UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 5, 2006 (May 5, 2005)
------------------------
THE GREAT ATLANTIC & PACIFIC
TEA COMPANY, INC.
(Exact name of registrant as specified in its charter)
------------------------
Maryland 1-4141 13-1890974
(State or other jurisdiction of (Commission file number) (I.R.S. Employer
incorporation or organization) Identification No.)
Two Paragon Drive
Montvale, New Jersey 07645
(Address of principal executive offices)
(201) 573-9700
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
------------------------
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a
Related Audit Report or Completed Interim Review.
At a meeting held on May 5, 2005, management advised the Audit Committee of
the Board of Directors of the Company (the "Audit Committee") that it had
made a determination, similar to recent determinations by other
publicly-held retail and restaurant companies, that its historical
accounting for leases, primarily relating to its accounting for landlord
allowances, was not in accordance with generally accepted accounting
principles ("GAAP").
At the May 5, 2005 meeting, management and the Audit Committee, in consultation
with the Company's independent registered public accounting firm,
PricewaterhouseCoopers LLP, discussed these lease accounting issues, and the
Audit Committee concurred with management's determination and concluded that the
Company's accounting for these items was incorrect and that the Company's
previously issued audited consolidated financial statements for fiscal years
2002 and 2003 should be restated.
As a result of the Company's determination to restate its consolidated financial
statements as discussed above, the financial statements included in the
Company's Annual Report on Form 10-K for its fiscal year ended February 28,
2004, as well as its interim unaudited financial statements for the first three
quarters of fiscal 2004, should no longer be relied upon. The Company's Annual
Report on Form 10-K for its fiscal year ended February 26, 2005, expected to be
filed on or before May 10, 2005, will reflect the restated information for the
periods presented therein.
In connection with the Company's restatement of previously issued financial
statements, the Company has determined a material weakness existed due to
ineffective controls over the selection and application of its lease
accounting policies. During the fourth quarter of fiscal year 2004 and prior
to February 26, 2005 the Company implemented controls to ensure that all leases
are reviewed and accounted for in accordance with GAAP. Accordingly, the
Company evaluated its internal controls over the selection and application of
lease accounting policies as of February 26, 2005 and has concluded that the
material weakness had been remediated as of year-end.
On May 6, 2005, the Company issued a press release describing the matters set
forth above, a copy of which is attached as Exhibit 99.1 hereto.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits. The following exhibits are filed herewith:
Exhibit No. Description
---------- ----------------------------------------
99.1 Press Release dated May 6, 2005
----------------------------------------
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: May 6, 2005
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
By: /s/Mitchell P. Goldstein
--------------------------------------------
Name: Mitchell P. Goldstein
Title: Executive Vice President,
Chief Financial Officer and Secretary
EXHIBIT INDEX
Exhibit No. Description
- ---------- -----------
99.1 Press release dated May 6, 2005
EXHIBIT 99.1
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: Richard De Santa
Vice President, Corporate Affairs
(201) 571-4495
For Immediate Release
- ---------------------
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
HAS COMPLETED ITS REVIEW OF LEASE ACCOUNTING
MONTVALE, NJ - May 6, 2005 - The Great Atlantic & Pacific Tea Company, Inc.
("A&P" or the "Company") (NYSE: GAP) today announced that in connection with its
preparation of its consolidated financial statements for the year ended February
26, 2005, it completed a review of its historical lease accounting to determine
whether its accounting for leases was in accordance with generally accepted
accounting principles ("GAAP").
Based upon this review, as well as discussions with the Company's independent
auditors and its Audit Committee, the Company determined that its accounting for
leases was not in conformity with GAAP. On May 5, 2005, management and the Audit
Committee concluded that the Company should restate its previously issued
consolidated financial statements for fiscal years 2002 and 2003. As a result of
the Company's determination to restate its consolidated financial statements,
the financial statements included in the Company's Annual Report on Form 10-K
for its fiscal year ended February 28, 2004, as well as its interim unaudited
financial statements for the first three quarters of fiscal year 2004, should no
longer be relied upon. The Company's Annual Report on Form 10-K for its fiscal
year ended February 26, 2005, expected to be filed on or before May 10, 2005,
will reflect the restated information for the periods presented therein.
The net cumulative impact of this correction, which was recorded in the fourth
quarter of fiscal 2004, was an increase to net loss of $0.8 million ($0.3
million pre-tax). Although the effect of this change did not have a material
effect on net loss, it did result in an increase in interest expense with a
corresponding reduction in rent expense and a related increase in EBITDA. Fourth
quarter interest expense for fiscal 2004 and fiscal 2003 includes $6 million and
$5 million, respectively, relating to this change. For the full year, interest
expense related to this change includes $25 million and $21 million for fiscal
years 2004 and 2003, respectively.
In connection with the Company's restatement of previously issued financial
statements, the Company has determined a material weakness existed due to
ineffective controls over the selection and application of its lease
accounting policies. During the fourth quarter of fiscal year 2004 and prior
to February 26, 2005 the Company implemented controls to ensure that all leases
are reviewed and accounted for in accordance with GAAP. Accordingly, the
Company evaluated its internal controls over the selection and application of
lease accounting policies as of February 26, 2005 and has concluded that the
material weakness had been remediated as of year-end.
Founded in 1859, A&P, one of the nation's first supermarket chains, is today
among North America's largest. The Company operates 647 stores in 10 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,
Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug.
***************
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.