The Great Atlantic & Pacific Tea Company, Inc. (A&P,
NYSE Symbol:GAP) today announced Eric Claus, President and
Chief Executive Officer, will be leaving the Company effective
immediately. The Company has commenced a search for a successor and
in the interim, Christian Haub, Executive Chairman of the Board,
will reassume the Chief Executive Officer responsibilities, a
position he previously held from 1998 until 2005.
The Company also announced fiscal 2009 second quarter and year
to date results for the 12 and 28 weeks ended September 12,
2009.
Sales for the second quarter were $2.1 billion versus $2.2
billion last year. Comparable store sales decreased 3.8%. For the
second quarter, excluding non-operating items, adjusted EBITDA was
$64 million versus $67 million last year. Adjusted income from
operations was $6.0 million versus $6.3 million in last year’s
second quarter. The non-operating items excluded from adjusted
income from operations are listed on Schedule 3 of the press
release and adjusted EBITDA is reconciled to net cash from
operating activities on Schedule 4. For the second quarter,
reported loss from continuing operations was $62.2 million compared
to a loss of $4.3 million last year, which includes a $50.0 million
increase in non cash mark to market adjustments related to
financial liabilities.
Sales for the 28 weeks year to date were $4.9 billion versus
$5.1 billion in 2008. Comparable store sales decreased 3.6%.
Excluding non-operating items, adjusted EBITDA was $144 million
versus $163 million last year. Adjusted income from operations was
$8.3 million versus adjusted income from operations of $22.5
million last year. The non-operating items excluded from adjusted
income from operations are listed on Schedule 3 of the press
release and adjusted EBITDA is reconciled to net cash from
operating activities on Schedule 4. Year to date reported loss from
continuing operations was $120.5 million compared to a loss from
continuing operations of $1.5 million for 2008, which includes a
$100.4 million increase in non cash mark to market adjustments
related to financial liabilities.
Christian Haub, Executive Chairman of the Board, said,
“The current challenging economy continues to impact our business.
The macro headwinds including rising unemployment, intensifying
price competition and now also deflation are creating an even more
difficult short-term economic environment. Nonetheless, we have
made progress in several of our formats and many of our
initiatives.
Our legacy business which is mainly comprised of our Fresh,
Discount and Gourmet stores experienced negative same stores sales
in the quarter but through tight expense control and stronger
margins produced positive year over year segment income. Our Price
Impact or Pathmark business continues to struggle as we experienced
negative same store sales and negative year over year segment
income. We have been making the difficult choices for the short
term, such as improving our retail pricing, and will continue to
work on lowering our expenses, enhancing our customer service and
improve our overall brand image of this key format.
Securing over $400 million in new funds was clearly done at the
right time to ensure that we have the resources to address future
debt maturities and to invest in our optimization strategies. In
addition our working relationship with Yucaipa is off to a great
start as we continue to look at ways to improve our overall
business strategy.
We believe that once the economy improves these strategies will
position us well to realize the tremendous strategic value of the
company and to capitalize on our leadership position in the
Northeast.”
Mr. Haub concluded, “I would like to thank Eric Claus for his
contributions to our Company during his tenure at A&P and wish
him well in his future endeavors.”
About A&P
Founded in 1859, A&P is one of the nation's first
supermarket chains. The Company operates 432 stores in 8 states and
the District of Columbia under the following trade names: A&P,
Waldbaum's, Pathmark, Pathmark Sav-a-Center, Best Cellars, 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 11:30 AM Eastern Time
today, at which members of the Company’s senior management team
will discuss the Company’s second quarter 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 through November
17, 2009.
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. The Company
uses the non-GAAP measures “Adjusted income (loss) from
operations”, “EBITDA” and “adjusted ongoing operating EBITDA” to
evaluate the Company’s liquidity and these are among the primary
measures used by management for planning and forecasting of future
periods. Adjusted income (loss) from operations is defined as
income (loss) 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 expense, interest and dividend income,
taxes, depreciation, amortization, the (loss) gain on the sale of
A&P Canada, the gain on the disposition of Metro, Inc.,
non-operating income, equity in earnings of Metro, Inc., and
discontinued operations. Adjusted 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. Adjusted ongoing,
operating EBITDA is reconciled to Net Cash used in 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: various operating factors and general economic
conditions; competitive practices and pricing in the food industry
generally and particularly in the Company’s principal geographic
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 capital 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 may affect the
buying patterns of the Company’s customers.
The Great Atlantic & Pacific Tea
Company, Inc. Schedule 1 - GAAP Earnings for the 12 and 28
weeks ended September 12, 2009 and September 6, 2008
(Unaudited) (In thousands, except share amounts and store
data) For the 12 Weeks Ended For the 28 Weeks
Ended September 12, September 6, September 12, September 6, 2009
2008 (2)
2009
2008 (2)
Sales $ 2,065,061 $ 2,182,636 $ 4,855,304 $ 5,105,301 Cost
of merchandise sold
(1,441,703 )
(1,531,093 )
(3,387,077 )
(3,570,172 ) Gross margin 623,358 651,543
1,468,227 1,535,129 Store operating, general and administrative
expense
(631,924 )
(663,066 ) (1,478,629
) (1,544,561 ) Loss
from operations (8,566 ) (11,523 ) (10,402 ) (9,432 ) Nonoperating
(loss) income (1) (7,079 ) 42,895 (8,954 ) 91,492 Interest expense
(48,559 ) (34,680 ) (102,807 ) (81,606 ) Interest and dividend
income
51 57
92 467 (Loss)
income from continuing operations before income taxes (64,153 )
(3,251 ) (122,071 ) 921 Benefit from (provision for) income taxes
1,994 (1,038
) 1,608
(2,422 ) Loss from continuing operations
(62,159 ) (4,289 ) (120,463 ) (1,501 ) Discontinued operations:
Loss from operations of discontinued businesses, net of tax (18,150
) (13,995 ) (25,006 ) (18,158 ) Income on disposal of discontinued
operations, net of tax
-
183 -
2,822 Loss from discontinued operations
(18,150 ) (13,812
) (25,006 )
(15,336 ) Net loss
$
(80,309 ) $
(18,101 ) $
(145,469 ) $
(16,837 ) Loss per share - basic:
Continuing operations $ (1.18 ) $ (0.09 ) $ (2.29 ) $ (0.03 )
Discontinued operations
(0.34 )
(0.28 ) (0.47
) (0.31 ) Net loss
per share - basic
$ (1.52 )
$ (0.37 ) $
(2.76 ) $ (0.34
) Net loss per share - diluted: Continuing
operations $ (3.06 ) $ (1.70 ) $ (5.90 ) $ (2.24 ) Discontinued
operations
(0.68 )
(0.27 ) (1.19
) (0.28 ) Net loss
per share - diluted
$ (3.74
) $ (1.97 )
$ (7.09 ) $
(2.52 ) Weighted average
common shares outstanding - basic
53,196,728
49,520,525
53,019,715 49,493,271
Weighted average common shares outstanding - diluted
26,614,466 52,270,094
21,044,730
54,246,231 Gross margin rate
30.19 % 29.85 % 30.24 % 30.07 % Store operating, general and
administrative expense rate 30.60 % 30.38 % 30.45 % 30.25 %
A&P depreciation and amortization $ 57,784 $ 60,797 $
135,572 $ 140,824 Number of stores operated at end of period
432 445
432 445
(1) Non operating income reflects the fair value adjustments
related to the conversion features, financing warrants, and Series
A and Series B warrants.
(2) Operating results for the 12 and 28 weeks ended September 6,
2008 have been adjusted as a result of the retrospective
application of FSP APB 14-1, which was adopted during the first
quarter of fiscal 2009.
The Great Atlantic & Pacific Tea
Company, Inc. Schedule 2 - Condensed Balance Sheet Data
(Unaudited) (In millions, except per share and store
data) September 12, 2009 February 28, 2009 (1)
Cash and short-term investments $348 $175 Other
current assets 750 744 Total current
assets 1,098 919 Property-net 1,645 1,724 Other
assets 915 902 Total assets $3,658
$3,545 Total current liabilities $774
$747 Total non-current liabilities 2,681 2,508 Series
A redeemable preferred stock 43 0 Stockholders' equity 160
290 Total liabilities and stockholders'
equity $3,658 $3,545
Other Statistical Data
Total Debt and Capital Leases $1,143 $1,085 Total Long Term
Real Estate Liabilities 330 330 Temporary Investments and
Marketable Securities (256 ) (74 ) Net Debt $1,217 $1,341
Total Retail Square Footage (in thousands) 18,182 18,386
Book Value Per Share $2.74 $5.03 For
the 28 For the 28 weeks ended weeks ended September 12, 2009
September 6, 2008 Capital Expenditures $50 $59
(1) Certain balances as of February 28, 2009 have been adjusted
as a result of the retrospective application of FSP APB 14-1, which
was adopted during the first quarter of fiscal 2009.
The Great Atlantic & Pacific Tea
Company, Inc. Schedule 3 - Reconciliation of GAAP (Loss)
Income from Operations to Adjusted Income from Operations
for the 12 and 28 weeks ended September 12, 2009 and September
6, 2008 (Unaudited) (In thousands)
For the 12 weeks ended For the 28 weeks ended September 12,
September 6, September 12, September 6, 2009 2008 2009 2008
As reported loss from operations
$ (8,566
) $ (11,523 )
$ (10,402 ) $
(9,432 ) Adjustments: Net restructuring
and other 2,162 10,640 4,820 22,570 Real estate related activity
11,461 5,610 9,228 6,360 Pension withdrawal costs - - 2,445 - LIFO
provision
928 1,546
2,166 2,962
Total adjustments
14,551
17,796 18,659
31,892 Adjusted income from operations
$ 5,985 $
6,273 $ 8,257
$ 22,460 A&P
depreciation and amortization
$ 57,784
$ 60,797 $
135,572 $ 140,824
The Great Atlantic
& Pacific Tea Company, Inc. Schedule 4 - Reconciliation
of GAAP Net Cash Provided by (Used in) Operating Activities to
Adjusted EBITDA for the 12 and 28 weeks ended September 12,
2009 and September 6, 2008 (Unaudited) (In
thousands) 12 Weeks Ended 28 Weeks Ended
September 12, September 6, September 12, September 6, 2009
2008 (1)
2009
2008 (1)
Net cash provided by (used in) operating activities $ 23,846
$ (25,409 ) $ 20,537 $ (30,824 ) Adjustments to calculate EBITDA:
Net interest expense 48,508 34,623 102,715 81,139 Non-cash interest
expense (14,516 ) (6,092 ) (27,393 ) (13,955 ) Asset disposition
initiatives (10,010 ) (6,675 ) (8,998 ) (4,918 ) Other property
impairments (2,683 ) (1,004 ) (3,739 ) (1,785 ) Occupancy charges
for normal store closures (17,114 ) (4,255 ) (18,374 ) (7,155 )
Gain (loss) on disposal of owned property 324 (91 ) 3,580 441 Loss
from operations of discontinued operations 18,150 13,995 25,006
18,158 Provision for income taxes (1,994 ) 1,038 (1,608 ) 2,422
Pension withdrawal costs - - (2,445 ) - LIFO reserve (928 ) (1,546
) (2,166 ) (2,962 ) Stock compensation expense (1,190 ) (2,159 )
(4,043 ) (7,005 )
Working capital changes
Accounts receivable (1,506 ) 12,340 (21,454 ) 15,817 Inventories
21,299 4,797 17,236 22,744 Prepaid expenses and other current
assets 13,769 4,344 19,430 18,767 Accounts payable (53,840 ) (3,475
) (60,147 ) (50,298 ) Accrued salaries, wages, benefits and taxes
1,956 (1,290 ) 14,282 22,241 Other accruals (12,091 ) 2,835 8,712
2,554 Other assets 10,421 5,144 15,552 13,718 Other non-current
liabilities 25,274 20,533 46,303 50,984 Other, net
1,543 1,621
2,184 1,309
Total A&P EBITDA
49,218
49,274 125,170
131,392 Adjustments: Net
restructuring and other 2,162 10,640 4,820 22,570 Real estate
related activity 11,461 5,610 9,228 6,360 Pension withdrawal costs
- - 2,445 - LIFO provision
928
1,546 2,166
2,962 Total adjustments
14,551 17,796
18,659 31,892
Adjusted A&P ongoing operating EBITDA
$
63,769 $ 67,070
$ 143,829 $
163,284
(1) Certain balances for the 12 and 28 weeks ended September 6,
2008 have been adjusted as a result of the retrospective
application of FSP APB 14-1, which was adopted during the first
quarter of fiscal 2009.
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