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
January 9, 2007
Date of Report (Date of earliest event reported)
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 incorporation or organization) |
(Commission file number) | (I.R.S. Employer 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 2.02 Regulation FD Disclosure
On January 9, 2007, The Great Atlantic & Pacific Tea Company, Inc. issued a press release announcing its unaudited fiscal 2006 third quarter and year to date results for the 12 and 40 weeks ended December 2, 2006. A copy of the press release is attached as Exhibit 99.1 to this Current Report.
In accordance with General Instruction B.2 of Form 8-K, the information furnished in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
To supplement the consolidated financial results as determined in accordance with generally accepted accounting principles (“GAAP”), the press release presents non-GAAP financial measures for “EBITDA.” EBITDA is defined as earnings before interest, taxes, depreciation, amortization, minority interest, equity in earnings of Metro, Inc., discontinued operations and the 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 U.S. 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.
Item 9.01 Financial Statements and Exhibits
| (c). Exhibits. | ||
| Exhibit 99.1 | Press Release of The Great Atlantic & Pacific Tea Company, Inc., dated January 9, 2007. | |
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.
| THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. | ||
| By: | ||
| Name: | Brenda Galgano | |
| Title: | Senior Vice President And Chief Financial Officer |
|
| Dated: January 9, 2007 | ||
EXHIBIT INDEX
| Exhibit No. | Description |
| 99.1 | Press Release dated January 9, 2007. |
The Great Atlantic & Pacific
Tea Company, Inc.
Schedule 1 - GAAP Earnings for the 12 and 40 weeks ended December 2, 2006 and
December 3, 2005
(Unaudited)
(In thousands, except share amounts and store data)
| 12 Weeks Ended | 40 Weeks Ended | |||||||||||
| December 2, 2006 | December 3, 2005 | December 2, 2006 | December 3, 2005 | |||||||||
| Sales | $ | 1,543,004 | $ | 1,580,942 | $ | 5,242,149 | $ | 7,132,824 | ||||
| Cost of merchandise sold | (1,078,439 | ) | (1,116,399 | ) | (3,658,042 | ) | (5,113,659 | ) | ||||
Gross
margin |
464,565 | 464,543 | 1,584,107 | 2,019,165 | ||||||||
| Store operating, general and administrative expense | (463,413 | ) | (546,100 | ) | (1,591,162 | ) | (2,283,928 | ) | ||||
Income
(loss) from operations |
1,152 | (81,557) | (7,055) | (264,763) | ||||||||
| (Loss) gain on sale of Canadian operations | (599 | ) | (6,083 | ) | (890 | ) | 912,468 | |||||
| Interest expense | (17,171 | ) | (15,398 | ) | (56,221 | ) | (76,783 | ) | ||||
| Interest income | 1,845 | 4,803 | 8,472 | 9,146 | ||||||||
| Minority interest in earnings of consolidated franchisees | — | — | — | (1,131 | ) | |||||||
| Equity in earnings of Metro, Inc. | 11,023 | 3,397 | 30,840 | 3,397 | ||||||||
(Loss)
income from continuing operations before income taxes |
(3,750 | ) | (94,838 | ) | (24,854 | ) | 582,334 | |||||
| Benefit from (provision for) income taxes | 43,702 | 21,279 | 58,584 | (152,885 | ) | |||||||
Income
(loss) from continuing operations |
39,952 | (73,559 | ) | 33,730 | 429,449 | |||||||
| Discontinued operations: | ||||||||||||
Income
from operations of discontinued businesses, net
of tax |
755 | 1,972 | 357 | 1,704 | ||||||||
Gain
on disposal of discontinued businesses, net of tax |
— | 577 | — | 577 | ||||||||
Income
from discontinued operations |
755 | 2,549 | 357 | 2,281 | ||||||||
| Net income (loss) | $ | 40,707 | $ | (71,010 | ) | $ | 34,087 | $ | 431,730 | |||
| Net income (loss) per share - basic: | ||||||||||||
Continuing
operations |
$ | 0.96 | $ | (1.80) | $ | 0.81 | $ | 10.71 | ||||
Discontinued
operations |
0.02 | 0.06 | 0.01 | 0.06 | ||||||||
| Net income (loss) per share - basic | $ | 0.98 | $ | (1.74) | $ | 0.82 | $ | 10.77 | ||||
| Net income (loss) per share - diluted: | ||||||||||||
| Continuing operations | $ | 0.95 | $ | (1.80 | ) | $ | 0.80 | $ | 10.56 | |||
| Discontinued operations | 0.02 | 0.06 | 0.01 | 0.06 | ||||||||
| Net income (loss) per share - diluted | $ | 0.97 | $ | (1.74 | ) | $ | 0.81 | $ | 10.62 | |||
| Weighted average common shares outstanding - basic | 41,499,554 | 40,997,714 | 41,403,346 | 40,075,391 | ||||||||
| Weighted average common shares outstanding - diluted | 42,020,446 | 40,997,714 | 41,904,766 | 40,634,565 | ||||||||
| Gross margin rate | 30.11 | % | 29.38 | % | 30.22 | % | 28.31 | % | ||||
| Store operating, general and administrative expense rate | 30.03 | % | 34.54 | % | 30.35 | % | 32.02 | % | ||||
| United States depreciation and amortization | $ | 40,556 | $ | 46,274 | $ | 135,775 | $ | 153,100 | ||||
| Canada depreciation and amortization | — | — | — | 10,942 | ||||||||
| Total A&P depreciation and amortization | $ | 40,556 | $ | 46,274 | $ | 135,775 | $ | 164,042 | ||||
| The Number of stores operated at end of quarter | 410 | 407 | 410 | 407 | ||||||||
The Great Atlantic & Pacific Tea Company,
Inc.
Schedule 2 - Condensed Balance Sheet Data
(Unaudited)
(In
millions, except per share and store data)
| December 2, 2006 | February 25, 2006 | |||||
| Cash and short-term investments | $ | 93 | $ | 230 | ||
| Other current assets | 753 | 980 | ||||
Total
current assets |
846 | 1,210 | ||||
| Property-net | 949 | 898 | ||||
| Equity investment in Metro, Inc. | 367 | 339 | ||||
| Other assets | 55 | 52 | ||||
Total assets |
$ | 2,217 | $ | 2,499 | ||
| Total current liabilities | $ | 568 | $ | 610 | ||
| Total non-current liabilities | 1,227 | 1,217 | ||||
| Stockholders' equity | 422 | 672 | ||||
Total
liabilities and stockholders' equity |
$ | 2,217 | $ | 2,499 | ||
| Other Statistical Data | ||||||
| Total Debt and Capital Leases | $ | 407 | $ | 282 | ||
| Total Long Term Real Estate Liabilities | 301 | 297 | ||||
| Temporary Investments and Marketable Securities | (92 | ) | (465 | ) | ||
Net
Debt |
$ | 616 | $ | 114 | ||
| Total Retail Square Footage (in thousands) | 16,737 | 16,509 | ||||
| Book Value Per Share | $ | 10.17 | $ | 16.32 | ||
| For the 40 | For the 40 | |||||
| weeks ended | weeks ended | |||||
| December 2, 2006 | December 3, 2005 | |||||
| Capital Expenditures | $ | 184 | $ | 135 | ||
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 2, 2006 and December 3, 2005
(Unaudited)
(In thousands, except share
amounts and store data)
| 12 Weeks Ended | 40 Weeks Ended | |||||||||||
| December 2, | December 3, | December 2, | December 3, | |||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||
| As reported income (loss) from operations | $ | 1,152 | $ | (81,557 | ) | $ | (7,055 | ) | $ | (264,763 | ) | |
| Adjustments: | ||||||||||||
Midwest
exit costs |
4 | 18,781 | 77 | 104,896 | ||||||||
Net
restructuring costs, primarily related to the sale of the U.S. distribution
operations to C&S |
172 | 14,812 | 3,245 | 89,407 | ||||||||
Labor
buyout costs |
230 | — | 4,474 | — | ||||||||
Real
estate related activity |
(13,008) | 3,688 | (15,262) | (22,273) | ||||||||
Long-lived
asset impairment |
— | 8,116 | — | 17,728 | ||||||||
Early
extinguishment of debt and write-off of deferred financing fees |
— | 3,113 | — | 32,570 | ||||||||
Impact
of Hurricane Katrina |
(4,348 | ) | 13,217 | (4,348 | ) | 18,167 | ||||||
VISA/Mastercard
lawsuit settlement |
— | (1,547 | ) | — | (1,547 | ) | ||||||
Canadian
dollar hedge |
— | — | — | 15,446 | ||||||||
Canada
income from operations |
— | — | — | (57,224) | ||||||||
| Total adjustments | (16,950 | ) | 60,180 | (11,814 | ) | 197,170 | ||||||
| Adjusted United States loss from operations | $ | (15,798 | ) | $ | (21,377 | ) | $ | (18,869 | ) | $ | (67,593 | ) |
| As reported United States depreciation and amortization | $ | 40,556 | $ | 46,274 | $ | 135,775 | $ | 153,100 | ||||
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 2, 2006 and December 3, 2005
(Unaudited)
(In thousands, except share
amounts and store data)
| 12 Weeks Ended | 40 Weeks Ended | |||||||||||
| December 2, | December 3, | December 2, | December 3, | |||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||
| Net cash used in operating activities | $ | (59,730 | ) | $ | (97,581 | ) | $ | (42,864) | $ | (157,462 | ) | |
| Adjustments to calculate EBITDA: | ||||||||||||
| Net interest expense | 15,326 | 10,595 | 47,749 | 67,637 | ||||||||
| Asset disposition initiatives | 1,201 | (17,388 | ) | (3,719 | ) | (163,108 | ) | |||||
| Long lived asset impairment charges | (845 | ) | (17,966 | ) | (3,410 | ) | (29,108 | ) | ||||
| Loss on extinguishment of debt | — | — | — | (28,623 | ) | |||||||
| Loss on derivatives | — | — | — | (15,446 | ) | |||||||
| Gain (loss) on disposal of owned property | 12,413 | (1,591 | ) | 23,238 | 25,836 | |||||||
| (Benefit from) provision for income taxes | (43,702 | ) | (21,279 | ) | (58,584 | ) | 152,885 | |||||
| Decrease (increase) in income tax reserve | 44,276 | 17,585 | 61,545 | (119,643 | ) | |||||||
| Other share based awards | (808 | ) | (2,043 | ) | (6,652 | ) | (6,970 | ) | ||||
| Proceeds from dividends from Metro, Inc. | (1,659 | ) | (1,549 | ) | (5,067 | ) | (3,061) | |||||
| Working capital changes | ||||||||||||
| Accounts receivable | 19,635 | (2,333 | ) | (49,780 | ) | 25,770 | ||||||
| Inventories | 37,662 | (4,743 | ) | 32,401 | (33,432 | ) | ||||||
| Prepaid expenses and other current assets | 4,695 | 8,394 | 16,486 | 15,890 | ||||||||
| Accounts payable | (8,313 | ) | 15,297 | 10,221 | 89,717 | |||||||
| Accrued salaries, wages, benefits and taxes | 15,166 | 31,693 | 30,508 | 36,152 | ||||||||
| Other accruals | 7,300 | 44,158 | 57,063 | (8,558 | ) | |||||||
| Other assets | 86 | 117 | 2,897 | 44 | ||||||||
| Other non-current liabilities | 949 | 4,127 | 20,381 | 59,721 | ||||||||
| Other, net | (1,944 | ) | (776 | ) | (3,693 | ) | (8,962 | ) | ||||
| Total A&P EBITDA | 41,708 | (35,283 | ) | 128,720 | (100,721 | |||||||
| Adjustments: | ||||||||||||
| Midwest exit costs | 4 | 18,781 | 77 | 104,896 | ||||||||
| Net restructuring costs, primarily related to the sale of the U.S. | ||||||||||||
| distribution operations to C&S | 172 | 14,812 | 3,245 | 89,407 | ||||||||
| Labor buyout costs | 230 | — | 4,474 | — | ||||||||
| Real estate related activity | (13,008 | ) | 3,688 | (15,262 | ) | (22,273 | ) | |||||
| Long-lived asset impairment | — | 8,116 | — | 17,728 | ||||||||
| Early extinguishment of debt and write-off of deferred financing fees | — | 3,113 | — | 32,570 | ||||||||
| Impact of Hurricane Katrina | (4,348 | ) | 13,217 | (4,348 | ) | 18,167 | ||||||
| VISA/Mastercard lawsuit settlement | — | (1,547 | ) | — | (1,547 | ) | ||||||
| Canadian dollar hedge | — | — | — | 15,446 | ||||||||
| Canada EBITDA | — | — | — | (68,166 | ) | |||||||
| Total adjustments | (16,950 | ) | 60,180 | (11,814 | ) | 186,228 | ||||||
| Adjusted United States ongoing operating EBITDA | $ | 24,758 | $ | 24,897 | $ | 116,906 | $ | 85,507 | ||||