Conformed Copy
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15 (d) of the
Securities Exchange Act of 1934
For the Year Ended December 31, 2002
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
(Full title of the Plan)
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
2 PARAGON DRIVE, MONTVALE, NEW JERSEY 07645
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(Name of issuer of the securities held
pursuant to the Plan and the address
of its principal executive office)
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this annual report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE GREAT ATLANTIC & PACIFIC
TEA COMPANY, INC.
Date: June 30, 2003 By /s/Brenda M. Galgano
-----------------------------
Brenda M. Galgano
Vice President and Controller
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
Financial Statements for the Years Ended
December 31, 2002 and 2001
Prepared for filing as part of the Annual
Return/Report of Employee Benefit Plan
(Form 5500)
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
TABLE OF CONTENTS
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Page
REPORT OF INDEPENDENT AUDITORS ............................ 2
INDEPENDENT AUDITOR'S REPORT ............................ 3
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001 .............................. 4
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002..................... 5
NOTES TO FINANCIAL STATEMENTS.............................. 6
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS
(HELD AT END OF YEAR) ................................... 11
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Report of Independent Auditors
To the Participants and Administrator of
The Great Atlantic & Pacific Tea Company, Inc. Savings Plan
In our opinion, the accompanying statement of net assets available for benefits
and the related statement of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of The Great Atlantic & Pacific Tea Company, Inc. Savings Plan (the "Plan") at
December 31, 2002 and the changes in net assets available for benefits for the
year ended December 31, 2002 in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these statements in accordance with auditing standards generally accepted in
the United States of America, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion. The financial statements of
The Great Atlantic & Pacific Tea Company, Inc. Savings Plan as of December 31,
2001 were audited by other independent auditors whose report, dated June 21,
2002, expressed an unqualified opinion on those financial statements.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule H,
Line 4i- Schedule of Assets (Held At End of Year) is presented for the purpose
of additional analysis and is not a required part of the basic financial
statements but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. This supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
June 27, 2003
Florham Park, NJ
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of The Great Atlantic & Pacific Tea
Company, Inc. Savings Plan:
We have audited the accompanying statement of net assets available for benefits
of The Great Atlantic & Pacific Tea Company, Inc. Savings Plan (the "Savings
Plan") as of December 31, 2001. This financial statement is the
responsibility of the Plan's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the statement of
net assets available for benefits is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the statement of net assets available for benefits. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit of the statement of net assets available
for benefits provides a reasonable basis for our opinion.
In our opinion, such financial statement presents fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
2001, in conformity with accounting principles generally accepted in the United
States of America.
/s/Deloitte & Touche
June 21, 2002
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2002 AND 2001
2002 2001
----------------- --------------
Assets:
Investments-at fair value
(Note 3) $247,487,857 $275,676,005
Receivables:
Participant contributions - 124,636
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Total Assets 247,487,857 275,800,641
------------ ------------
Liabilities:
Accrued expenses (1,125) (625)
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Total Liabilities (1,125) (625)
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Net assets available for benefits $247,486,732 $275,800,016
============ ============
The accompanying notes are an integral
part of these financial statements.
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2002
2002
-------------
Investment loss:
Net depreciation in fair value of
investments (Note 3) $(38,069,733)
Interest income 5,861,370
Dividend income 2,366,728
Other income 774,720
---------------
(29,066,915)
Contributions:
Participants 17,495,120
Employer 5,661,310
---------------
23,156,430
Total investment loss and contributions (5,910,485)
---------------
Benefits paid to participants 22,383,220
Administrative expenses and other 19,579
---------------
Total deductions 22,402,799
---------------
Net decrease in net assets available for benefits (28,313,284)
Net assets available for benefits:
Beginning of year 275,800,016
---------------
End of year $247,486,732
===============
The accompanying notes are an integral
part of these financial statements.
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
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1. PLAN DESCRIPTION
The following description of the Great Atlantic & Pacific Tea Company,
Inc. ("Company") Savings Plan ("Savings Plan") provides only general
information. Participants should refer to the Savings Plan agreement for a
more complete description of the Savings Plan's provisions.
The Savings Plan is a voluntary defined contribution plan of the Company.
The Savings Plan was formed effective January 1, 1991 by the merger of the
Savings Plans of the following affiliates of the Company:
The Borman's Employees' Savings Trust
The Shopwell, Inc. Savings Plan for Non-Union Employees
The Waldbaum's, Inc. Management Savings Plan, and
The Waldbaum's Food Mart Management & Staff Deferred Salary Plan
The employee and Company matching contributions of the Great Atlantic &
Pacific Tea Company, Inc. Retirement Savings Plan ("RSP") were transferred
to the Savings Plan effective September 30, 1991.
Effective March 1, 1995, the Company merged The Great Atlantic & Pacific
Tea Company, Inc. Employees' Thrift Plan (the "Thrift Plan") into the
Savings Plan. As a result of the merger, Thrift Plan investment account
balances were transferred to the existing Savings Plan investment
accounts.
The Savings Plan was amended effective October 1, 1998, resulting in
changes in the investment of contributions and changes in investment
options. Effective October 1, 1998, employee and employer contributions
under the Plan are invested initially as elected by the participant. All
subsequent changes to the investment of such contributions shall be made
in 5% multiples in one or more investment funds only once in any one month
period. Participants may also change his or her investment options with
regard to future contributions once in any one month period.
The Savings Plan covers employees of the Company who are not covered by a
collective bargaining agreement and who were (a) participants in one of
the prior merged plans, unless the collective bargaining agreement
specifically states otherwise, as of December 31, 1990 (September 30, 1991
for the RSP and March 1, 1995 for the Thrift Plan), or (b) completed at
least one year of service (1,000 hours in a 12-month period) if age 21 or
older or five years of service if under age 21 at the time of employment.
Eligible employees have the option to contribute from 1% to 16% of their
base compensation to the Savings Plan. An employee's before tax
contribution may not exceed 8%, while the after tax contribution may be
from 1% to 20% of base compensation. The Internal Revenue Service limits
the maximum amount a participant may contribute. The Company matches 50%
of employees' contributions up to 6% of their compensation.
Participants direct the investment of their contributions into the plan,
as discussed in Note 3, which includes various investment options offered
by the Savings Plan. Employee contributions may not be allocated to the
Employer Stock Fund. Participants are always 100% vested in their
contributions and become fully vested in the Company's matching
contributions after five years, in accordance with the following schedule:
Vesting Percentage
------------------
Less than 2 years 0%
2 years but less than 3 years 25%
3 years but less than 4 years 50%
4 years but less than 5 years 75%
5 years or more 100%
Participants receive the value of the vested portion of their account
balance when they leave the Company for any reason other than death, in
which case a beneficiary would receive the benefit. Participants may
generally withdraw unmatched after-tax contributions once during any 12
month period but may withdraw unmatched before-tax contributions only in
the case of "financial hardship" as defined in the Plan.
For the year ended December 31, 2002, forfeited nonvested accounts totaled
$142,551. These accounts will be used to reduce future employer
contributions.
Participants may borrow from their account balance a minimum of $1,000 up
to a maximum equal to the lesser of $50,000 or 50 percent of their vested
account balance, whichever is less. The loans are secured by the balance
in the participant's account and bear interest at rates that range from
5.75% to 10.50%, which are commensurate with local prevailing rates as
determined quarterly by the Plan administrator. Principal and interest
is paid ratably through payroll deductions.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Savings Plan are as
follows:
o The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of
America.
o The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of net assets available for benefits and changes therein.
Actual results could differ from those estimates.
o The Plan's investments are presented at fair value using quoted market
prices. In instances where quoted market prices are not available, the
fair value of investments is estimated primarily by banks, independent
investment brokerage firms and insurance companies.
o Purchases and sales of securities are recorded on a trade date basis.
Dividends are recorded on the ex-dividend date.
o Expenses - Administrative expenses of the Plan are paid by either the
Plan or the Plan's Sponsor, as provided in the Plan document.
o Payment of Benefits - Benefit payments to participants are recorded
upon distribution.
o Risks and Uncertainties - The Plan provides for various investment
options. The Plan's mutual funds invest in various securities
including U.S. government securities, corporate debt instruments and
corporate stocks. Investment securities, in general, are exposed to
various risks, such as interest rate, credit and overall market
volatility. Due to the level of risk associated with certain
investment securities, it is reasonably possible that changes in the
values of investment securities will occur in the near term and that
such changes could materially affect the amounts reported in the
statements of net assets available for Plan benefits.
3. INVESTMENTS
The following table presents investments, all of which are publicly
traded, except for the A&P Stable Value Investment. Investments that
represent 5 percent or more of the Plan's net assets are separately
identified by (*).
December 31, 2002 December 31, 2001
-------------------------- -------------------------
A&P Stable Value Investment (*) $ 106,679,754 $ 100,560,575
Prudential Stock Index Fund I (*) 52,078,104 73,596,940
PIMCO Total Return A (*) 25,138,941 19,415,531
AIM Balanced A Fund (*) 18,996,787 26,795,351
John Hancock Small Cap Value A Fund (* for 2001 only) 7,782,833 14,894,907
Amer Funds EuroPacific Growth A 9,787,599 11,285,605
MFS Massachusetts Investors Growth Stock A 9,369,197 11,461,405
Alliance Growth & Income A 9,753,736 12,792,753
Lord Abbett Mid Cap Value Fund 2,956,622 -
A&P Stock Fund 329,868 1,104,592
American Balanced Fund 605,376 -
Loan Fund 4,009,040 3,768,346
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$247,487,857 $275,676,005
================= =================
During 2002, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) depreciated
in value by $29,066,915 as follows:
Interest income - A&P Stable Value Investment $ 5,541,295
Interest income - other 320,075
Dividend income 2,366,728
Other income 774,720
----------------
Total income 9,002,818
----------------
Net (depreciation) appreciation in fair value of investments:
Prudential Stock Index Fund I (16,739,208)
PIMCO Total Return A 388,474
AIM Balanced A Fund (5,168,011)
John Hancock Small Cap Value A Fund (7,377,140)
Amer Funds EuroPacific Growth A (1,619,554)
MFS Massachusetts Investors Growth Stock A (3,466,749)
Alliance Growth & Income A (3,538,406)
Lord Abbett Mid Cap Value Fund 128,176
A&P Stock Fund (672,165)
American Balanced Fund (5,150)
----------------
Net depreciation (38,069,733)
-----------------
Net investment loss $ (29,066,915)
================
4. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of a common collective trust and
mutual funds managed by Prudential Trust Company. Prudential Trust
Company is the trustee as defined by the Plan and, therefore, these
transactions qualify as party-in-interest transactions. Certain
administrative functions are performed by the officers and
employees of the Company (who may be participants in the Plan) at no cost
to the Plan. These transactions are not deemed prohibited transactions
because they are covered by the statutory administrative exemption from
the Internal Revenue Code's and ERISA's rules on prohibited transactions.
5. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company reserves
the right to terminate the Plan subject to the provisions of ERISA. If the
Plan is terminated, each participant would receive the value of his or her
interest in the trust funds attributable to both participant and employer
contributions for all years of participation.
6. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by
letter dated June 19, 1995 that the Plan and related trust are designed in
accordance with applicable sections of the Internal Revenue Code (the
"Code"). The Plan has been amended to reflect the provisions required by
the Small Business Job Protection Act ("SBJPA"), since receiving the
determination letter. However, the Plan Administrator believes that the
Plan is currently designed and being operated in compliance with the
applicable requirements of the Internal Revenue Code. Therefore, no
provision for income taxes has been included in the Plan's financial
statements.
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
Description of Investment
including maturity date, rate of
Identity of Issue, Borrower, interest, collateral, par or
Lessor, or Similar Party maturity value Cost Current Value
----------------------------------- -------------------------------- ------------ -------------
Wells Fargo Bank Minnesota, N.A. A&P Stable Value Investment $96,625,571 $106,679,754
Prudential Mutual Funds (*) Prudential Stock Index Fund I 76,476,315 52,078,104
AIM Balanced Fund A AIM Balanced Fund A 26,649,584 18,996,787
PIMCO Total Return A PIMCO Total Return A 24,933,744 25,138,941
MFS Massachusetts Investors Growth MFS Massachusetts Investors Growth
Stock A Stock A 14,309,234 9,369,197
Alliance Growth and Income A Alliance Growth and Income A 12,965,709 9,753,736
Amer Funds Euro Pacific Growth A Amer Funds Euro Pacific Growth A 12,187,291 9,787,599
John Hancock Small Cap Value A John Hancock Small Cap Value A 11,485,555 7,782,833
Lord Abbett Mid Cap Value Fund Lord Abbett Mid Cap Value Fund 2,828,989 2,956,622
American Balanced Fund American Balanced Fund 607,739 605,376
A&P Stock Fund (*) A&P Stock Fund 409,045 329,868
Participant loans 5.75% - 10.50% - 4,009,040
(*) Party-in-interest
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement No.
2-92428 on Form S-8, Post Effective Amendment No. 7 to Registration Statement
No. 2-59290 on Form S-8 and Post Effective Amendment No. 3 to Registration
Statement No. 2-73205 on Form S-8 of our report dated June 27, 2003, appearing
in the Annual Report on Form 11-K of The Great Atlantic & Pacific Tea Company,
Inc. Savings Plan for the year ended December 31, 2002.
/s/ PricewaterhouseCoopers LLP
------------------------------
PricewaterhouseCoopers LLP
Florham Park, NJ
June 27, 2003
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement No.
2-92428 on Form S-8, Post Effective Amendment No. 7 to Registration Statement
No. 2-59290 on Form S-8 and Post Effective Amendment No. 3 to Registration
Statement No. 2-73205 on Form S-8 of our report dated June 21, 2002, appearing
in the Annual Report on Form 11-K of The Great Atlantic & Pacific Tea Company,
Inc. Savings Plan for the year ended December 31, 2002.
/s/ Deloitte & Touche LLP
-------------------------
Parsippany, New Jersey
June 27, 2003
Exhibit 99.1
Certification Pursuant To 18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In connection with the Annual Report of The Great Atlantic & Pacific Tea
Company, Inc. Savings Plan (the "Plan") on Form 11-K for the period ending
December 31, 2002 as filed with the Securities and Exchange Commission on the
date hereof (the "Report"), I, Ann Marie Phillips, Vice President - Benefits
(Plan Administrator), President and Chief Executive Officer, of The Great
Atlantic & Pacific Tea Company, Inc., certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the Plan.
June 27, 2003 /s/ Ann Marie Phillips
-------------------------
Vice President - Benefits
(Plan Administrator)