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, 2009
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
------------------------------------------------
(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 24, 2010 By /s/ Melissa E. Sungela
----------------------------------------------
Melissa E. Sungela
Vice President and Corporate Controller
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
-----------------------------------------------------------
Financial Statements as of December 31, 2009 and 2008
and for the Year Ended December 31, 2009
______________________________________________________________________________
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
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.... 2
FINANCIAL STATEMENTS
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2009 AND 2008 .............................. 3
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2009..................... 4
NOTES TO FINANCIAL STATEMENTS.............................. 5-17
SUPPLEMENTAL SCHEDULE
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
As of December 31, 2009.................................. 18
EXHIBITS
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 19
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 20
Note: Other schedules required by Section 2520.103-10 of the Department of
Labor's Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
----------------------------------------------------------------------
-1-
Report of Independent Registered Public Accounting Firm
-------------------------------------------------------
To the Participants and Administrator 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 "Plan") as
of December 31, 2009 and 2008, and the related statement of changes in net
assets available for benefits for the year ended December 31, 2009. 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 audits.
We conducted our audit in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards 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. 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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of The Great
Atlantic & Pacific Tea Company, Inc. Savings Plan as of December 31, 2009 and
2008, and the changes in its net assets available for benefits for the year
ended December 31, 2009, in conformity with accounting principles generally
accepted in the United States of America.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets (Held
at End of Year) is presented only 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 our audit of the basic 2009 financial statements and, in our opinion, is
fairly stated in all material respects when considered in relation to the basic
financial statements taken as a whole.
/s/ WithumSmith+Brown, PC
-------------------------
Somerville, New Jersey
June 24, 2010
-2-
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 2009 AND 2008
2009 2008
----------------- ------------------
Assets:
Investments - at fair value (Note 4) $474,194,482 $409,355,108
Receivables:
Participant contributions 427,531 452,484
Employer contributions 7,417,697 7,906,646
----------------- -----------------
Total receivables 7,845,228 8,359,130
----------------- -----------------
Total assets 482,039,710 417,714,238
Liabilities:
Accrued expenses 211,566 246,215
----------------- -----------------
Total liabilities 211,566 246,215
----------------- -----------------
Net assets reflecting investments
at fair value 481,828,144 417,468,023
----------------- -----------------
Adjustment from fair value to contract value
for fully benefit responsive investment
contracts (security-backed contracts) 426,917 7,918,616
Adjustment from fair value to contract value
for fully benefit responsive investments
(collective trust funds) (398,242) 4,169,020
----------------- -----------------
Net assets available for benefits $ 481,856,819 $ 429,555,659
================= =================
The accompanying notes are an integral
part of these financial statements.
-3-
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 2009
2009
-----------------
Additions:
Contributions:
Participants $18,852,108
Employer 7,608,813
Rollover 111,084
-----------------
26,572,005
Investment income:
Net appreciation in fair value of investments (Note 4) 57,769,874
Interest income 432,360
Dividend income 6,347,533
-----------------
64,549,767
Total additions, net 91,121,772
-----------------
Deductions:
Benefits paid to participants 38,112,557
Administrative expenses 708,055
-----------------
Total deductions 38,820,612
-----------------
Net increase in net assets available for benefits 52,301,160
Net assets available for benefits:
Beginning of year 429,555,659
-----------------
End of year $481,856,819
=================
The accompanying notes are an integral
part of these financial statements.
-4-
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 2009
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 Document for a
more complete description of the Savings Plan's provisions.
Reclassifications
Certain reclassifications have been made to prior year amounts to conform
to current year presentation. There was no effect on the net assets
available for benefits as of December 31, 2008.
Plan Merger
On January 1, 2008, the Company merged The Great Atlantic & Pacific Tea
Company, Inc. Savings Plan with The Great Atlantic & Pacific Tea Company,
Inc. Retirement Plan. Additionally, on July 1, 2008, the Company merged
The Great Atlantic & Pacific Tea Company, Inc. Savings Plan with The Great
Atlantic & Pacific Tea Company, Inc. Savings Plan for Certain Employees,
the Pathmark Stores, Inc. Savings Plan and the Pathmark Stores, Inc.
Savings Plan for Union Employees.
General
The Savings Plan is a voluntary defined contribution plan of the Company.
The Savings Plan covers employees of the Company who are not covered by a
collective bargaining agreement (CBA), as well as employees covered by a
CBA where the CBA specifically provides for such coverage. Effective
January 1, 2008, the Savings Plan was amended to include the employer
money purchase savings plan covering all eligible employees of the Company
and each subsidiary, which is designated a participating employer by the
Board of Directors. The Savings Plan is subject to the Provisions of the
Employee Retirement Income Security Act of 1974 ("ERISA").
Contributions
For the defined contribution portion of the Savings Plan, eligible
employees are automatically enrolled at a 3% deferral rate unless the
employee declines participation. Employees have the option to contribute
from 1% to 40% of their base compensation to the Savings Plan. This can be
any combination of pre-tax and post-tax percentages, as long as the total
of the percentages does not exceed 40% of base compensation. Union
employee contributions are limited to 20% of their compensation and they
are not automatically enrolled.
-5-
Additionally, the Internal Revenue Service limits the maximum amount a
participant may contribute, which was $16,500 for fiscal 2009.
Participating employees age 50 and older may elect to make "catch-up"
pre-tax contributions to the Plan in accordance with Internal Revenue
Service Regulations. The maximum "catch-up" contribution allowed during
the 2009 Plan year was $5,500. On March 1, 2009, the Company suspended its
matching contributions for the remainder of the 2009 Plan year for all
defined contribution plan participants, except for a small number of
participants whose existing collective bargaining agreement still requires
matching contributions. Prior to March 1, 2009, the Company matched 50% of
eligible employee contributions up to 6% of their compensation after one
year of service, except for certain union employees who were not eligible
for matching contributions.
Participants direct the investment of their contributions into various
investment options offered by the Savings Plan and are permitted to change
their contribution rates on a daily basis. In addition, they may change
their investment options with regard to future contributions and
reallocate existing investment balances on any business day. Employee
contributions may not be allocated to the Employer Stock Fund.
For the non-elective Company contributions, the Company contributes 4% of
an eligible employee's base compensation for the Plan year. The eligible
employees are not required to make any contributions to the Savings Plan
to be eligible for the non-elective Company contributions. Refer to Note
10 - Subsequent Events for the Company's suspension of this contribution
for Plan year 2010.
Eligibility and Vesting
Prior to May 4, 2004, the Savings Plan covered eligible employees of the
Company who completed at least one year of service (1,000 hours in a
12-month period) if age 21 or older or the earlier of five years of
service or age 21, if under age 21 at time of employment. Effective May 4,
2004 the Plan was amended to (a) allow employees to contribute to the Plan
on the first of the month following their hire date based on the
eligibility criteria described in the preceding sentence, and (b) stated
that each participant shall be 100% vested in the event of termination or
partial termination of the Savings Plan (if participant is affected by
partial termination) or upon retirement, disability or death.
-6-
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:
Years of Service 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 are 100% vested in the Company's non-elective contributions
made to their Savings Plan account after completing two years of service
with the Company (1,000 hours in each 12-month period).
Payment of Benefits
Participants may generally withdraw their 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 Savings Plan.
Participants may 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. Terminated
participants whose account balance is less than $1,000 receive automatic
distributions.
Forfeited Accounts
At December 31, 2009 and December 31, 2008, forfeited nonvested accounts
totaled $10,411 and $1,086,525, respectively. These accounts are used to
decrease future employer contributions and can also be used to pay certain
administrative expenses. During the year ended December 31, 2009, the Plan
used forfeited nonvested accounts of $1,208,474 to fund employer
contributions and $145,077 for administrative expenses.
Participant Accounts
Each participant's account is credited with the participant's contribution
and (a) any matching Company contribution, (b) the non-elective Company
contribution, if any, and (c) allocations of Savings Plan earnings.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
-7-
Participant Loans
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. The loans are collateralized by the balance in the
participant's account and bear a fixed interest rate for the duration of
the loan equal to Prime plus 1% as published in the Wall Street Journal
fifteen days prior to the start of the calendar quarter. Principal and
interest are paid ratably through payroll deductions. The maximum loan
repayment period is five years, or twenty years for the purchase of a
primary residence. There is no minimum loan duration period.
During the year ended December 31, 2009, interest rates on participant
loans ranged from 4.00% to 9.50%. During the year ended December 31, 2008,
interest rates on participant loans ranged from 4.00% to 10.50%.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Savings Plan are as
follows:
Basis of Accounting -
The accompanying financial statements have been prepared in accordance
with accounting principles generally accepted in the United States of
America on the accrual basis of accounting.
Fully benefit-responsive investment contracts held by a defined
contribution plan are required to be reported at fair value. However,
contract value is the relevant measurement attribute for that portion of
the net assets available for benefits of a defined-contribution plan
attributable to fully benefit-responsive investment contracts because
contract value is the amount participants would receive if they were to
initiate permitted transactions under the terms of the plan. The plan
invests in investment contracts through a collective trust. The Statement
of Net Assets Available for Benefits presents the fair value of the
investment in the collective trust as well as the adjustment of the
investment in the collective trust from fair value to contract value
relating to the investment contracts, as required. The Statement of
Changes in Net Assets Available for Benefits is prepared on a contract
value basis.
Use of Estimates -
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
Savings Plan management to make significant estimates and assumptions that
affect the reported amounts of net
-8-
assets available for benefits at the date of the financial statements,
changes in net assets available for benefits during the reporting period
and, where applicable, the disclosure of contingent assets and liabilities
at the date of the financial statements. Actual results could differ from
those estimates.
Investment Income Recognition -
Purchases and sales of securities are recorded on a trade date basis.
Dividends are recorded on the ex-dividend date. Interest income is
recorded as earned.
Expenses -
All administrative expenses are being paid by the Savings Plan.
Payment of Benefits -
Benefit payments to participants are recorded upon distribution.
Risks and Uncertainties -
The Savings Plan provides for various investment options. The Savings
Plan's mutual funds invest in various securities including U.S. government
securities, corporate debt instruments and corporate stocks. The
Employer-related securities fund invests in the Company's common stock.
The Savings Plan's A&P Stable Value Fund account is invested in common
collective trusts and wrapper contracts. 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 and the significant volatility in the U.S.
and world markets, 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 participant account balances and the amounts
reported in the statements of net assets available for benefits.
Recently Adopted Accounting Standards -
In September 2009, the Financial Accounting Standards Board ("FASB")
issued guidance which provides a practical expedient for measuring the
fair values of certain investments at their Net Asset Value ("NAV") and
requires new disclosures of the attributes of investments in scope of this
guidance. This guidance was effective for our Plan year ended December 31,
2009, with earlier adoption permitted. Refer to Note 3 - Fair Value
Measurements for the related disclosures.
In March 2008, the ("FASB") issued new accounting guidance for disclosures
about derivative instruments and hedging, which
-9-
expands the disclosure requirements relating to an entity's derivative
instruments and hedging activities. This guidance is effective for the plan
year ended December 31, 2009. The adoption of this guidance did not have a
material impact on our financial statements and disclosures.
Recently Issued Accounting Standards -
In January 2010, the FASB issued new accounting guidance requiring
additional disclosures about the different classes of assets and
liabilities measured at fair value, valuation techniques and inputs used,
the activity in Level 3 fair value measurements, and the transfers between
Levels 1 and 2. It also clarified guidance around disaggregation and
disclosures of inputs and valuation techniques for Level 2 and Level 3
fair value measurements. The current guidance is effective for the plan
year ended December 31, 2010, except for the new disclosures relating to
the Level 3 reconciliation, which are effective for the plan year ended
December 31, 2011. The Plan is currently evaluating the impact of its
adoption on the Plan's financial statements.
3. FAIR VALUE MEASUREMENTS
The accounting guidance for fair value measurement defines and establishes
a framework for measuring fair value. Inputs used to measure fair value
are classified based on the following three-tier fair value hierarchy:
Level 1 - Quoted prices in active markets for identical assets or
liabilities.
Level 2 - Directly or indirectly observable inputs other than Level 1
quoted prices in active markets, such as quoted prices for similar assets
or liabilities; or other inputs that are observable or can be corroborated
by observable market data for substantially the full term of the assets or
liabilities (interest rates, prepayment speeds, credit risk, etc.).
Level 3 - Unobservable inputs that are supported by little or no market
activity and that are financial instruments whose value is determined
using pricing models, discounted cash flows, or similar methodologies, as
well as instruments for which the determination of fair value requires
significant judgment or estimation.
A financial asset or liability's classification within the hierarchy is
determined based on the lowest level input that is significant to the fair
value measurement.
-10-
The following table sets forth by level, within the fair value hierarchy,
the Plan's assets at fair value, on a recurring basis, as of December 31,
2009 and December 31, 2008:
Fair Value Measurements
At December 31, 2009
-------------------------------------------------------- ------------------
Description Level 1 Level 2 Level 3 Total
----------- ------------------- ----------------- -------------- ------------------
Money market fund $ 15,710,647 $ - $ - $ 15,710,647
Mutual funds
Fixed income 33,902,024 - - 33,902,024
Large-Cap 124,311,518 - - 124,311,518
Mid-Cap 18,897,996 - - 18,897,996
Small Cap 15,362,814 - - 15,362,814
International 26,130,704 - - 26,130,704
Blended 51,151,763 - - 51,151,763
------------------- -----------------
Total mutual funds 269,756,819 - - 269,756,819
Collective trust funds - 180,735,398 - 180,735,398
Wrapper contracts - 191,462 - 191,462
Employer-related securities
fund - 257,558 - 257,558
Participant loans - - 7,542,598 7,542,598
------------------- ------------------ ---------- ------------------
Fair value of investments $ 285,467,466 $ 181,184,418 $7,542,598 $ 474,194,482
------------------- ------------------ ---------- ------------------
Fair Value Measurements
At December 31, 2008
-------------------------------------------------------
Description Level 1 Level 2 Level 3 Total
----------- ------------------- ------------------ ----------- ----------------
Money Market Fund $ 17,089,278 $ - $ - $ 17,089,278
Mutual funds 206,915,181 - - 206,915,181
Collective trust funds - 178,722,954 - 178,722,954
Wrapper contracts - 192,835 - 192,835
Employer-related securities
fund - 151,446 - 151,446
Participant loans - - 6,283,414 6,283,414
------------------- ------------------- ------------- ----------------
Fair value of investments $ 224,004,459 $ 179,067,235 $ 6,283,414 $ 409,355,108
------------------- ------------------- ------------- ----------------
The following is a description of the valuation methodologies used for
assets measured at fair value.
The money market fund is considered cash and cash equivalents and is
valued at a dollar per share. As such, the fair value of the money market
fund is classified as Level 1.
Mutual funds are valued at their quoted market prices, which represent the
net asset value of the securities held in such funds. As such, they are
classified as Level 1.
The Savings Plan's interest in the A&P Stable Value Fund consists of
common/collective trusts and wrapper contracts, which are valued based on
the Net Asset Value reported by the investment advisor in the audited
financial statements of the Great Atlantic and Pacific Tea Company, Inc.
Stable Value Separate Account as of December 31, 2009 and 2008. The fair
value of the wrapper contracts provided by a security-backed contract
issuer is the present value of the difference between the current wrapper
fee and the contracted wrapper fee. The fees and the discount rate
-11-
are also directly observable inputs. The fair values of the
security-backed or common collective trust contracts are based on the
cumulative value of their underlying investments and wrapper fee.
Investment in security-backed contracts allows for periodic deposits and
withdrawals. As such, the Saving Plan's interest in the A&P's Stable Value
Fund is classified as Level 2.
The Plan holds an investment fund which consists primarily of
employer-related securities. Fidelity Management Trust Company is the
fund's custodian and is paid related custodial fees. As of December 31,
2009 and 2008, A&P common stock represented approximately 99% of the
fund's assets, and the remaining 1% consisted of cash. While A&P common
stock is publically traded, the units of this A&P Stock Fund are only
available to the participants of this Plan. This fund is valued at the net
asset value ("NAV") of the units held by the Plan at year end as
calculated by the custodian of the fund. The fair value of this fund is
considered to be a level 2 measurement, since the fair value is based on a
comparison of the Plan sponsor's publically traded stock value.
Participant loans are valued at cost, which is the best approximation of
their fair value.
The following table sets forth a summary of the changes in the fair value
of the Plan's Level 3 assets for the years ended December 31, 2009 and
December 31, 2008:
Level 3 Measurements
--------------------
Participant Loans
--------------------------------------------------------------
December 31, 2009 December 31, 2008
--------------------------- ---------------------------
Balance, beginning of the year $ 6,283,414 $ 3,936,358
Loan originations, repayments
and distributions, net 1,259,184 2,347,056
--------------------------- ---------------------------
Balance, end of year $ 7,542,598 $ 6,283,414
=========================== ===========================
The methods described above may produce a fair value calculation that may
not be indicative of net realizable value or reflective of future fair
values. Furthermore, while the Plan believes its valuation methods are
appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine fair value of certain
financial instruments could result in a different fair value measurement
at the reporting date.
-12-
4. INVESTMENTS
The following table represents a breakdown of the fair value of
investments:
December 31, 2009 December 31, 2008
------------------- -----------------
Employer-related Securities Fund $ 257,558 $ 151,446
Common Collective Trusts at Net Asset Value 180,735,398 178,722,954
Wrappers at Fair Value 191,462 192,835
Money Market Fund at Fair Value 15,710,647 17,089,278
Mutual Funds at Net Asset Value 269,756,819 206,915,181
Participant Loans 7,542,598 6,283,414
------------------- ------------------
Total investments at fair value $ 474,194,482 $ 409,355,108
=================== ==================
The following table presents investments that represent 5 percent or more
of the Savings Plan's net assets at December 31, 2009 and 2008.
December 31, 2009 December 31, 2008
--------------------- -----------------
Pyramis Intermediate Duration Commingled* $ 89,026,272 $ 79,002,519
Wells Fargo Synthetic Stable Value Fund* 52,369,832 53,958,773
Bank of America, N.A. Fixed Income Fund F* 39,559,431 38,441,652
Vanguard Institutional Index 47,059,848 38,101,122
Allianz NFJ Dividend Value Admin Fund 29,589,922 27,719,696
AF Growth of Amer R5** 28,052,092 19,541,127
PIMCO Total Return Admin Fund 33,902,024 26,461,067
Fidelity Balanced Fund 32,280,547 26,572,092
Fidelity International Discovery** 26,130,704 20,848,994
------------------
* Represents contract value for these investments
** The market value of this fund at December 31, 2008 was below the 5%
of the Savings Plan's net assets. However, it is presented for
comparability.
During 2009, the Savings Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year) appreciated
in value by $57,769,874, as follows:
Net appreciation in fair value of investments:
Employer-related securities fund $ 116,948
Common Collective Trusts 7,924,980
Mutual funds 49,727,946
----------------------
Net appreciation $ 57,769,874
======================
5. Synthetic Guaranteed Investment Contracts (GIC)
The Savings Plan had two investments in Synthetic Guaranteed Investment
Contracts ("GIC") during the 2009 and 2008 Plan years. These are
investments that simulate the performance of a traditional GIC through the
use of financial instruments (referred to as "wrapper" contracts). For
these investments, the Company invested in common / collective trusts
which consist of government securities, private and public backed
mortgaged-backed and other asset-backed securities as well as grouped
investments. The benefit
-13-
responsive "wrapper" contracts were all liquidity agreements. As of
December 31, 2009 and 2008, the aggregate fair values of the "wrapper"
contracts held by the Savings Plan were $191,462 and $192,835,
respectively.
There are no reserves against contract value for credit risk of the
contract issuer or otherwise. The crediting interest rate is based on a
formula agreed upon with the issuer, but it may not be less than zero
percent. Such interest rates are reviewed on a quarterly basis for
resetting.
The crediting rate of security-backed contracts will track current market
yields on a trailing basis. The rate reset allows the contract value to
converge with the fair value of the underlying portfolio over time,
assuming the portfolio continues to earn the current yield for a period of
time equal to the current portfolio duration.
To the extent that the underlying portfolio of a security-backed
contract has unrealized and/or realized losses, a positive adjustment is
made to the adjustment from fair value to contract value under the
contract value accounting. As a result, the future crediting rate may be
lower over time and the then-current market rates. Similarly, if the
underlying portfolio generates unrealized and/or realized gains, a
negative adjustment is made to the adjustment from fair value to contract
value, and the future crediting rate may be higher than the then-current
market rates.
Certain events limit the ability of the Savings Plan to transact at
contract value with the issuer. Such events include the following: (1)
amendments to the Savings Plan documents, (2) changes to Savings Plan's
prohibition on competing investment options or deletion of equity wash
provisions, (3) bankruptcy of the Savings Plan sponsor or other Savings
Plan sponsor events that cause a significant withdrawal from the plan, or
(4) the failure of the trust to qualify for exemption from federal income
taxes or any required prohibited transaction exemption under the Employee
Retirement Income Security Act of 1974. The Savings Plan administrator
does not believe that the occurrence of any such value event, which would
limit the Savings Plan's ability to transact at contract value with
participants, is probable.
-14-
The guaranteed investment contract does not permit the insurance company
to terminate the agreement prior to the scheduled maturity date.
Reconciled Contract
Plan Year 2009 Value of Investment
--------------------------------------------------------------------------- -------------------------
Monumental Life Insurance Co.,4.43%
Pyramis Intermediate Duration Commingled Pool $89,601,796
Contract value liquidity agreement 93,415
Adjustment to contract value (668,939)
-------------------------
Total Contract Value $89,026,272
-------------------------
Crediting rate: 4.28%
Yield Rate: 3.93%
Bank of America, N.A. 2.23%
Fixed Income Fund F $38,365,528
Contract value liquidity agreement 98,047
Adjustment to contract value 1,095,856
-------------------------
Total Contract Value $39,559,431
Crediting rate: 2.13%
-------------------------
Yield Rates: 3.71% Total Plan Year 2009 $128,585,703
-------------------------
Reconciled Contract
Plan Year 2008 Value of Investment
--------------------------------------------------------------------------- -------------------------
Monumental Life Insurance Co., 5.42%
Pyramis Intermediate Duration Commingled Pool $ 73,833,642
Contract value liquidity agreement 124,875
Adjustment to contract value 5,044,002
-------------------------
Total Contract Value $ 79,002,519
-------------------------
Crediting rate: 5.42%
Yield Rate: 7.55%
Bank of America, N.A. 4.27%
Fixed Income Fund F $ 35,499,108
Contract value liquidity agreement 67,960
Adjustment to contract value 2,874,584
-------------------------
Total Contract Value $ 38,441,652
Crediting rate: 4.27%
-------------------------
Yield Rates: 6.24% Total Plan Year 2008 $ 117,444,171
-------------------------
In addition to the two investments in GIC's discussed above for Plan years
ended December 31, 2009 and 2008, the Savings Plan invests in collective
trust funds that primarily invest in security-backed contracts. As of
December 31, 2009 and 2008, the adjustment from fair value to contract
value for fully benefit responsive investments for these collective trust
funds were $(398,242) and $4,169,002, respectively.
The average yield rates based on actual earnings for fully benefit
responsive investment contracts as of December 31, 2009 and 2008 were
4.07% and 4.84%, respectively. The average yield rates based on interest
rate credited to participants for fully benefit responsive investment
contracts as of December 31, 2009 and 2008 were 3.91% and 4.72%,
respectively.
-15-
6. RELATED PARTY TRANSACTIONS
Certain Savings Plan investments are mutual funds managed by Fidelity
Management Trust Company, which is also the custodian for these
investments. Also, certain investments within the common collective trust
fund are managed by Wells Fargo, which is also the custodian for these
investments. Therefore, these transactions qualify as party-in-interest
transactions. The Savings Plan has investments in A&P Common Stock that
were made in prior years. Employees may no longer select this investment
option.
Certain administrative functions are performed by the officers and
employees of the Company (who may be participants in the Savings Plan) at
no cost to the Savings 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.
7. SAVINGS PLAN TERMINATION
Although it has not expressed any intent to do so, the Company reserves
the right to terminate the Savings Plan subject to the provisions of
ERISA. If the Savings Plan is terminated, each participant would receive
the value of his or her interest in the trust funds attributable to both
participant and employer vested contributions for all years of
participation.
8. FEDERAL INCOME TAX STATUS
The Internal Revenue Service has determined and informed the Company by
letter dated April 19, 2004 that the Savings Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (the "Code"). The Savings Plan has been amended since receiving the
determination letter. The Savings Plan Administrator believes that the
Savings 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 Savings Plan's
financial statements.
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9. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits and
investment income per the financial statements to the Form 5500:
December 31, 2009 December 31, 2008
------------------- -----------------
Net assets available for benefits
per the financial statements $ 481,856,819 $ 429,555,659
Adjustment from contract value to fair
value for fully benefit responsive
investment contracts for security-backed
contracts (426,917) (7,918,616)
Adjustment from contract value to fair value
for fully benefit responsive investments
for collective trust funds 398,242 (4,169,020)
------------------- -----------------
Net assets available for benefits
per the Form 5500 $ 481,828,144 $ 417,468,023
=================== =================
December 31, 2009
-------------------
Investment income per financial
statements $ 64,549,767
Adjustment from contract value to fair
value at December 31, 2008 12,087,636
Adjustment from contract value to fair
value at December 31, 2009 (28,675)
-------------------
Investment income per the Form 5500 $ 76,608,728
===================
10. SUBSEQUENT EVENTS
The Company has evaluated and disclosed any subsequent events that have
occurred through the date of this filing. The following is a summary
of the subsequent event.
Effective January 1, 2010, the Company has suspended its non-elective
contributions to the defined contribution retirement plans, which were
equal to 4% of eligible participants' salaries.
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THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC. SAVINGS PLAN
SCHEDULE H, LINE 4i - SCHEDULE OF ASSETS (HELD AT END OF YEAR)
AS OF DECEMBER 31, 2009
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
---------------------------------------------- ---------------------------------------- ------------------ ----------------
A&P Stable Value Fund
Wells Fargo Synthetic Stable Value Fund(*) Collective Trust Fund $ 46,405,951 $ 52,768,074
Pyramis Intermediate Duration
Commingled Pool (*) Collective Trust Fund 80,169,637 89,601,796
Bank of America, N.A. Fixed Income Fund F(*) Collective Trust Fund 32,618,087 38,365,528
Monumental Life Insurance Company Wrapper Contract, rate of interest 4.43% - 93,415
Bank of America, N.A. Wrapper Contract, rate of interest 2.23% - 98,047
PIMCO Total Return Administrative Mutual fund 33,091,275 33,902,024
Davis NY Venture A Mutual fund 21,142,996 19,609,656
Vanguard Institutional Index Mutual fund 51,742,258 47,059,848
Allianz NFJ Dividend Value Admin Fund Mutual fund 37,725,689 29,589,922
Wells Fargo Small Cap Value Inv CL Mutual fund 2,745,017 3,092,988
Artisan Mid Cap Value Mutual fund 11,762,158 12,543,405
American Funds Growth Fund of America R5 Mutual fund 29,987,215 28,052,092
Royce Value Plus Service CL Mutual fund 12,631,381 12,269,826
Munder Mid Cap Core Growth Class Y Mutual fund 573,465 609,244
Fidelity Balanced (*) Mutual fund 34,636,389 32,280,547
Fidelity International Discovery (*) Mutual fund 29,482,497 26,130,704
Fidelity Low-Priced Stock Fund (*) Mutual fund 5,549,913 5,745,346
Fidelity Freedom Income (*) Mutual fund 2,067,975 2,101,771
Fidelity Freedom 2000 (*) Mutual fund 483,945 496,897
Fidelity Freedom 2005 (*) Mutual fund 136,140 145,982
Fidelity Freedom 2010 (*) Mutual fund 1,752,405 1,795,985
Fidelity Freedom 2015 (*) Mutual fund 2,236,579 2,401,729
Fidelity Freedom 2020 (*) Mutual fund 3,045,748 3,055,232
Fidelity Freedom 2025 (*) Mutual fund 2,641,010 2,793,557
Fidelity Freedom 2030 (*) Mutual fund 1,712,084 1,822,612
Fidelity Freedom 2035 (*) Mutual fund 1,054,130 1,181,422
Fidelity Freedom 2040 (*) Mutual fund 1,731,881 1,835,779
Fidelity Freedom 2045 (*) Mutual fund 599,377 733,063
Fidelity Freedom 2050 (*) Mutual fund 436,615 507,188
Fidelity Money Market Trust Retirement(*) Money Market Fund 15,710,647 15,710,647
The Great Atlantic & Pacific Tea
Company, Inc.(*) A&P Stock Fund 293,496 257,558
Participant loans Mature from 2010 to 2029, 4.00% - 9.50% - 7,542,598
---------------- --------------
Total $ 464,165,960 $ 474,194,482
================ ==============
(*) Party-in-interest
See Report of Independent Registered Accounting Firm
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Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (Nos. 333-147808, 333-119045, 333-78805, and 333-152491)
of The Great Atlantic & Pacific Tea Company, Inc. of our report dated June 24,
2010 relating to the financial statements of The Great Atlantic & Pacific Tea
Company, Inc. Savings Plan, which appears in this Form 11-K.
/s/ WithumSmith+Brown, PC
-------------------------
WithumSmith+Brown PC
Somerville, New Jersey
June 24, 2010
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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 year ended December
31, 2009 as filed with the Securities and Exchange Commission on the date hereof
(the "Report"), I, Ali B. Rizvi, Senior Director Taft Hartley, HR and Labor
Analytics, 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, to the best of my knowledge:
(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 24, 2010 /s/ Ali B. Rizvi
---------------------------------------------
Ali B. Rizvi
Senior Director Taft Hartley, HR
and Labor Analytics
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