SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
For the Year Ended December 31, 2003
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SAVINGS PLAN
(Full title of the Plan)
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
2 PARAGON DRIVE, MONTVALE, NEW JERSEY 07645
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(Name of issuer of the securities held
pursuant to the Plan and the address
of its principal executive office)
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this annual report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE GREAT ATLANTIC & PACIFIC
TEA COMPANY, INC.
Date: June 28, 2004 By /s/Brenda M. Galgano
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Brenda M. Galgano
Vice President and Controller
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
Financial Statements as of December 31, 2003 and 2002
and for the Year Ended December 31, 2003
Prepared for filing as part of the Annual
Return/Report of Employee Benefit Plan
(Form 5500)
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
TABLE OF CONTENTS
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Page
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM......... 2
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002 ................................... 3
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2003.......................... 4
NOTES TO FINANCIAL STATEMENTS................................... 5
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS
(HELD AT END OF YEAR) ...................................... 10
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-1-
Report of Independent Registered Public Accounting Firm
To the Participants and Administrator of
The Great Atlantic & Pacific Tea Company, Inc. Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of The Great Atlantic & Pacific Tea Company, Inc. Savings Plan (the "Plan") at
December 31, 2003 and 2002, and the changes in net assets available for benefits
for the year ended December 31, 2003 in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of the Plan's management. Our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with the standards of the
Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H, Line 4i -
Schedule of Assets (Held at End of Year) is presented for the purpose of
additional analysis and is not a required part of the basic financial statements
but are supplementary information required by the Department of Labor's Rules
and Regulations for Reporting and Disclosure under the Employee Retirement
Income Security Act of 1974. This supplemental schedule is the responsibility of
the Plan's management. The supplemental schedule has been subjected to the
auditing procedures applied in the audit of the basic financial statements and,
in our opinion, is fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
June 25, 2004
Florham Park, NJ
-2-
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2003 AND 2002
2003 2002
------------ ------------
Assets:
Investments-at fair value (Note 3) $276,388,108 $247,487,857
Receivables:
Participant Contributions 176,993 -
Employer Contributions 61,150 -
------------ ------------
Total Assets 276,626,251 247,487,857
------------ ------------
Liabilities:
Accrued expenses (500) (1,125)
------------ ------------
Total Liabilities (500) (1,125)
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Net assets available for benefits $276,625,751 $247,486,732
============ ============
The accompanying notes are an integral
part of these financial statements.
-3-
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2003
2003
------------
Investment income:
Net appreciation in fair value of investments (Note 3) $ 29,012,384
Interest income 5,376,119
Dividend income 2,262,958
Other income 412,935
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37,064,396
Contributions:
Participants 15,785,232
Employer 5,179,086
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20,964,318
Total investment income and contributions 58,028,714
------------
Benefits paid to participants 28,867,239
Administrative expenses and other 22,456
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Total deductions 28,889,695
------------
Net increase in net assets available for benefits 29,139,019
Net assets available for benefits:
Beginning of year 247,486,732
------------
End of year $276,625,751
============
The accompanying notes are an integral part
of these financial statements.
-4-
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
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1. PLAN DESCRIPTION
The following description of The Great Atlantic & Pacific Tea Company,
Inc. ("Company") Savings Plan ("Savings Plan") provides only general
information. Participants should refer to the Savings Plan summary plan
description for a more complete description of the Savings Plan's
provisions.
The Savings Plan is a voluntary defined contribution plan of the Company.
The Savings Plan was formed effective January 1, 1991 by the merger of the
Savings Plans of the following affiliates of the Company:
The Borman's Employees' Savings Trust
The Shopwell, Inc. Savings Plan for Non-Union Employees
The Waldbaum's, Inc. Management Savings Plan, and
The Waldbaum's Food Mart Management & Staff Deferred Salary Plan
The employee and Company matching contributions of The Great Atlantic &
Pacific Tea Company, Inc. Retirement Savings Plan ("RSP") were transferred
to the Savings Plan effective September 30, 1991.
Effective March 1, 1995, the Company merged The Great Atlantic & Pacific
Tea Company, Inc. Employees' Thrift Plan (the "Thrift Plan") into the
Savings Plan. As a result of the merger, Thrift Plan investment account
balances were transferred to the existing Savings Plan investment
accounts.
The Savings Plan was amended effective November 2000, resulting in changes
in the investment of contributions and changes in investment options.
Participants may now change their contribution rates once per month. In
addition, they may change their investment options with regard to future
contributions and reallocate the way existing balances are invested on any
business day.
The Savings Plan covers employees of the Company who are not covered by a
collective bargaining agreement and who were (a) participants in one of
the prior merged plans, unless the collective bargaining agreement
specifically states otherwise, as of December 31, 1990 (September 30, 1991
for the RSP and March 1, 1995 for the Thrift Plan), or (b) completed at
least one year of service (1,000 hours in a 12-month period) if age 21 or
older or five years of service if under age 21 at the time of employment.
Eligible employees have the option to contribute from 1% to 20% of their
base compensation to the Savings Plan. This can be any combination of pre
and post tax percentages, as long as the total of the percentages does not
exceed 20% of base compensation. The Internal Revenue Service limits the
maximum amount a participant may contribute, which was $12,000 for fiscal
2003. The Company matches 50% of employees' contributions up to 6% of
their compensation.
Participants direct the investment of their contributions into the plan,
as discussed in Note 3, which includes various investment options offered
by the Savings Plan. Employee contributions may not be allocated to the
Employer Stock Fund. Participants are always 100% vested in their
contributions and become fully vested in the Company's matching
contributions after five years, in accordance with the following schedule:
Vesting Percentage
------------------
Less than 2 years 0%
2 years but less than 3 years 25%
3 years but less than 4 years 50%
4 years but less than 5 years 75%
5 years or more 100%
Participants receive the value of the vested portion of their account
balance when they leave the Company for any reason other than death, in
which case a beneficiary would receive the benefit. Participants may
generally withdraw unmatched after-tax contributions once during any 12
month period but may withdraw unmatched before-tax contributions only in
the case of "financial hardship" as defined in the Plan.
For the year ended December 31, 2003, forfeited nonvested accounts totaled
$253,590. These accounts will be used to decrease future employer
contributions.
Participants may borrow from their account balance a minimum of $1,000 up
to a maximum equal to the lesser of $50,000 or 50 percent of their vested
account balance, whichever is less. The loans are secured by the balance
in the participant's account and bear a fixed interest rate for the
duration of the loan. The rate equals Prime plus 1% as published in the
Wall Street Journal 15 days prior to the start of the calendar quarter.
Principal and interest is paid ratably through payroll deductions.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Savings Plan are as
follows:
o The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of
America on the accrual basis of accounting.
o The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and changes therein.
Actual results could differ from those estimates.
o The Plan's investments are presented at fair value using quoted market
prices. In instances where quoted market prices are not available, the
fair value of investments is estimated primarily by banks, independent
investment brokerage firms and insurance companies.
o Purchases and sales of securities are recorded on a trade date basis.
Dividends are recorded on the ex-dividend date.
o Expenses - Administrative expenses of the Plan are paid by either the
Plan or the Plan's sponsor, as provided in the Plan document.
o Payment of Benefits - Benefit payments to participants are recorded
upon distribution.
o Risks and Uncertainties - The Plan provides for various investment
options. The Plan's mutual funds invest in various securities
including U.S. government securities, corporate debt instruments and
corporate stocks. Investment securities, in general, are exposed to
various risks, such as interest rate, credit and overall market
volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and that
such changes could materially affect the amounts reported in the
statements of net assets available for Plan benefits.
3. INVESTMENTS
The following table presents investments, all of which are publicly
traded, except for the A&P Stable Value Investment. Investments that
represent 5 percent or more of the Plan's net assets are separately
identified by (*).
December 31, 2003 December 31, 2002
-------------------------- -----------------
A&P Stable Value Investment (*) $106,641,792 106,679,754
Dryden Stock Index Fund I (*) 62,314,583 52,078,104
PIMCO Total Return A (*) 21,771,481 25,138,941
AIM Balanced A Fund (*) 20,333,156 18,996,787
John Hancock Small Cap Value A Fund 10,874,208 7,782,833
Amer Funds EuroPacific Growth A 9,503,774 9,787,599
MFS Massachusetts Investors Growth Stock A (*
for 2003 only) 15,313,588 9,369,197
Alliance Bern Growth & Income A (* for 2003
only) 16,142,770 9,753,736
Lord Abbett Mid Cap Value Fund 5,951,391 2,956,622
A&P Stock Fund 323,434 329,868
American Balanced Fund 2,825,596 605,376
Loan Fund 4,392,335 4,009,040
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$276,388,108 $247,487,857
============ ============
During 2003, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) increased
in value by $37,064,396 as follows:
Interest income - A&P Stable Value Investment $5,086,833
Interest income - other 289,286
Dividend income 2,262,958
Other income 412,935
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Total income 8,052,012
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Net appreciation in fair value of investments:
Dryden Stock Index Fund I 13,222,310
PIMCO Total Return A 188,976
AIM Balanced A Fund 2,721,370
John Hancock Small Cap Value A Fund 3,536,727
Amer Funds EuroPacific Growth A 2,502,795
MFS Massachusetts Investors Growth Stock A 2,355,222
Alliance Bern Growth & Income A 3,269,737
Lord Abbett Mid Cap Value Fund 930,906
A&P Stock Fund 12,251
American Balanced Fund 272,090
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Net appreciation 29,012,384
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Net investment income $37,064,396
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4. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of a common collective trust and
mutual funds managed by Prudential Trust Company. Prudential Trust Company
is the trustee as defined by the Plan and, therefore, these transactions
qualify as party-in-interest transactions.
Certain administrative functions are performed by the officers and
employees of the Company (who may be participants in the Plan) at no cost
to the Plan. These transactions are not deemed prohibited transactions
because they are covered by the statutory administrative exemption from
the Internal Revenue Code's and ERISA's rules on prohibited transactions.
5. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company reserves
the right to terminate the Plan subject to the provisions of ERISA. If the
Plan is terminated, each participant would receive the value of his or her
interest in the funds attributable to both participant and employer
contributions for all years of participation.
6. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by
letter dated June 19, 1995 that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (the
"Code"). The Plan has been amended to reflect the provisions required by
the Small Business Job Protection Act ("SBJPA"), since receiving the
determination letter. However, the Plan Administrator believes that the
Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
On April 19, 2004, the Internal Revenue Service issued a new letter
informing the Company that the Plan and related trust are designed in
accordance with applicable sections of the Code.
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
Description of Investment
including maturity date, rate of
Identity of Issue, Borrower, interest, collateral, par or
Lessor, or Similar Party maturity value Cost Current Value
- ---------------------------------- ----------------------------------- ------------------ ----------------
Wells Fargo Bank Minnesota, N.A. A&P Stable Value Investment $ 93,624,918 $106,641,792
Prudential Mutual Funds (*) Dryden Stock Index Fund I 70,453,426 62,314,583
AIM Balanced Fund A AIM Balanced Fund A 24,042,958 20,333,156
PIMCO Total Return A PIMCO Total Return A 21,666,227 21,771,481
MFS Massachusetts Investors Growth MFS Massachusetts Investors Growth
Stock A Stock A 17,139,314 15,313,588
Alliance Growth and Income A Alliance Growth and Income A 15,610,103 16,142,770
Amer Funds Euro Pacific Growth A Amer Funds Euro Pacific Growth A 8,778,291 9,503,774
John Hancock Small Cap Value A John Hancock Small Cap Value A 10,268,775 10,874,208
Lord Abbett Mid Cap Value Fund Lord Abbett Mid Cap Value Fund 5,002,323 5,951,391
American Balanced Fund American Balanced Fund 2,578,925 2,825,596
A&P Stock Fund (*) A&P Stock Fund 382,920 323,434
Participant loans 5.00% - 10.50% 4,392,335
(*) Party-in-interest
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No.
2-92428 on Form S-8, Post Effective Amendment No. 7 to Registration Statement
No. 2-59290 on Form S-8 and Post Effective Amendment No. 3 to Registration
Statement No. 2-73205 on Form S-8 of our report dated June 25, 2004, appearing
in the Annual Report on Form 11-K of The Great Atlantic & Pacific Tea
Company, Inc. Savings Plan for the year ended December 31, 2003.
/s/ PricewaterhouseCoopers LLP
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PricewaterhouseCoopers LLP
Florham Park, NJ
June 25, 2004
Exhibit 99.1
Certification Pursuant To 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of The Great Atlantic & Pacific Tea
Company, Inc. Savings Plan (the "Plan") on Form 11-K for the period ending
December 31, 2003 as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), I, Ann Marie Phillips, Vice President, Benefits and
HRIS (Plan Administrator), of The Great Atlantic & Pacific Tea Company, Inc.,
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Plan.
June 28, 2004 /s/ Ann Marie Phillips
----------------------
Ann Marie Phillips
Vice President,
Benefits and HRIS
(Plan Administrator)