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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13
OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file number 1-4141
February 26, 2000
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THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
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(Exact name of registrant as specified in its charter)
MARYLAND 13-1890974
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 Paragon Drive, Montvale, New Jersey 07645
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 201-573-9700
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Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange on
Title of each class which registered
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Common Stock - $1 par value New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
None
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(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
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The aggregate market value of the voting stock held by non-affiliates of the
Registrant at May 8, 2000 was $315,331,621.
The number of shares of common stock outstanding at May 8, 2000 was
38,367,216.
Documents Incorporated by Reference
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The information required by Part I, Items 1(d) and 3, and Part II, Items 5,
6, 7 and 8 are incorporated by reference from the Registrant's 1999 Annual
Report to Shareholders. The Registrant has filed with the S.E.C. since the
close of its last fiscal year ended February 26, 2000, a definitive proxy
statement. Certain information required by Part III, Items 10, 11, 12 and 13
is incorporated by reference from the proxy statement in this Form 10-K.
PART I
ITEM 1. Business
General
The Great Atlantic & Pacific Tea Company, Inc. ("A&P" or the "Company") is
engaged in the retail food business. The Company operated 750 stores
averaging approximately 35,900 square feet per store as of February 26, 2000.
In addition, the Company began franchising as wholesaler, its Canadian Food
Basics stores in fiscal 1995. As of February 26, 2000, the Company served as
wholesaler to 65 franchise stores in Canada averaging approximately 29,400
square feet per store. On the basis of reported sales for fiscal 1999, the
Company believes that it is one of the 10 largest retail food chains in the
United States and that it had the largest market share in metropolitan New
York and Detroit, and the second largest market share in the Province of
Ontario, the Company's largest single markets in the United States and
Canada.
Operating under the trade names A&P, Super Fresh, Sav-A-Center, Farmer Jack,
Kohl's, Waldbaum's, Super Foodmart, Ultra Food & Drug, Dominion, Food Basics,
The Barn Markets and Food Emporium, the Company sells groceries, meats, fresh
produce and other items commonly offered in supermarkets. In addition, many
stores have bakery, delicatessen, pharmacy, floral, fresh fish and cheese
departments, and on-site banking. National, regional and local brands are
sold as well as private label merchandise. In support of its retail
operations, the Company also operates one coffee roasting plant in the United
States. Through its Compass Foods Division, the Company manufactures and
distributes a line of whole bean coffees under the Eight O'Clock, Bokar and
Royale labels, for sale through its own stores as well as other food and
convenience retailers. The other private label products sold in the Company's
stores are sold under the Company's own brand names which include America's
Choice, Master Choice, Health Pride, Savings Plus and The Farm.
Building upon a broad base of A&P supermarkets, the Company has historically
expanded and diversified within the retail food business through the
acquisition of other supermarket chains and the development of several
alternative store types. The Company now operates its stores with
merchandise, pricing and identities tailored to appeal to different segments
of the market, including buyers seeking gourmet and ethnic foods, unusual
produce, a wide variety of premium quality private label goods and health and
beauty aids along with the array of traditional grocery products.
Modernization of Facilities
The Company is engaged in a continuing program of modernizing its operations
including retail stores, warehousing and distribution facilities, supply
logistics and processes. In support of its modernizing program, on March 13,
2000, the Company announced Phase II of its Great Renewal-supply chain
initiative, to develop a state of the art supply chain and business
management infrastructure over the next four years.
During fiscal 1999, the Company expended approximately $480 million for
capital projects which included 54 new supermarkets, 14 new franchised stores
and 59 remodels or enlargements. The Company's plans for fiscal 2000
anticipate capital expenditures of approximately $560 million, including $60
million relating to the supply chain initiative and $500 million relating to
ongoing capital projects which include the opening of 50 to 60 new
supermarkets and the remodeling or expansion of up to 65 stores. In
addition, the Company plans to continue with similar levels of capital
expenditures in fiscal 2001 and several years thereafter.
Sources of Supply
The Company obtains the merchandise sold in its stores from a variety of
suppliers located primarily in the United States and Canada. The Company has
long-standing and satisfactory relationships with its suppliers.
The Company maintains a processing facility that produces coffee products.
The main ingredients for coffee products are purchased principally from
Brazilian and Central American sources. Other ingredients are obtained from
domestic suppliers.
Employees
As of February 26, 2000, the Company had approximately 80,900 employees, of
which 70% were employed on a part-time basis. Approximately 88% of the
Company's employees are covered by union contracts.
Competition
The supermarket business is highly competitive throughout the marketing areas
served by the Company and is generally characterized by low profit margins on
sales with earnings primarily dependent upon rapid inventory turnover,
effective cost controls and the ability to achieve high sales volume. The
Company competes for sales and store locations with a number of national and
regional chains as well as with many independent and cooperative stores and
markets.
Foreign Operations
The information required is contained in the 1999 Annual Report to
Shareholders on pages 36 through 40, 42, 43 and 46 and is herein incorporated
by reference.
ITEM 2. Properties
At February 26, 2000, the Company operated 750 retail stores and serviced 65
franchised stores. Approximately 10% of the Company's stores are owned, while
the remainder are leased. These stores are geographically located as
follows:
Company Stores:
New England States:
Connecticut 40
Massachusetts 18
New Hampshire 1
Vermont 2
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Total 61
Middle Atlantic States:
District of Columbia 1
Delaware 8
Maryland 43
New Jersey 104
New York 148
Pennsylvania 30
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Total 334
Midwestern States:
Michigan 100
Wisconsin 36
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Total 136
Southern States:
Louisiana 21
Mississippi 5
North Carolina 1
Virginia 12
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Total 39
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Total United States 570
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Ontario, Canada 180
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Total Stores 750
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Franchised Stores:
Ontario, Canada 65
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Total Franchised Stores 65
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The total area of all Company operated retail stores is approximately 27
million square feet averaging approximately 35,900 square feet per store.
Excluding liquor and Food Emporium stores, which are generally smaller in
size, the average store size is approximately 38,000 square feet. The total
area of all franchised stores is approximately 1.9 million square feet
averaging approximately 29,400 square feet per store. The 54 new
supermarkets opened in fiscal 1999 had a range in size from 21,500 to 79,900
square feet, with an average size of approximately 48,600 square feet. The
stores built by the Company over the past several years and those planned for
fiscal 2000, generally range in size from 50,000 to 65,000 square feet with
an average of approximately 58,000 square feet. The selling area of new
stores is approximately 73% of the total square footage.
The Company operates one coffee roasting plant in the United States. In
addition, the Company maintains 14 warehouses that service its store network.
These warehouses are geographically located as follows:
Company Warehouses
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Indiana 1
Louisiana 1
Maryland 1
Michigan 2
New Jersey 2
New York 2
Pennsylvania 1
Wisconsin 1
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Total United States 11
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Ontario, Canada 3
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Total Warehouses 14
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The net book value of real estate pledged as collateral for all mortgage
loans amounted to approximately $9 million as of February 26, 2000.
ITEM 3. Legal Proceedings
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The information required is contained in the 1999 Annual Report to
Shareholders on page 45 and is herein incorporated by reference.
ITEM 4. Submission of Matters to a Vote of Security Holders
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There were no matters submitted to a vote of security holders during the
fourth quarter of fiscal 1999.
PART II
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ITEM 5. Market for the Registrant's Common Stock and Related Security Holder
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Matters
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The information required is contained in the 1999 Annual Report to
Shareholders on pages 47, 50 and 54 and is herein incorporated by reference.
ITEM 6. Selected Financial Data
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The information required is contained on page 50 of the 1999 Annual Report to
Shareholders and is herein incorporated by reference.
ITEM 7. Management's Discussion and Analysis
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The information required is contained in the 1999 Annual Report to
Shareholders on pages 20 through 27 and is herein incorporated by reference.
ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk
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The information required is contained in the 1999 Annual Report to
Shareholders on pages 26 and 27 and is herein incorporated by reference.
ITEM 8. Financial Statements and Supplementary Data
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(a) Financial Statements: The financial statements required to be filed
herein are described in Part IV, Item 14 of this report. Except for the
pages included herein by reference, the Company's 1999 Annual Report to
Shareholders is not deemed to be filed as part of this report.
(b) Selected Quarterly Financial Data: The information required is contained
on page 47 of the 1999 Annual Report to Shareholders and is herein
incorporated by reference.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
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Financial Disclosure
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None
PART III
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ITEMS 10 and 11. Directors and Executive Officers of the Registrant and
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Executive Compensation
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Executive Officers of the Company
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Name Age Current Position
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Christian W.E. Haub 35 President and Chief Executive Officer
Fred Corrado 59 Vice Chairman of the Board and Chief Financial
Officer
Michael J. Larkin 58 Senior Executive Vice President - Chief Operating
Officer
George Graham 50 Executive Vice President - Chief Merchandising
Officer
William P. Costantini 52 Senior Vice President - General Counsel &
Secretary
John P. Dunne 61 Non-Executive Chairman - The Great Atlantic &
Pacific Company of Canada, Limited
Nicholas L. Ioli, Jr. 56 Senior Vice President - Chief Information Officer
Laurane S. Magliari 49 Senior Vice President - People Resources and
Services
William McEwan 43 President and Chief Executive Officer - Atlantic
Region Operations
Brian Pall 41 Senior Vice President - Chief Development Officer
Cheryl M. Palmer 42 Senior Vice President - Strategic Marketing
Brian Piwek 53 President and Chief Executive Officer - The
Great Atlantic & Pacific Company of Canada,
Limited
Craig C. Sturken 56 Chairman and Chief Executive Officer - Midwestern
Operations
Executive officers of the Company are chosen annually and serve at the
pleasure of the Chief Executive Officer with the consent of the Board of
Directors.
Mr. Haub was elected a director on December 3, 1991, President and Chief
Operating Officer of the Company on December 7, 1993 and Co-Chief Executive
Officer on April 2, 1997. He was elected to his current position effective
May 1, 1998. He is a member of the Executive Committee and an ex officio
member of the Finance and Retirement Benefits Committees.
Mr. Corrado has been a director since 1990. He is Vice Chairman of the
Executive Committee and a member of the Finance and Retirement Benefits
Committees. During the past five years, Mr. Corrado also served as Treasurer
and Executive Vice President of the Company.
Mr. Larkin was elected Senior Executive Vice President - Chief Operating
Officer on June 30, 1997. Prior to rejoining the Company, Mr. Larkin owned
and operated two supermarkets in the Pennsylvania area from April 1995
through June 1997.
Mr. Graham was elected Executive Vice President - Chief Merchandising Officer
on August 1, 1997. Prior to assuming his present position and for the past
five years, he was successively Executive Vice President - U.S. Operations,
and Senior Vice President - Chief Merchandising Officer.
Mr. Costantini was elected Senior Vice President, General Counsel & Secretary
effective April 24, 2000. Prior to joining the Company and for the past five
years, Mr. Costantini was successively Executive Vice President & General
Counsel of Olsten Corporation and Senior Vice President & General Counsel of
Olsten.
Mr. Dunne was appointed Non-Executive Chairman of The Great Atlantic &
Pacific Company of Canada, Limited on February 14, 2000. Prior thereto and
for the past five years, Mr. Dunne was successively Chairman and Co-Chief
Executive Officer, Chairman and Chief Executive Officer, President and Chief
Operating Officer and Vice Chairman and Chief Merchandising Officer of The
Great Atlantic & Pacific Company of Canada, Limited. Mr. Dunne also served
as Chairman and Chief Executive Officer of Food Basics, Limited from December
1995 through September 1996.
Mr. Ioli was elected Senior Vice President - Chief Information Officer on
July 13, 1999. Prior to joining the Company and for the past five years, Mr.
Ioli was Vice President, Chief Information Officer, Citizens Utilities
Company.
Ms. Magliari was elected Senior Vice President, People Resources and Services
on February 16, 1999. Prior to joining the Company and for the past five
years, Ms. Magliari was successively Vice President, Human Resources,
Publishers Clearing House and Vice President, Global Marketing, The Chase
Manhattan Bank.
Mr. McEwan was appointed President and Chief Executive Officer of the
Company's Atlantic Region effective the beginning of fiscal year 2000. Prior
to assuming his present position and for the past five years, he was
successively President and Chief Merchandising Officer and Executive Vice
President, Merchandising and Procurement of The Great Atlantic and Pacific
Company of Canada, Limited.
Mr. Pall was appointed Chief Development Officer of the Company on May 1,
2000. Prior thereto and for the past five years, Mr. Pall was successively
Senior Vice President, Development and Corporate Vice President, Real Estate
Development.
Ms. Palmer was appointed Senior Vice President, Strategic Marketing on May 3,
1999. Prior to joining the Company and for the past five years, Ms. Palmer
was successively Group Vice President/General Manager for Allied Domecq
Spirits & Wines and held various management positions for Cadbury Beverages,
Inc.
Mr. Piwek was appointed President and Chief Executive Officer of The Great
Atlantic & Pacific Company of Canada, Limited on February 14, 2000. Prior
thereto and for the past five years, Mr. Piwek was successively Vice Chairman
and Co-Chief Executive Officer of The Great Atlantic & Pacific Company of
Canada, Limited and President of Overwaitea Food Group, a retailer and
franchisor in British Columbia and Alberta, Canada.
Mr. Sturken was appointed Chairman and Chief Executive Officer - Midwestern
Operations on April 7, 1997. Prior thereto and for the past five years, Mr.
Sturken was successively Group Vice President Michigan and Chairman and Chief
Executive Officer - The Great Atlantic & Pacific Company of Canada, Limited.
Mr. Peter O'Gorman, Executive Vice President, International Store and Product
Development resigned from the Company effective May 28, 1999.
Mr. Robert Ulrich, Senior Vice President, General Counsel and Secretary
retired from the Company effective May 18, 2000.
Mr. Aaron Malinsky, Vice Chairman and Chief Development Officer resigned from
the Company, effective May 12, 2000.
The Company has filed with the Commission since the close of its fiscal year
ended February 26, 2000 a definitive proxy statement pursuant to Regulation
14A, involving the election of directors. Accordingly, the information
required in Items 10 and 11, except as provided above, appears on pages 1
through 12 and is incorporated by reference from the Company's fiscal 1999
definitive proxy statement.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
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The information required is contained in the Company's fiscal 1999 definitive
proxy statement on pages 1 and 5 and is herein incorporated by reference.
ITEM 13. Certain Relationships and Related Transactions
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The information required is contained in the Company's fiscal 1999 definitive
proxy statement on pages 1 and 7 and is herein incorporated by reference.
PART IV
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ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
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(a) Documents filed as part of this report
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1) Financial Statements: The financial statements required by Item 8,
are included in the fiscal 1999 Annual Report to Shareholders. The
following required items, appearing on pages 28 through 49 of the 1999
Annual Report to Shareholders, are herein incorporated by reference:
Statements of Consolidated Operations
Statements of Consolidated Shareholders' Equity and Comprehensive
Income (Loss)
Consolidated Balance Sheets
Statements of Consolidated Cash Flows
Notes to Consolidated Financial Statements
Independent Auditors' Report
2) Financial Statement Schedules are omitted because they are not
required or do not apply, or the information is included elsewhere in
the financial statements or notes thereto.
3) Exhibits:
Exhibit Incorporation by reference
Numbers Description (If applicable)
2) Not Applicable
3) Articles of Incorporation
and By-Laws
a) Articles of Incorporation Exhibit 3)a) to Form 10-K
as amended through for fiscal year ended
July 1987 February 27, 1988
b) By-Laws as amended through Exhibit 3)b) to Form 10-K
March 1989 for fiscal year ended
February 25, 1989
4) Instruments defining the Exhibit 4.1 to Form 8-K
rights of security holders, dated as of January 1, 1991
including indentures *
9) Not Applicable
10) Material Contracts
a) Management Compensation Exhibit 10)b) to Form 10-K
Agreements for the fiscal years ended
February 25, 1989,
February 24, 1990, and
Exhibit 10)a) for the fiscal
years ended
February 26, 1994,
February 25, 1995,
February 22, 1997,
February 28, 1998,
February 27, 1999 and attached
b) Supplemental Executive Exhibit 10)b) to Form 10-K
Retirement Plan, amended for the fiscal years ended
and restated February 27, 1993 and
February 28, 1998
c) 1984 Stock Option Plan, Exhibit 10)e) to Form 10-K
as amended for the fiscal year ended
February 23, 1991
* Agreements with respect to long-term debt where the total amount of
securities authorized thereunder does not exceed 10% of the total assets
of the Registrant and its subsidiaries on a consolidated basis shall be
furnished to the Commission on request.
Exhibit Incorporated by reference
Numbers Description (If applicable)
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10) d) 1994 Stock Option Plan Exhibit 10)e) to Form 10-K
for the fiscal year ended
February 25, 1995
e) 1994 Stock Option Plan Exhibit 10)f) to Form 10-K
for Non-Employee Directors for the fiscal year ended
February 25, 1995
f) Directors' Deferred Exhibit 10)h) to Form 10-K
Payment Plan for the fiscal year ended
February 22, 1997
g) Competitive Advance and Exhibit 10) to Form 8-K
Revolving Credit Facilities filed on June 12, 1997;
Agreement dated as of Exhibit 10)I to Form 10-K
June 10, 1997 and amendment for the fiscal year ended
dated February 17, 1999 February 27, 1999
h) Project Great Renewal - Exhibit 99.1) to Form 8-K
Phase I dated as of filed December 9, 1998;
December 8, 1998; Phase II Exhibit 99) to Form 8-K
dated March 13, 2000 filed March 24, 2000
i) 1998 Long Term Incentive Exhibit 10)k to Form 10-K
and Share Award plan for the fiscal year ended
February 27, 1999
Exhibit Incorporation by reference
Numbers Description (If applicable)
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11) Not Applicable
12) Not Applicable
13) 1999 Annual Report to Shareholders
18) Not Applicable
21) Subsidiaries of Registrant
22) Not Applicable
23) Independent Auditors' Consent
24) Not Applicable
27) Financial Data Schedule
28) Not Applicable
(b) Reports on Form 8-K
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On March 24, 2000, the Company filed Form 8-K with the Securities and
Exchange Commission with respect to Phase II of its Project "Great
Renewal" program (Great Renewal - Phase II). The Company engaged IBM
Corporation and Retek Inc., food and drug retailing industry systems
consultants, along with a team of Company executives, to help develop
a state of the art supply chain and business management
infrastructure. Great Renewal - Phase II is intended to modernize the
Company's operating facilities, improve efficiency in its processes,
enhance growth and be a catalyst that guides the Company toward a
competitive position in the North America food retailing business.
SIGNATURES
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Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
The Great Atlantic & Pacific Tea Company, Inc.
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(registrant)
Date: May 16, 2000 By: /s/ Fred Corrado
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(Signature)
Fred Corrado
Vice Chairman of the Board and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and as of the date indicated.
/s/ James Wood Chairman of the Board and Director
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James Wood
/s/ Christian W.E. Haub President, Chief Executive Officer and
- ----------------------- Director
Christian W.E. Haub
/s/ Fred Corrado Vice Chairman of the Board,
- ---------------- Chief Financial Officer and Director
Fred Corrado
/s/ John D. Barline Director
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John D. Barline
/s/ Rosemarie Baumeister Director
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Rosemarie Baumeister
/s/ Helga Haub Director
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Helga Haub
/s/ Barbara Barnes Hauptfuhrer Director
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Barbara Barnes Hauptfuhrer
/s/ Dan Kourkoumelis Director
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Dan Kourkoumelis
/s/ Edward Lewis Director
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Edward Lewis
/s/ William A. Liffers Director
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William A. Liffers
/s/ Richard L. Nolan Director
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Richard L. Nolan
/s/ Fritz Teelen Director
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Fritz Teelen
/s/ R.L. "Sam" Wetzel Director
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R.L. "Sam" Wetzel
The above-named persons signed this report on behalf of the registrant on
May 16, 2000.
/s/ Kenneth A. Uhl Vice President, Controller May 16, 2000
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Kenneth A. Uhl Date