |||||||||||||||||||
Income (loss) from operations | 6,394 | — | — | 1,717 | 8,111 | (193,468 | ) | — | 60,606 | (132,862 | ) | |||||||||||||||||
Interest expense | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Interest income | — | — | — | — | — | — | — | — | — | |||||||||||||||||||
Income (loss) before income taxes and extraordinary item | 6,394 | — | — | 1,717 | 8,111 | (193,468 | ) | — | 60,606 | (132,862 | ) | |||||||||||||||||
Benefit from (provision for) income taxes | 3,199 | — | (133,675 | ) | (721 | ) | (131,197 | ) | 81,200 | — | (25,455 | ) | 55,745 | |||||||||||||||
Net income (loss) before extraordinary item | 9,593 | — | (133,675 | ) | 996 | (123,086 | ) | (112,268 | ) | — | 35,151 | (77,117 | ) | |||||||||||||||
Extraordinary gain (loss) on early extinguishment of debt, net of income tax benefit of $0 and $5,230, respectively | — | 12,468 | — | — | 12,468 | — | (7,222 | ) | — | (7,222 | ) | |||||||||||||||||
Reinstatement of tax benefit on extraordinary loss on early extinguishment of debt recorded in first quarter of fiscal 2002 | — | — | (287 | ) | — | (287 | ) | — | — | — | — | |||||||||||||||||
Net income (loss) | $ | 9,593 | $ | 12,468 | $ | (133,962 | ) | $ | 996 | $ | (110,905 | ) | $ | (112,268 | ) | $ | (7,222 | ) | $ | 35,151 | $ | (84,339 | ) | |||||
Net income (loss) per share — basic: | ||||||||||||||||||||||||||||
Income (loss) before extraordinary item | $ | 0.25 | $ | — | $ | (3.47 | ) | $ | 0.03 | $ | (3.19 | ) | $ | (2.93 | ) | $ | — | $ | 0.92 | $ | (2.01 | ) | ||||||
Extraordinary gain (loss) on early extinguishment of debt, including the reinstatement of tax benefit | — | 0.32 | (0.01 | ) | — | 0.31 | — | (0.19 | ) | — | (0.19 | ) | ||||||||||||||||
Net income (loss) per share — basic | $ | 0.25 | $ | 0.32 | $ | (3.48 | ) | $ | 0.03 | $ | (2.88 | ) | $ | (2.93 | ) | $ | (0.19 | ) | $ | 0.92 | $ | (2.20 | ) | |||||
Net income (loss) per share — diluted: | ||||||||||||||||||||||||||||
Income (loss) before extraordinary item | $ | 0.25 | $ | — | $ | (3.47 | ) | $ | 0.03 | $ | (3.19 | ) | $ | (2.93 | ) | $ | — | $ | 0.92 | $ | (2.01 | ) | ||||||
Extraordinary gain (loss) on early extinguishment of debt, including the reinstatement of tax benefit | — | 0.32 | (0.01 | ) | — | 0.31 | — | (0.19 | ) | — | (0.19 | ) | ||||||||||||||||
Net income (loss) per share — diluted | $ | 0.25 | $ | 0.32 | $ | (3.48 | ) | $ | 0.03 | $ | (2.88 | ) | $ | (2.93 | ) | $ | (0.19 | ) | $ | 0.92 | $ | (2.20 | ) | |||||
Weighted average common shares outstanding: | ||||||||||||||||||||||||||||
Basic | 38,494,812 | 38,494,812 | 38,494,812 | 38,494,812 | 38,494,812 | 38,350,616 | 38,350,616 | 38,350,616 | 38,350,616 | |||||||||||||||||||
Diluted | 38,494,812 | 38,494,812 | 38,494,812 | 38,494,812 | 38,494,812 | 38,350,616 | 38,350,616 | 38,350,616 | 38,350,616 | |||||||||||||||||||
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The Great Atlantic & Pacific Tea Company, Inc.
Schedule 4 — Pro Forma Earnings for the 12 Weeks Ended February 22, 2003 and February 23, 2002
(Unaudited)
(In thousands, except share amounts and store data)
12 Weeks Ended February 22, 2003 | 12 Weeks Ended February 23, 2002 | ||||||||||||||||||
GAAP Earnings(1)(2) | Adjustments to be (added) subtracted (See Schedule 2) | Earnings as Adjusted(2) | GAAP Earnings(1)(2) | Adjustments to be (added) subtracted (See Schedule 2) | Earnings as Adjusted(2) | ||||||||||||||
Sales | $ | 2,520,179 | $ | — | $ | 2,520,179 | $ | 2,512,043 | $ | — | $ | 2,512,043 | |||||||
Cost of merchandise sold | (1,813,402 | ) | — | (1,813,402 | ) | (1,796,099 | ) | (3,707 | ) | (1,792,392 | ) | ||||||||
Gross margin | 706,777 | — | 706,777 | 715,944 | (3,707 | ) | 719,651 | ||||||||||||
Store operating, general and administrative expense | (716,522 | ) | 3,532 | (720,054 | ) | (710,691 | ) | (24,887 | ) | (685,804 | ) | ||||||||
Gain on proceeds from the demutualization of a mututal insurance company | — | — | — | 60,606 | 60,606 | — | |||||||||||||
(Loss) income from operations | (9,745 | ) | 3,532 | (13,277 | ) | 65,859 | 32,012 | 33,847 | |||||||||||
Interest expense | (18,471 | ) | — | (18,471 | ) | (19,753 | ) | — | (19,753 | ) | |||||||||
Interest income | 1,602 | — | 1,602 | 1,788 | — | 1,788 | |||||||||||||
(Loss) income before income taxes and extraordinary item | (26,614 | ) | 3,532 | (30,146 | ) | 47,894 | 32,012 | 15,882 | |||||||||||
Provision for income taxes | (7,219 | ) | (201 | ) | (7,018 | ) | (20,230 | ) | (13,474 | ) | (6,756 | ) | |||||||
Net (loss) income before extraordinary item | (33,833 | ) | 3,331 | (37,164 | ) | 27,664 | 18,538 | 9,126 | |||||||||||
Extraordinary gain (loss) on early extinguishment of debt, net of benefit of nil and $5,230, respectively | 12,865 | 12,865 | — | (7,222 | ) | (7,222 | ) | — | |||||||||||
Net (loss) income | $ | (20,968 | ) | $ | 16,196 | $ | (37,164 | ) | $ | 20,442 | $ | 11,316 | $ | 9,126 | |||||
Net (loss) income per share — basic: | |||||||||||||||||||
(Loss) income before extraordinary item | $ | (0.88 | ) | $ | 0.09 | $ | (0.97 | ) | $ | 0.72 | $ | 0.48 | $ | 0.24 | |||||
Extraordinary gain (loss) on early extinguishment of debt | 0.34 | 0.34 | — | (0.19 | ) | (0.19 | ) | — | |||||||||||
Net (loss) income per share — basic | $ | (0.54 | ) | $ | 0.43 | $ | (0.97 | ) | $ | 0.53 | $ | 0.29 | $ | 0.24 | |||||
Net (loss) income per share — diluted: | |||||||||||||||||||
(Loss) income before extraordinary item | $ | (0.88 | ) | $ | 0.09 | $ | (0.97 | ) | $ | 0.70 | $ | 0.47 | $ | 0.23 | |||||
Extraordinary gain (loss) on early extinguishment of debt | 0.34 | 0.34 | — | (0.18 | ) | (0.18 | ) | — | |||||||||||
Net (loss) income per share — diluted | $ | (0.54 | ) | $ | 0.43 | $ | (0.97 | ) | $ | 0.52 | $ | 0.29 | $ | 0.23 | |||||
Weighted average common shares outstanding: | |||||||||||||||||||
Basic | 38,515,806 | 38,515,806 | 38,515,806 | 38,361,941 | 38,361,941 | 38,361,941 | |||||||||||||
Diluted | 38,515,806 | 38,515,806 | 38,515,806 | 39,478,296 | 39,478,296 | 39,478,296 | |||||||||||||
Gross margin rate | 28.04 | % | 28.04 | % | 28.50 | % | 28.65 | % | |||||||||||
Store operating, general and administrative expense rate | 28.43 | % | 28.57 | % | 28.29 | % | 27.30 | % | |||||||||||
Depreciation and amortization | $ | 63,704 | $ | 63,704 | $ | 57,599 | $ | 57,599 | |||||||||||
Reconciliation of GAAP cash flow measure to adjusted EBITDA: | |||||||||||||||||||
Net cash provided by operating activities | $ | 121,793 | $ | 150,831 | |||||||||||||||
Net interest expense | 16,869 | 17,965 | |||||||||||||||||
Adjustments from GAAP earnings (see Schedule 2) | 3,331 | 18,538 | |||||||||||||||||
Deferred income tax (provision) benefit | (9,942 | ) | (18,809 | ) | |||||||||||||||
Working capital changes | (58,175 | ) | (19,283 | ) | |||||||||||||||
Other, net | (23,449 | ) | (57,796 | ) | |||||||||||||||
Adjusted EBITDA | $ | 50,427 | $ | 91,446 | |||||||||||||||
Notes:
(1) | Cost of sales for the 12 weeks ended February 23, 2002 includes $0.01 million related to the Company’s business process initiative which was announced in 2000. Store operating, general and administrative expense for the 12 weeks ended February 22, 2003 and February 23, 2002 includes $11.5 million and $20.3 million, respectively, related to the business process initiative. |
(2) | Earnings as adjusted for the 12 weeks ended February 22, 2003 includes severance of approximately of $10 million and a charge relating to the adoption of EITF 02-16 “Accounting By a Customer (including a Reseller) for Certain Consideration Received From a Vendor” of approximately $2 million. These charges are offset by a $7 million reduction of accruals for occupancy costs which we believe accumulated over a number of years and are not significant to each or any of those years. |
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The Great Atlantic & Pacific Tea Company, Inc.
Schedule 5 — Pro Forma Earnings for the 52 Weeks Ended February 22, 2003 and February 23, 2002
(Unaudited)
(In thousands, except share amounts and store data)
52 Weeks Ended February 22, 2003 | 52 Weeks Ended February 23, 2002 | ||||||||||||||||||
GAAP Earnings(1) | Adjustments to be (added) subtracted (See Schedule 3) | Earnings as Adjusted | GAAP Earnings(1) | Adjustments to be (added) subtracted (See Schedule 3) | Earnings as Adjusted | ||||||||||||||
Sales | $ | 10,794,370 | $ | — | $ | 10,794,370 | $ | 10,973,315 | $ | — | $ | 10,973,315 | |||||||
Cost of merchandise sold | (7,738,337 | ) | (1,263 | ) | (7,737,074 | ) | (7,822,649 | ) | (3,889 | ) | (7,818,760 | ) | |||||||
Gross margin | 3,056,033 | (1,263 | ) | 3,057,296 | 3,150,666 | (3,889 | ) | 3,154,555 | |||||||||||
Store operating, general and administrative expense | (3,048,775 | ) | 9,374 | (3,058,149 | ) | (3,234,796 | ) | (189,579 | ) | (3,045,217 | ) | ||||||||
Gain on proceeds from the demutualization of a mutual insurance company | — | — | — | 60,606 | 60,606 | — | |||||||||||||
Income (loss) from operations | 7,258 | 8,111 | (853 | ) | (23,524 | ) | (132,862 | ) | 109,338 | ||||||||||
Interest expense | (84,679 | ) | — | (84,679 | ) | (91,722 | ) | — | (91,722 | ) | |||||||||
Interest income | 7,897 | — | 7,897 | 6,972 | — | 6,972 | |||||||||||||
(Loss) income before income taxes and extraordinary item | (69,524 | ) | 8,111 | (77,635 | ) | (108,274 | ) | (132,862 | ) | 24,588 | |||||||||
(Provision for) benefit from income taxes | (136,166 | ) | (131,197 | ) | (4,969 | ) | 43,590 | 55,745 | (12,155 | ) | |||||||||
Net (loss) income before extraordinary item | (205,690 | ) | (123,086 | ) | (82,604 | ) | (64,684 | ) | (77,117 | ) | 12,433 | ||||||||
Extraordinary gain (loss) on early extinguishment of debt, net of benefit of nil and $5,230, respectively | 12,181 | 12,468 | (287 | ) | (7,222 | ) | (7,222 | ) | — | ||||||||||
Reinstatement of tax benefit on extraordinary loss on early extinguishment of debt recorded in first quarter of fiscal 2002 | — | (287 | ) | 287 | — | — | — | ||||||||||||
Net (loss) income | $ | (193,509 | ) | $ | (110,905 | ) | $ | (82,604 | ) | $ | (71,906 | ) | $ | (84,339 | ) | $ | 12,433 | ||
Net (loss) income per share — basic and diluted: | |||||||||||||||||||
(Loss) income before extraordinary item | $ | (5.34 | ) | $ | (3.19 | ) | $ | (2.15 | ) | $ | (1.69 | ) | $ | (2.01 | ) | $ | 0.32 | ||
Extraordinary gain (loss) on early extinguishment of debt, including the reinstatement of tax benefit | 0.31 | 0.31 | — | (0.19 | ) | (0.19 | ) | — | |||||||||||
Net (loss) income per share — basic and diluted | $ | (5.03 | ) | $ | (2.88 | ) | $ | (2.15 | ) | $ | (1.88 | ) | $ | (2.20 | ) | $ | 0.32 | ||
Weighted average common shares outstanding: | |||||||||||||||||||
Basic | 38,494,812 | 38,494,812 | 38,494,812 | 38,350,616 | 38,350,616 | 38,350,616 | |||||||||||||
Diluted | 38,494,812 | 38,494,812 | 38,494,812 | 38,350,616 | 38,350,616 | 38,350,616 | |||||||||||||
Gross margin rate | 28.31 | % | 28.32 | % | 28.71 | % | 28.75 | % | |||||||||||
Store operating, general and administrative expense rate | 28.24 | % | 28.33 | % | 29.48 | % | 27.75 | % | |||||||||||
Depreciation and amortization | $ | 263,585 | $ | 263,585 | $ | 262,552 | $ | 262,552 | |||||||||||
Reconciliation of GAAP cash flow measure to adjusted EBITDA: | |||||||||||||||||||
Net cash provided by operating activities | $ | 178,622 | $ | 314,939 | |||||||||||||||
Net interest expense | 76,782 | 84,750 | |||||||||||||||||
Adjustments from GAAP earnings (see Schedule 3) | 123,086 | 77,117 | |||||||||||||||||
Deferred income tax (provision) benefit | (157,566 | ) | 47,298 | ||||||||||||||||
Working capital changes | 7,080 | 14,844 | |||||||||||||||||
Other, net | 34,728 | (167,058 | ) | ||||||||||||||||
Adjusted EBITDA | $ | 262,732 | $ | 371,890 | |||||||||||||||
Notes:
(1) | Cost of sales for the 52 weeks ended February 23, 2002 includes $6.3 million related to the Company’s business process initiative which was announced in 2000. Store operating, general and administrative expense for the 52 weeks ended February 22, 2003 and February 23, 2002 include $60.5 million and $91.6 million, respectively, related to the business process initiative. |
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The Great Atlantic & Pacific Tea Company, Inc.
Schedule 6 — Condensed Balance Sheet Data
(Unaudited)
(In millions, except per share and store data)
February 22, 2003 | February 23, 2002 | ||||||
Cash and short-term investments | $ | 199 | $ | 169 | |||
Other current assets | 901 | 1,043 | |||||
Total current assets | 1,100 | 1,212 | |||||
Property-net | 1,609 | 1,705 | |||||
Other assets | 176 | 273 | |||||
Total assets | $ | 2,885 | $ | 3,190 | |||
Total current liabilities | $ | 1,091 | $ | 1,184 | |||
Total non-current liabilities | 1,296 | 1,333 | |||||
Stockholders’ equity | 498 | 673 | |||||
Total liabilities and stockholders’ equity | $ | 2,885 | $ | 3,190 | |||
Other Statistical Data | |||||||
Total Debt and Capital Leases | $ | 926 | $ | 884 | |||
Temporary Investments | 78 | 78 | |||||
Net Debt | $ | 849 | $ | 806 | |||
Total Retail Square Footage (in thousands) | 26,818 | 26,664 | |||||
Book Value Per Share | $ | 12.93 | $ | 17.54 |
For the 52 weeks ended February 22, 2003 | For the 52 weeks ended February 23, 2002 | ||||||
Capital Expenditures | $ | 220 | $ | 246 |
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