EXHIBIT 99.1
News
[A&P LOGO]
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 P. De Santa
Senior Director, Communications
(201) 571-4495
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. ANNOUNCES
RESULTS FOR ITS THIRD QUARTER ENDED DECEMBER 1, 2007
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COMPANY REPORTS 3.1% INCREASE IN COMPARABLE STORE SALES
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OPERATING RESULTS CONTINUE TO IMPROVE
MONTVALE, NJ - JANUARY 8, 2008 - The Great Atlantic & Pacific Tea Company, Inc.
(A&P, NYSE Symbol: GAP) announced fiscal 2007 third quarter and year to date
results for the 12 and 40 weeks ended December 1, 2007.
Sales for the third quarter were $1.3 billion versus $1.2 billion last year.
Comparable store sales increased 3.1%. For the third quarter, net income from
continuing operations was $73.1 million or $1.73 per diluted share versus income
of $32.3 million or $0.77 per diluted share in the same period last year.
The results for the third quarter of fiscal years 2007 and 2006 include items
the Company considers non-operating in nature that management excludes when
evaluating the results of the ongoing business. These items are listed on
Schedule 3 of the press release. Excluding these items, adjusted loss from
operations was $12.1 million, compared to a loss of $17.7 million in last year's
third quarter. Adjusted EBITDA, which is reconciled to net cash from operating
activities on Schedule 4, was $20.5 million this year versus $16.3 million in
last year's third quarter. Last year's adjusted EBITDA excludes income of $4.1
million from the recently expired IT services agreement with Metro Inc.
Sales for the 40 weeks year to date were $4.2 billion versus $4.1 billion in
2006. Comparable store sales increased 2.3%. Net income from continuing
operations for year to date 2007 was $131.5 million or $3.11 per diluted share
compared to income of $23.7 million or $0.57 per diluted share for 2006.
Fiscal 2007 and fiscal 2006 year to date results include the non-operating items
listed on Schedule 3 of the press release. Excluding these items, adjusted U.S.
loss from operations was $26.8 million for year to date 2007 versus a loss of
$34.6 million for 2006. Adjusted EBITDA, which is reconciled to net cash from
operating activities on Schedule 4, was $87.2 million for year to date 2007
versus $78.7 million in 2006. Adjusted EBITDA excludes income of $5.8 million
and $13.7 million respectively, from the recently expired IT services agreement
with Metro Inc.
CHRISTIAN HAUB, EXECUTIVE CHAIRMAN OF THE BOARD, said, "A&P's transformation and
operating improvement moved forward driven by ongoing strategic and business
strategies in the 3rd quarter, highlighted by another solid sales performance;
the completion of our non-core business divestitures, and just after the quarter
closed, our acquisition of Pathmark Stores Inc.
"With operations focused exclusively in the Northeast, and the addition of
Pathmark establishing our market leadership in metropolitan New York and
improving our Mid-Atlantic presence, our strategic transformation is now
completed, and our comprehensive plan for the integration of the Pathmark
business over the next 18 to 24 months is well underway. The achievement of all
financial synergies through that process, the addition of Pathmark's substantial
sales and customer base, and the ongoing positive momentum of the A&P business
now positions our Company to achieve breakthrough performance and sustainable
profitability.
"We are proud of the forward motion we have achieved over the past three years,
and excited about the prospects of our combined Company in the months and years
ahead," Mr. Haub said.
ERIC CLAUS, PRESIDENT AND CHIEF EXECUTIVE OFFICER, said, "I'm pleased with the
growing vitality of our business that continued in the 3rd quarter, as evidenced
by our continued sales improvement, Fresh store development and fundamental
merchandising and operating improvements. Maintaining our momentum, while also
completing the acquisition of Pathmark and the detailed plans for its
integration into our Company, was a monumental task accomplished successfully by
our leadership team with the excellent support of our associates.
"Those efforts will continue as we drive further improvement and execute the
integration of the Pathmark business within the established timetable. The
consolidation of all backstage operations, while we preserve the Pathmark banner
and its powerful retail format and customer franchise, will produce a
financially strong, diversified and innovative retail food entity, poised for
profitability and further growth across our Northeast territory.
"We're excited to move forward and deliver the tremendous potential of our
combined Company. My thanks go to all at A&P for their part in our continuing
improvement, as does my welcome to our many field and corporate colleagues from
Pathmark. I look
forward to working with all as we usher in a dynamic and successful era for the
New A&P," Mr. Claus said.
Founded in 1859, A&P is one of the nation's first supermarket chains. The
Company operates 455 stores in 8 states and the District of Columbia under the
following trade names: A&P, Pathmark, Waldbaum's, The Food Emporium, Super
Foodmart, Super Fresh and Food Basics.
The Company invites investors and other interested parties to listen to a live
audio Webcast to be held at 11:00 AM Eastern Time today, at which members of the
Company's senior management team will discuss the Company's second quarter
financial results. The Webcast may be accessed through a link on the "Investors"
page of the Company's Website, www.aptea.com. Listeners who cannot participate
in the live broadcast will be able to hear a recorded replay of the broadcast
beginning this afternoon and available until February 5, 2008.
Effective March 28, 2003, the Securities and Exchange Commission ("SEC") 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 "Adjusted (loss) income from operations" and "EBITDA" to
evaluate the Company's liquidity and it is among the primary measures used by
management for planning and forecasting of future periods. Adjusted (loss)
income from operations is defined as (loss) income 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 and dividend income, taxes, depreciation, amortization,
equity in earnings of Metro, Inc., discontinued operations, the gain on the sale
of Metro Inc. shares and the (loss) gain on the sale of A&P Canada. Ongoing,
operating EBITDA is defined as EBITDA adjusted for items the Company considers
non-operating in nature that management 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. Ongoing, operating
EBITDA is reconciled to Net Cash provided by 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: 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; the failure to successfully integrate Pathmark's business and
operations and realize synergies in the expected time frame.
###
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SCHEDULE 1 - GAAP EARNINGS FOR THE 12 AND 40 WEEKS ENDED DECEMBER 1, 2007
AND DECEMBER 2, 2006
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS AND STORE DATA)
12 Weeks Ended 40 Weeks Ended
----------------------------- ----------------------------
December 1, December 2, December 1, December 2,
2007 2006 2007 2006
------------ ------------ ------------ ------------
Sales $ 1,251,123 $ 1,213,476 $ 4,204,630 $ 4,103,430
Cost of merchandise sold (869,448) (837,749) (2,901,336) (2,828,584)
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Gross margin 381,675 375,727 1,303,294 1,274,846
Store operating, general and administrative expense (402,808) (381,426) (1,323,411) (1,294,499)
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Loss from operations (21,133) (5,699) (20,117) (19,653)
Gain (loss) on sale of Canadian operations 495 (599) 209 (890)
Gain on disposition of Metro, Inc. 106,063 -- 184,451 --
Interest expense (14,499) (15,342) (48,806) (50,167)
Interest and dividend income 3,910 1,697 12,231 7,977
Equity in earnings of Metro, Inc. -- 11,023 7,869 30,840
------------ ------------ ------------ ------------
Income (loss) from continuing operations before
income taxes 74,836 (8,920) 135,837 (31,893)
(Provision for) benefit from income taxes (1,754) 41,177 (4,288) 55,632
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Income from continuing operations 73,082 32,257 131,549 23,739
Discontinued operations:
(Loss) income from operations of discontinued
businesses, net of tax (13,540) 651 (179,667) 2,758
(Loss) gain on disposal of discontinued
businesses, net of tax (2,235) 7,799 (51,039) 7,590
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(Loss) income from discontinued operations (15,775) 8,450 (230,706) 10,348
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Net income (loss) $ 57,307 $ 40,707 $ (99,157) $ 34,087
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Net income (loss) per share - basic:
Continuing operations $ 1.74 $ 0.78 $ 3.14 $ 0.57
Discontinued operations (0.38) 0.20 (5.51) 0.25
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Net income (loss) per share - basic $ 1.36 $ 0.98 $ (2.37) $ 0.82
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Net income (loss) per share - diluted:
Continuing operations $ 1.73 $ 0.77 $ 3.11 $ 0.57
Discontinued operations (0.38) 0.20 (5.45) 0.24
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Net income (loss) per share - diluted $ 1.35 $ 0.97 $ (2.34) $ 0.81
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Weighted average common shares outstanding - basic 41,961,253 41,499,554 41,888,969 41,403,346
============ ============ ============ ============
Weighted average common shares outstanding - diluted 42,363,903 42,020,446 42,306,348 41,904,766
============ ============ ============ ============
Gross margin rate 30.51% 30.96% 31.00% 31.07%
Store operating, general and administrative expense rate 32.20% 31.43% 31.48% 31.55%
A&P depreciation and amortization $ 32,654 $ 40,556 $ 122,614 $ 135,775
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Number of stores operated at end of quarter 322 410 322 410
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THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SCHEDULE 2 - CONDENSED BALANCE SHEET DATA
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE AND STORE DATA)
December 1, 2007 February 24, 2007
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Cash and short-term investments $ 69 $ 86
Other current assets 1,044 663
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Total current assets 1,113 749
Property-net 758 940
Equity investment in Metro, Inc. -- 369
Other assets 192 54
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Total assets $ 2,063 $ 2,112
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Total current liabilities $ 464 $ 558
Total non-current liabilities 1,239 1,123
Stockholders' equity 360 431
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Total liabilities and stockholders' equity $ 2,063 $ 2,112
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Other Statistical Data
Total Debt and Capital Leases $ 255 $ 348
Total Long Term Real Estate Liabilities 283 301
Temporary Investments and Marketable Securities (545) (77)
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Net Debt $ (7) $ 572
Total Retail Square Footage (in thousands) 12,086 16,538
Book Value Per Share $ 8.59 $ 10.36
For the 40 For the 40
weeks ended weeks ended
December 1, 2007 December 2, 2006
---------------- ----------------
Capital Expenditures $ 98 $ 184
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SCHEDULE 3 - RECONCILIATION OF GAAP (LOSS) INCOME FROM OPERATIONS TO ADJUSTED
(LOSS) INCOME FROM OPERATIONS
FOR THE 12 AND 40 WEEKS ENDED DECEMBER 1, 2007 AND DECEMBER 2, 2006
(UNAUDITED)
(IN THOUSANDS)
12 Weeks Ended 40 Weeks Ended
------------------------ ------------------------
December 1, December 2, December 1, December 2,
2007 2006 2007 2006
----------- ----------- ----------- -----------
As reported loss from operations $ (21,133) $ (5,699) $ (20,117) $ (19,653)
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Adjustments:
Net restructuring costs 168 403 4,420 7,562
Pathmark acquisition 4,392 -- 6,761 --
Real estate related activity 4,449 (8,228) (12,037) (8,819)
IT services agreement with Metro, Inc. (16) (4,128) (5,792) (13,672)
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Total adjustments 8,993 (11,953) (6,648) (14,929)
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Adjusted Northeast loss from operations $ (12,140) $ (17,652) $ (26,765) $ (34,582)
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Northeast depreciation and amortization $ 32,654 $ 33,930 $ 113,977 $ 113,314
Discontinued operations depreciation and
amortization -- 6,626 8,637 22,461
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Total A&P depreciation and amortization $ 32,654 $ 40,556 $ 122,614 $ 135,775
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THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SCHEDULE 4 - RECONCILIATION OF GAAP NET CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES TO ADJUSTED EBITDA
FOR THE 12 AND 40 WEEKS ENDED DECEMBER 1, 2007 AND DECEMBER 2, 2006
(UNAUDITED)
(IN THOUSANDS)
12 Weeks Ended 40 Weeks Ended
------------------------ ------------------------
December 1, December 2, December 1, December 2,
2007 2006 2007 2006
----------- ----------- ----------- -----------
Net cash used in operating activities $ (26,470) $ (59,730) $ (22,807) $ (42,864)
Adjustments to calculate EBITDA:
Depreciation and amortization on discontinued operations -- (6,626) (8,637) (22,461)
Net interest expense 10,589 13,645 36,575 42,190
Asset disposition initiatives (141,407) 1,259 (120,422) (3,673)
Long lived asset impairment charges (2,437) (987) (3,551) (3,552)
Gain on disposal of owned property (1,293) 6,903 (2,514) 17,844
Loss (income) from operations of discontinued operations 13,540 (651) 179,667 (2,758)
Provision for (benefit from) income taxes 1,754 (41,177) 4,288 (55,632)
Income tax benefit -- 44,276 -- 61,545
Other share based awards (1,978) (808) (7,282) (6,652)
Proceeds from dividends from Metro, Inc. -- (1,659) -- (5,067)
Working capital changes
Accounts receivable 1,089 19,635 (31,915) (49,780)
Inventories (1,181) 37,662 (72,741) 32,401
Prepaid expenses and other current assets 3,435 4,695 14,230 16,486
Accounts payable (2,304) (8,313) 27,285 10,221
Accrued salaries, wages, benefits and taxes 40,217 15,166 56,368 30,508
Other accruals 10,974 7,300 2,012 57,063
Other assets (5,893) 86 3,131 2,897
Other non-current liabilities 112,568 948 42,559 20,381
Other, net 318 (3,393) (2,386) (5,436)
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Total A&P EBITDA 11,521 28,231 93,860 93,661
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Adjustments:
Net restructuring costs 168 403 4,420 7,562
Pathmark acquisition 4,392 -- 6,761 --
Real estate related activity 4,449 (8,228) (12,037) (8,819)
IT services agreement with Metro, Inc. (16) (4,128) (5,792) (13,672)
--------- --------- --------- ---------
Total adjustments 8,993 (11,953) (6,648) (14,929)
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Adjusted A&P ongoing operating EBITDA $ 20,514 $ 16,278 $ 87,212 $ 78,732
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