THE GREAT ATLANTIC & PACIFIC TEA COMPANY 
By The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol: GAP) announced fiscal 2007 first quarter results for the 16 weeks ended June 16, 2007.
Sales for the first quarter in the Company's core Northeast operations were $1.68 billion versus $1.65 billion last year, with comparable store sales increasing 1.0%. Total Company sales for the first quarter were $2.0 billion, comparable to $2.0 billion in last year's first quarter. Total Company net loss for the quarter was $43 million or $1.03 per share versus a loss of $6 million or $0.15 per share last year. This quarter's net loss of $43 million includes a loss of $125 million attributable to non-core operations in the Midwest and New Orleans, offset by a gain of $78 million from the sale of Metro Inc. shares.
The results for the first quarter of fiscal years 2007 and 2006 include items the Company considers non-operating in nature that management excludes when evaluating the results of the ongoing business. These items are listed on Schedule 3 of the press release. Excluding these items, adjusted loss from operations for the Northeast was $3.5 million as compared to a loss of $2.5 million in last year's first quarter. Northeast EBITDA, excluding non-operating items, was $44 million versus $43 million in the first quarter of last year. Adjusted loss from operations and adjusted ongoing operating EBITDA for the total Company was $8.5 million and $45 million, respectively, as compared to $3.4 million and $48 million in last year's first quarter.
Christian Haub, Executive Chairman of the Board, said, ?A&P's strategic transformation continued on all key fronts in the first quarter. Top and bottom line results in our core business were further improved, our strategy to concentrate our retail activities in the Northeast by divesting non-core operations moved forward, and the closing process of the proposed Pathmark transaction is proceeding as planned.?
Eric Claus, President and Chief Executive Officer, said, ?The ongoing improvement in operations and merchandising, combined with strict cost controls, has delivered continued year over year improved EBITDA. Although total Company sales for the quarter were impacted by the winding down of our since-closed Midwest operations, we are pleased with our performance in the Northeast market. Our core businesses posted positive comparable store sales and improved gross margins ? attributable to more effective merchandising, more profitable fresh product distribution, good returns from our new Fresh stores, and strong improvement in our discount Food Basics group. On the cost side we suffered the impact of higher utility expenses but were still able to achieve overall improved results.
?During the quarter, we announced definitive plans to exit the Midwest and Southern markets, to focus all resources on growing our core Northeast business. The Farmer Jack group ceased operating as of July 7, with 43 stores sold and negotiations continuing for the balance. The sale process is also moving forward for the Sav-A-Center division based in New Orleans, which we expect to conclude by this Fall.
?With each quarter, we move closer to the realization of the New A&P as a sustainably profitable, diverse and consumer-focused Northeastern retailer. Our ongoing store development and operating improvements, and the transformational opportunity of adding Pathmark's distinct customer appeal to our roster of formats, creates truly exciting prospects for the foreseeable future and beyond,? Mr. Claus said.
Founded in 1859, A&P is one of the nation's first supermarket chains. The Company operates 337 stores in 8 states and the District of Columbia under the following trade names: A&P, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, Sav-A-Center and Food Basics.
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 17, 2007.
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 measures ?Adjusted (loss) income from operations? and ?EBITDA? to evaluate the Company's liquidity and it is among the primary measures used by management for planning and forecasting of future periods. Adjusted (loss) income from operations is defined as (loss) income 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 and dividend income, taxes, depreciation, amortization, equity in earnings of Metro, Inc., discontinued operations, the (loss) gain on the sale of Metro Inc. shares and the (loss) 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 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.
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.
| The Great Atlantic & Pacific Tea Company, Inc. | ||||||||
| Schedule 1 - GAAP Earnings for the 16 weeks ended June 16, 2007 and June 17, 2006 | ||||||||
| (Unaudited) | ||||||||
| (In thousands, except share amounts and store data) | ||||||||
| 16 Weeks Ended | ||||||||
June 16, | June 17, | |||||||
| 2007 | 2006 | |||||||
| Sales | $ | 1,986,925 | $ | 1,994,428 | ||||
| Cost of merchandise sold | (1,386,601 | ) | (1,391,427 | ) | ||||
| Gross margin | 600,324 | 603,001 | ||||||
| Store operating, general and administrative expense | (714,519 | ) | (613,885 | ) | ||||
| Loss from operations | (114,195 | ) | (10,884 | ) | ||||
| Loss on sale of Canadian operations | (281 | ) | (326 | ) | ||||
| Gain on sale of shares of Metro, Inc. | 78,388 | - | ||||||
| Interest expense | (21,419 | ) | (21,371 | ) | ||||
| Interest and dividend income | 4,666 | 4,503 | ||||||
| Equity in earnings of Metro, Inc. | 7,869 | 7,947 | ||||||
| Loss from continuing operations before income taxes | (44,972 | ) | (20,131 | ) | ||||
| Benefit from income taxes | 18,830 | 11,492 | ||||||
| Loss from continuing operations | (26,142 | ) | (8,639 | ) | ||||
| Discontinued operations: | ||||||||
| (Loss) income from operations of discontinued businesses, net of tax | (1,829 | ) | 2,540 | |||||
| Loss on disposal of discontinued operations, net of tax | (15,192 | ) | (10 | ) | ||||
| (Loss) income from discontinued operations | (17,021 | ) | 2,530 | |||||
| Net loss | $ | (43,163 | ) | $ | (6,109 | ) | ||
| Net (loss) income per share - basic and diluted: | ||||||||
| Continuing operations | $ | (0.62 | ) | $ | (0.21 | ) | ||
| Discontinued operations | (0.41 | ) | 0.06 | |||||
| Net loss per share - basic & diluted | $ | (1.03 | ) | $ | (0.15 | ) | ||
| Weighted average common shares outstanding - basic | 41,801,381 | 41,280,600 | ||||||
| Weighted average common shares outstanding - diluted | 41,801,381 | 41,280,600 | ||||||
| Gross margin rate | 30.21 | % | 30.23 | % | ||||
| Store operating, general and administrative expense rate | 35.96 | % | 30.78 | % | ||||
| Total depreciation and amortization | $ | 56,349 | $ | 54,947 | ||||
| Number of stores operated at end of quarter | 403 | 405 | ||||||
| The Great Atlantic & Pacific Tea Company, Inc. | ||||||
| Schedule 2 - Condensed Balance Sheet Data | ||||||
| (Unaudited) | ||||||
| (In millions, except per share and store data) | ||||||
| June 16, 2007 | February 24, 2007 | |||||
| Cash and short-term investments | $94 | $86 | ||||
| Other current assets | 850 | 663 | ||||
| Total current assets | 944 | 749 | ||||
| Property-net | 786 | 940 | ||||
| Investment in Metro, Inc. | 411 | 0 | ||||
| Equity investment in Metro, Inc. | - | 369 | ||||
| Other assets | 167 | 54 | ||||
| Total assets | $2,308 | $2,112 | ||||
| Total current liabilities | $514 | $558 | ||||
| Total non-current liabilities | 1,235 | 1,123 | ||||
| Stockholders' equity | 559 | 431 | ||||
| Total liabilities and stockholders' equity | $2,308 | $2,112 | ||||
Other Statistical Data | ||||||
| Total Debt and Capital Leases | $285 | $348 | ||||
| Total Long Term Real Estate Liabilities | 303 | 301 | ||||
| Restricted Cash, Temporary Investments and Marketable Securities | (205 | ) | (77 | ) | ||
| Net Debt | $383 | $572 | ||||
| Total Retail Square Footage (in thousands) | 16,467 | 16,538 | ||||
| Book Value Per Share | $13.35 | $10.36 | ||||
| For the 16 | For the 16 | |||||
| weeks ended | weeks ended | |||||
| June 16, 2007 | June 17, 2006 | |||||
| Capital Expenditures | $51 | $68 | ||||
| The Great Atlantic & Pacific Tea Company, Inc. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule 3 - Reconciliation of GAAP Loss from Operations to Adjusted Loss from Operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| for the 16 weeks ended June 16, 2007 and June 17, 2006 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| (In thousands, except share amounts and store data) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| For the 16 weeks ended June 16, 2007 | For the 16 weeks ended June 17, 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Northeast | Midwest | Total | Northeast | Midwest | Share
© Business Wire - 2007
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