EXHIBIT 99.1
[A&P LOGO] News
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
Vice President, Corporate Affairs
(201) 571-4495
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. ANNOUNCES RESULTS FOR FIRST
QUARTER 2005
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COMPANY REPORTS EBITDA, ADJUSTED FOR NON-OPERATING ITEMS, OF $101 MILLION, UP
FROM $81 MILLION IN PRIOR YEAR
MONTVALE, NJ - July 22, 2005 - The Great Atlantic & Pacific Tea Company, Inc.
(A&P, NYSE Symbol: GAP) announced unaudited fiscal 2005 first quarter results
for the 16 weeks ended June 18, 2005.
Sales for the first quarter were $3.4 billion, compared with $3.3 billion in the
first quarter of fiscal 2004. Comparable store sales decreased 0.3% vs.
year-ago. The loss for the quarter was $2.28 per share this year versus a loss
of $1.11 per share last year.
Results from continuing operations, as shown on Schedule 1, were a loss of $89
million or $2.27 per share this quarter versus a loss of $41 million or $1.08
per share in last year's first quarter. The current year's results include
charges totaling $68 million related to certain items that the Company believes
are of a non-operating nature. These items include $50 million in restructuring
costs, primarily related to the sale of the U.S. distribution operations to C&S,
$15 million related to Midwest exit costs, and $3 million related to a Canadian
dollar hedge. Last year's results included a $1 million restructuring charge.
Excluding these items, EBITDA was $101 million for first quarter of fiscal 2005
versus $81 million for the same period of fiscal 2004.
Christian Haub, Chairman of the Board and Chief Executive Officer, said, "Our
Company's improvement continued in the first quarter. A&P Canada's fresh
marketing initiatives, improving discount Food Basics operation and cost
controls contributed to excellent results in Ontario. In the U.S., our fresh
store development continued to generate excellent customer response, while the
Food Basics stores produced a good sales trend as our improvement of that format
continued.
"We now look forward to the formation and development of The New A&P, as
augmented by our major strategic accomplishments since the end of the quarter;
namely the recently announced transfer of distribution operations, the pending
sale of A&P Canada to METRO INC., and our executive leadership change going
forward in the U.S.
"Our objectives for the second quarter and beyond are to:
o accelerate the improvement of our operating trends;
o close our Canadian transaction and realize the de-leveraging of our
balance sheet;
o complete the remainder of our divestiture initiative;
o continue rolling out our U.S. fresh stores and improving our
discount operations;
o and continue pursuing significant cost reduction opportunities, and
shaping the organization of the New A&P."
Founded in 1859, A&P, one of the nation's first supermarket chains, is today
among North America's largest. The Company operates 637 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.
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 first 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 August 19, 2005.
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 measure "EBITDA" to evaluate the Company's liquidity and it is among
the primary measures used by management for planning and forecasting of future
periods. EBITDA is defined as earnings before interest, taxes, depreciation,
amortization, minority interest, discontinued operations and cumulative effect
of change in accounting principle. The Company believes the presentation of this
measure 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, this
measure is 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. EBITDA
is reconciled to Net Cash provided by Operating Activities on Schedule 1 of this
release.
2
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.
###
3
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SCHEDULE 1 - GAAP EARNINGS FOR THE 16 WEEKS ENDED JUNE 18, 2005 AND
JUNE 19, 2004
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AMOUNTS AND STORE DATA)
16 Weeks Ended
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June 18, 2005 June 19, 2004
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AS RESTATED (1)
Sales $ 3,383,633 $ 3,280,299
Cost of merchandise sold (2,445,675) (2,360,303)
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Gross margin 937,958 919,996
Store operating, general and administrative expense (976,687) (921,074)
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Loss from operations (2) (38,729) (1,078)
Interest expense (36,123) (34,392)
Interest income 1,186 841
Minority interest in earnings of consolidated franchisees (1,536) (1,376)
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Loss from continuing operations before income taxes (75,202) (36,005)
Provision for income taxes (13,865) (5,458)
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Loss from continuing operations (89,067) (41,463)
Discontinued operations:
Loss from operations of discontinued businesses, net of tax (168) (1,383)
Gain on disposal of discontinued operations, net of tax - -
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Loss from discontinued operations (168) (1,383)
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Net loss $ (89,235) $ (42,846)
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Net loss per share - basic and diluted:
Continuing operations $ (2.27) $ (1.08)
Discontinued operations (0.01) (0.03)
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Net loss per share - basic and diluted $ (2.28) $ (1.11)
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Weighted average common shares outstanding:
Basic 39,201,114 38,520,018
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Diluted 39,201,114 38,520,018
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Gross margin rate 27.72% 28.05%
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Store operating, general and administrative expense rate 28.87% 28.08%
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Depreciation and amortization $ 71,875 $ 80,846
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Reconciliation of GAAP cash flow measure to EBITDA:
Net cash provided by operating activities $ 1,231 $ 38,846
Net interest expense 34,937 33,551
Restructuring charge (48,549) 0
Deferred income taxes (5,430) (1,012)
Working capital changes
Accounts receivable (16,477) (24,840)
Inventories 20,747 22,822
Prepaid expenses and other current assets 2,779 14,887
Accounts payable (6,824) (55,635)
Accrued salaries, wages, benefits and taxes 19,054 6,813
Other accruals 7,277 27,899
Other assets 434 (362)
Other non-current liabilities 11,689 12,415
Other, net 12,278 4,384
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EBITDA $ 33,146 $ 79,768
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Number of stores operated at end of quarter 637 628
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Number of franchised stores served at end of quarter 42 66
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(1) As previously reported, prior year results have been restated for changes
in our accounting for leases primarily to correct the Company's accounting
for landlord allowances.
(2) Loss from operations includes charges totaling $68 million related to
certain items that the Company believes are of a non-operating nature.
These items include $50 million in restructuring costs, primarily related
to the sale of the U.S. distribution operations to C&S, $15 million
related to Midwest exit costs, and $3 million related to the Canadian
dollar hedge.
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
Schedule 2 - Condensed Balance Sheet Data
(Unaudited)
(In millions, except per share and store data)
June 18, 2005 February 26, 2005
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Cash and short-term investments $ 171 $ 258
Other current assets 1,543 907
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Total current assets 1,714 1,165
Property-net 1,003 1,516
Other assets 56 121
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Total assets $ 2,773 $ 2,802
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Total current liabilities $ 1,230 $ 1,078
Total non-current liabilities 1,388 1,490
Stockholders' equity 155 234
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Total liabilities and stockholders' equity $ 2,773 $ 2,802
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Other Statistical Data
Total Debt and Capital Leases $ 689 $ 697
Total Long Term Real Estate Liabilities 330 328
Temporary Investments (74) (104)
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Net Debt $ 945 $ 921
Total Retail Square Footage (in thousands) 25,257 25,583
Book Value Per Share $ 3.86 $ 6.03
For the 16 For the 16
weeks ended weeks ended
June 18, 2005 June 19, 2004
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Capital Expenditures $ 70 $ 61