May 14, 2008
VIA EDGAR
Mr. H. Christopher Owings
Assistant Director
Mail Stop 3561
Securities and Exchange Commission
100 F Street, N.E.
Washington, D.C. 20549-3561
Re: The Great Atlantic & Pacific Tea Company, Inc.
Preliminary Proxy Statement on Schedule 14A
Filed January 18, 2008
Form 10-Q for the Quarter Ended December 1, 2007 Filed January 7, 2008 Form 10-K
for Fiscal Year Ended February 24, 2007 Filed April 25, 2007 Definitive Proxy
Statement on Schedule 14A Filed May 25, 2007 File No. 1-4141
Dear Mr. Owings,
On behalf of The Great Atlantic & Pacific Tea Company, Inc. (the "Company" or
"A&P"), we hereby submit responses to the comments of the Staff regarding the
Company's Form 10-K for Fiscal Year Ended February 24, 2007.
Set forth below are the Staff's comments contained in your letter dated May 2,
2008 and immediately following each comment is the Company's response:
Form 10-K for the fiscal year ended February 24, 2007
- -----------------------------------------------------
Note 15 - Operating Segments, page 97
- -------------------------------------
We note you have determined you have six operating segments that you have
aggregated under the criteria of SFAS 131, paragraph 17. After consideration of
the information you have provided and discussed with you telephonically, we do
not agree you meet all of the aggregation criteria of paragraph 17. There are
enough operational differences in your identified operating segments to render
disaggregated information helpful in assessing your performance and the
direction of strategic initiatives. Please revise your disclosure in future
filings to report separately information about each of your operating segments
meeting the quantitative thresholds.
Response:
We have provided the following disclosure in Note - 15 Operating Segments of our
Form 10-K for the fiscal year ended February 24, 2007 filed on May 8, 2008.
NOTE 15 - OPERATING SEGMENTS
Statement of Financial Accounting Standards No. 131, Disclosures about
Segments of an Enterprise and Related Information ("SFAS 131"), establishes
standards for reporting information about operating segments. This standard
requires segmentation based on our internal organization and reporting of
revenue and segment income. The segments are designed to allocate resources
internally and provide a framework to determine management responsibility.
Operating segments are defined as components of an enterprise about which
separate financial information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. Our chief operating decision maker is our President and
Chief Executive Officer. In the fourth quarter of 2007, we acquired Pathmark and
we revised our reporting segments to be consistent with the manner in which our
chief operating decision maker currently manages the business. Accordingly we
have revised our segment reporting to report seven operating segments: North,
Central, South, Pathmark, Gourmet, Other and Investment in Metro, Inc. The Other
segment includes our Food Basics and Liquor businesses. Our Investment in Metro,
Inc. represents our economic interest in Metro, Inc. and is required to be
reported as an operating segment in accordance with SFAS No. 131, as our
investment was greater than 10% of our Company's combined assets in the prior
fiscal year of all operating segments and the investment generated operating
income during the current fiscal year. We sold our Canadian operations during
fiscal 2005, thus we have included the operating results through the date of the
sale.
During fiscal 2006, our retail supermarkets were reported in one segment;
however, during fiscal 2007, we satisfied the criteria necessary to report the
Greater New Orleans area and the Midwest as discontinued operations and these
operations have been reclassified as such in our Consolidated Statements of
Operations for the fiscal years ended February 23, 2008, February 24, 2007 and
February 25, 2006. Refer to Note 6 - Discontinued Operations for further
discussion. Further, in fiscal 2007 we revised our reportable segments for prior
years to reflect our operating segments described above. Prior year information
has been restated to conform to current year presentation. Our Company is
evaluating the impact of the acquisition of Pathmark on our internal reporting
structure.
The accounting policies for these segments are the same as those described
in the summary of significant accounting policies in Note 1. We measure segment
performance based upon segment income (loss). Reconciling amounts include
corporate-level activity not specifically attributed to a segment including our
corporate administration group, which coordinates 1) the purchase of all
merchandise (including the design and production of private label merchandise
sold in our retail stores), 2) distribution and 3) real estate management and
other reconciling items primarily attributed to nonrecurring activities.
Assets and capital expenditures are not allocated to segments for internal
reporting presentations.
The following is segment information for the years ended February 23,
2008, February 24, 2007, and February 25, 2006:
OPERATING DATA Fiscal 2007 Fiscal 2006 Fiscal 2005
- ---------------------- --------------- --------------- ----------------
Sales by category
Grocery (1) $ 4,364,970 $ 3,623,792 $ 4,670,700
Meat (2) 1,253,847 1,037,651 1,422,680
Produce (3) 776,521 690,088 987,457
Other (4) 5,792 17,672 9,181
--------------- --------------- ----------------
Total Company $ 6,401,130 $ 5,369,203 $ 7,090,018
=============== =============== ================
(1) The grocery category includes grocery, frozen foods, dairy, general
merchandise/health and beauty aids, liquor and pharmacy.
(2) The meat category includes meat, deli, bakery and seafood.
(3) The produce category includes produce and floral.
(4) Other includes sales from an information technology services agreement
with Metro, Inc. Refer to Note 17 - Related Party Transactions for further
discussion.
Fiscal
------------------------------------------
2007 2006 2005
----------- ----------- -----------
Sales
North $ 1,891,967 $ 1,838,416 $ 1,830,389
Central 1,403,852 1,397,910 1,404,741
South 1,656,641 1,620,666 1,631,998
Pathmark 921,267 -- --
Gourmet 289,775 282,350 282,650
Other 231,836 212,189 207,180
Investment in Metro, Inc. 5,792 17,672 9,181
Canada -- -- 1,723,879
----------- ----------- -----------
Total sales $ 6,401,130 $ 5,369,203 $ 7,090,018
=========== =========== ===========
Segment income (loss)
North $ 76,247 $ 70,891 $ 65,315
Central 18,207 11,917 8,607
South (19,375) (1,946) 9,471
Pathmark 20,694 -- --
Gourmet 19,105 18,220 14,980
Other (2,639) (9,400) (12,108)
Canada -- -- 57,224
----------- ----------- -----------
Total segment income 112,239 89,682 143,489
Corporate (130,960) (135,716) (153,967)
Reconciling items* (20,519) 18,864 (160,382)
----------- ----------- -----------
Loss from operations (39,240) (27,170) (170,860)
(Loss) gain on sale of Canadian operations (436) (1,299) 912,129
Gain on sale of Metro, Inc. 184,451 -- --
Non operating income 37,394 -- --
Interest expense (111,816) (65,884) (84,404)
Interest and dividend income 14,350 9,020 12,855
Equity earnings in Metro 7,869 40,003 7,801
Minority interest -- -- (1,131)
----------- ----------- -----------
Income (loss) from continuing operations before income taxes $ 92,572 $ (45,330) $ 676,390
=========== =========== ===========
Segment depreciation and amortization - continuing operations
North $ 37,000 $ 36,593 $ 34,460
Central 30,359 28,028 25,367
South 33,920 30,748 29,524
Pathmark 15,934 -- --
Gourmet 10,570 9,175 7,894
Other 4,377 3,386 3,973
Canada -- -- 10,942
----------- ----------- -----------
Total segment depreciation and amortization - continuing operations 132,160 107,930 112,160
Corporate 45,992 40,832 61,880
----------- ----------- -----------
Total depreciation and amortization - continuing operations 178,152 148,762 174,040
Discontinued operations 8,637 28,992 33,289
----------- ----------- -----------
Total company depreciation and amortization $ 186,789 $ 177,754 $ 207,329
=========== =========== ===========
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* Reconciling items which are not included in segment income (loss) include
LIFO reserve adjustment, stock awards expense, restructuring events,
real-estate related activity and other nonrecurring adjustments.
Please feel free to call Melissa Sungela at (201) 571-4330 or myself at (201)
571-4363 with any further questions or comments.
Sincerely,
Brenda M. Galgano
Senior Vice President
Chief Financial Officer
cc: Melissa E. Sungela
Allan Richards
Chris McGarry