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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended February 26, 2005
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
Commission file number 1-4141
THE GREAT ATLANTIC & PACIFIC TEA COMPANY, INC.
----------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 13-1890974
- ------------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 Paragon Drive
Montvale, New Jersey 07645
(Address of principal executive offices)
Registrant's telephone number, including area code: 201-573-9700
---------------------------------
Securities registered pursuant to Section 12 (b) of the Act:
Title of each class Name of each exchange on which registered
- ------------------- -----------------------------------------
Common Stock - $1 par value New York Stock Exchange
7.75% Notes, due April 15, 2007 New York Stock Exchange
9.125% Senior Notes, due
December 15, 2011 New York Stock Exchange
9.375% Notes, due August 1, 2039 New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act: None
---------------------------------
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 [ ]
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. [ X ]
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2). Yes [ X ] No [ ]
The aggregate market value of the voting stock held by non-affiliates
of the Registrant as of the close of business on September 10, 2004, the
registrant's most recently completed second fiscal quarter, was $258,099,276.
The number of shares of common stock outstanding as of the close of
business on May 5, 2005 was 38,963,530.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part I, Items 1 and 3, and Part II, Items
5, 6, 7, 7A, 8, 9A and 15 are incorporated by reference from the Registrant's
Fiscal 2004 Annual Report to Stockholders. The information required by Part II,
Items 10, 11, 12, 13, and 14 are incorporated by reference from the
Registrant's Proxy Statement.
PART I
ITEM 1 - Business
General
- -------
The Great Atlantic & Pacific Tea Company, Inc. ("A&P", "we", "our",
"us" or "our Company") is engaged in the retail food business. We operated 647
stores averaging approximately 39,500 square feet per store as of February 26,
2005. In addition, we served as wholesaler to 42 franchise stores in Canada
averaging approximately 32,750 square feet per store as of February 26, 2005. On
the basis of reported sales for fiscal 2004, we believe that we are among North
America's largest retail food chains.
Operating under the trade names A&P(R), Super Fresh(R),
Sav-A-Center(R), Farmer Jack(R), Waldbaum's(TM), Super Foodmart, Ultra Food &
Drug, Dominion(R), Food Basics(R), The Barn Markets(R) and The Food Emporium(R),
we sell 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 our retail operations, we sell other private label products in our
stores under other brand names of our Company which include without limitation,
America's Choice(R), Master Choice(R), Health Pride(R), Savings Plus and The
Farm.
Building upon a broad base of A&P supermarkets, our 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. We now operate our stores with merchandise, pricing and
identities tailored to appeal to different segments of the market, including
buyers seeking gourmet and ethnic foods, a wide variety of premium quality
private label goods and health and beauty aids along with the array of
traditional grocery products.
The Company's Securities and Exchange Commission ("SEC") filings are
promptly posted to its website at www.aptea.com after they are filed with the
SEC and can be accessed free of charge through a link on the "Investors" page.
Modernization of Facilities
- ---------------------------
During fiscal 2004, we expended approximately $216 million for capital
projects, which included 24 new supermarkets and 18 major remodels or
enlargements. Our Company has planned capital expenditures of approximately $225
to $250 million in fiscal 2005. These expenditures relate primarily to opening
10 to 15 new supermarkets, converting 1 to 3 stores to new formats, and
enlarging or remodeling 100 - 110 supermarkets. In addition, we plan to continue
with at least similar levels of capital expenditures in fiscal 2006 and several
years thereafter.
Sources of Supply
- -----------------
Our Company obtains the merchandise sold in our stores from a variety
of suppliers located primarily in the United States and Canada. Our Company has
long-standing and satisfactory relationships with our suppliers.
Employees
- ---------
As of February 26, 2005, we had approximately 73,000 employees, of
which 69% were employed on a part-time basis. Approximately 89% of our employees
are covered by union contracts.
Competition
- -----------
The supermarket business is highly competitive throughout the marketing
areas served by our 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. We compete
for sales and store locations with a number of national and regional chains, as
well as with many independent and cooperative stores and markets.
Segment Information
- -------------------
The segment information required is contained under the caption "Note
14 - Operating Segments" in the Fiscal 2004 Annual Report to Stockholders and is
herein incorporated by reference.
Foreign Operations
- ------------------
The information required is contained under the captions "Management's
Discussion and Analysis", "Note 2 - Restatement of Previously Issued Financial
Statements", "Note 3 - Changes in Accounting Methods," "Note 4 - Valuation of
Goodwill and Long-Lived Assets", "Note 10 - Income Taxes", "Note 11 - Retirement
Plans and Benefits", "Note 13 - Commitments and Contingencies" and "Note 14 -
Operating Segments" in the Fiscal 2004 Annual Report to Stockholders and is
herein incorporated by reference.
ITEM 2 - Properties
At February 26, 2005, we owned 65 properties consisting of the
following:
Stores, Not Including Stores in Owned Shopping Centers
------------------------------------------------------
Land and building owned 16
Building owned and land leased 17
----
Total stores 33
Shopping Centers
----------------
Land and building owned 5
Building owned and land leased 3
----
Total shopping centers 8
Warehouses
----------
Land and building owned 6
Administrative and Other Properties
-----------------------------------
Land and building owned 5
Building owned and land leased 3
Property under development - building owned and land leased 1
Property under development - land and building owned 1
Property under development - land only 2
Undeveloped land 6
----
Total other properties 18
----
Total Properties 65
====
At February 26, 2005, we operated 647 retail stores and serviced 42
franchised stores. These stores are geographically located as follows:
Company Stores:
--------------
New England States:
------------------
Connecticut 28
----
Total 28
Middle Atlantic States:
----------------------
District of Columbia 1
Delaware 9
Maryland 30
New Jersey 94
New York 136
Pennsylvania 25
----
Total 295
Midwestern States:
-----------------
Michigan 95
Ohio 6
----
Total 101
Southern States:
---------------
Louisiana 24
Mississippi 4
----
Total 28
----
Total United States 452
Ontario, Canada 195
----
Total Stores 647
====
Franchised Stores:
Ontario, Canada 42
----
Total Franchised Stores 42
====
The total area of all of our operated retail stores is 25.6 million
square feet averaging approximately 39,500 square feet per store. Excluding
liquor and The Food Emporium(R) stores, which are generally smaller in size, the
average store size is approximately 41,700 square feet. The total area of all
franchised stores is 1.4 million square feet averaging approximately 32,750
square feet per store. The 24 new stores opened in fiscal 2004 consisted of 24
supermarkets and range in size from 7,500 to 60,000 square feet, with an average
size of approximately 41,750 square feet. The stores built over the past several
years and those planned for fiscal 2005 and thereafter, generally range in size
from 40,000 to 60,000 square feet. The selling area of new stores is
approximately 72% of the total square footage.
As of the end of fiscal 2004, we operated 12 warehouses to service our
store network. These warehouses are geographically located as follows:
Louisiana 1
Maryland 1
Michigan 2
New Jersey 1
New York 2
Pennsylvania 1
----
Total United States 8
Ontario, Canada 4
----
Total Warehouses 12
====
The net book value of real estate pledged as collateral for the
Company's $400 million Secured Revolving Credit Agreement amounted to $16.1
million as of February 26, 2005.
ITEM 3 - Legal Proceedings
The information required is contained under the caption "Note 13 -
Commitments and Contingencies" in the Fiscal 2004 Annual Report to Stockholders
and is herein incorporated by reference.
ITEM 4 - Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during
the fourth quarter of fiscal 2004.
PART II
ITEM 5 - Market for the Registrant's Common Stock and Related Security Holder
Matters
The information required is contained under the captions "Summary of
Quarterly Results", "Five Year Summary of Selected Financial Data", and
"Stockholder Information" in the Fiscal 2004 Annual Report to Stockholders and
is herein incorporated by reference.
Our Company is prohibited, under the terms of our Revolving Credit
Agreement, from paying cash dividends on common shares. As such, we have not
made dividend payments in the previous three years and do not intend to pay
dividends in the normal course of business in fiscal 2005.
Securities authorized for issuance under equity compensation plans are
summarized below:
As of February 26, 2005
Weighted Average
Number of Exercise Price Number of
Securities of Outstanding Securities
to be Issued Options and Available to
Upon Exercises Rights Grant
----------------- ------------------ ------------------
Plan Category
- -------------
1994 Stock Option Plan for officers and key employees 1,016,025** $ 15.43** - *
1998 Long Term Incentive and Share Award Plan 3,425,909 14.30 1,268,622
1994 Stock Option Plan for Board of Directors 34,700 17.95 65,167
----------------- --------------- ------------------
Total Options Outstanding as of February 26, 2005 4,476,634 $ 14.58** 1,333,789
================= ============== ==================
* On March 17, 2004, the plan expired.
** Includes 12,500 SAR's with a weighted average exercise price of $31.625.
Since SAR's enable the holder, in lieu of purchasing stock, to receive cash
in an amount equal to the excess of the fair market value of common stock
on the date of exercise over the option price, such SAR's have not been
included in the "Number of Securities to be Issued Upon Exercises" column
above.
ITEM 6 - Selected Financial Data
The information required is contained under the caption "Five Year
Summary of Selected Financial Data" in the Fiscal 2004 Annual Report to
Stockholders and is herein incorporated by reference.
ITEM 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
The information required is contained under the caption "Management's
Discussion and Analysis" in the Fiscal 2004 Annual Report to Stockholders and is
herein incorporated by reference.
ITEM 7A - Quantitative and Qualitative Disclosures About Market Risk
The information required is contained in the section "Market Risk"
under the caption "Management's Discussion and Analysis" in the Fiscal 2004
Annual Report to Stockholders and is herein incorporated by reference.
ITEM 8 - Financial Statements and Supplementary Data
(a) Financial Statements: The financial statements required to be filed
herein are described in Part IV, Item 15 of this report. Except for
the sections included herein by reference, our Fiscal 2004 Annual
Report to Stockholders is not deemed to be filed as part of this
report.
(b) Supplementary Data: The information required is contained under the
caption "Summary of Quarterly Results" in the Fiscal 2004 Annual
Report to Stockholders and is herein incorporated by reference.
ITEM 9 - Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
There were no changes in or disagreements with accountants on
accounting and financial disclosure during the fiscal year ended February 26,
2005.
ITEM 9A - Controls and Procedures
Evaluation of Disclosure Controls and Procedures
- ------------------------------------------------
We have established and maintain disclosure controls and procedures
that are designed to ensure that information required to be disclosed in our
Company's Exchange Act reports is recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms, and that such
information is accumulated and communicated to our Company's management,
including our Chairman of the Board and Chief Executive Officer and Executive
Vice President, Chief Financial Officer and Secretary, as appropriate, to allow
timely decisions regarding required disclosure.
We carried out an evaluation, under the supervision and with the
participation of our Company's management, including our Company's Chairman of
the Board and Chief Executive Officer along with our Company's Executive Vice
President, Chief Financial Officer and Secretary, of the effectiveness of the
design and operation of our Company's disclosure controls and procedures
pursuant to Exchange Act Rule 13a-15(b). Based upon the foregoing, as of
February 26, 2005, our Company's Chairman of the Board and Chief Executive
Officer along with our Company's Executive Vice President, Chief Financial
Officer and Secretary, concluded that our Company's disclosure controls and
procedures were effective as of February 26, 2005.
The Company's management does not expect that its disclosure controls and
procedures or its internal control over financial reporting will prevent all
errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the
objectives of the control system are met. Further, the design of a control
system must reflect the fact that there are resource constraints, and the
benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that all control issues and instances of fraud, if
any, within the Company have been detected. These inherent limitations include
the realities that judgments in decision-making can be faulty, and breakdowns
can occur because of simple errors or mistakes. Additionally, controls can be
circumvented by the individual acts of some person or by collusion of two or
more people. The design of any system of controls also is based in part upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions; over time, controls may become inadequate because
of changes in conditions, or the degree of compliance with the policies or
procedures may deteriorate. Because of the inherent limitations in a
cost-effective control system, misstatements due to error or fraud may occur and
not be detected. Accordingly, the Company's disclosure controls and procedures
are designed to provide reasonable, not absolute, assurance that the objectives
of our disclosure control system are met and, as set forth above, the Company's
management has concluded, based on their evaluation as of the end of the period,
that our disclosure controls and procedures were sufficiently effective to
provide reasonable assurance that the objectives of our disclosure control
system were met.
Incorporation by reference of Management's Annual Report on Internal Control
over Financial Reporting
- ------------------------------------------------------------------------------
Management of The Great Atlantic and Pacific Tea Company, Inc. has prepared
an annual report on internal control over financial reporting. Management's
report, together with the attestation report of the independent registered
public accounting firm, is included in our Company's Fiscal 2004 Annual Report
to Stockholders and is herein incorporated by reference in this Annual Report on
Form 10-K.
Changes in Internal Control over Financial Reporting
- ----------------------------------------------------
Other than discussed below, there has been no change during our Company's
fiscal quarter ended February 26, 2005 in our Company's internal control over
financial reporting that has materially affected, or is reasonably likely to
materially affect, our Company's internal control over financial reporting.
In coming to the conclusion that our internal control over financial
reporting was effective as of February 26, 2005, our management considered,
among other things, the restatement related to the accounting for leases, as
disclosed in Note 2 of Notes to the Consolidated Financial Statements included
in our Fiscal 2004 Annual Report to Stockholders which is herein incorporated by
reference, which management concluded resulted from a deficiency in our controls
over the accounting for leases, which represented a material weakness.
Management notified the Audit Committee of the Board of Directors and our
Company's independent registered public accounting firm of this matter. During
the fourth quarter of fiscal 2004 and prior to February 26, 2005, the Company
implemented controls to ensure that all leases are reviewed and accounted for in
accordance with generally accepted accounting principles. Accordingly, the
Company evaluated its internal controls over the selection and application of
lease accounting policies as of February 26, 2005 and has concluded that the
material weakness had been remediated as of year-end.
ITEM 9B - Other Information
On May 5, 2005, our Company approved the payout to executive officers of
$2,960,553 in cash bonuses, pursuant to the Management Incentive Plan for Fiscal
Year 2004, which includes the payout of the following amounts to the Company's
Named Executive Officers, as defined by Item 402(a)(3) of Regulation S-K:
Cash Bonus Award for
Officer Title Fiscal Year 2004
- --------------------- ------------------------------------------------------------- --------------------
Christian W.E. Haub Chairman of the Board and Chief Executive Officer $ 766,438
Eric Claus President and Chief Executive Officer, Canadian Company 455,875
Mitchell P. Goldstein Executive Vice President, Chief Financial Officer & Secretary 401,000
John E. Metzger Senior Vice President, Chief Information Officer 251,625
Brian Piwek President and Chief Operating Officer 455,875
PART III
ITEMS 10 and 11 - Directors and Executive Officers of the Registrant and
Executive Compensation
The executive officers of our Company are as follows:
Name Age Current Position
- --------------------------- ------ ------------------------------------------------------------
Christian W.E. Haub 40 Chairman of the Board and Chief Executive Officer
Eric Claus 48 President and Chief Executive Officer, Canadian Company
Brenda M. Galgano 36 Senior Vice President and Corporate Controller
Mitchell P. Goldstein 44 Executive Vice President, Chief Financial Officer & Secretary
Peter Johannes Jueptner 42 Executive Vice President, Retail Development
John E. Metzger 50 Senior Vice President, Chief Information Officer
William Moss 57 Vice President and Treasurer
Brian Piwek 58 President and Chief Operating Officer
The executive officers of our Company are chosen annually and serve
under the direction of the Chief Executive Officer ("CEO") with the consent of
the Board of Directors.
Mr. Haub currently serves as Chairman of the Board and Chief Executive
Officer of our Company. He was elected a director on December 3, 1991, and is
Chair of the Executive Committee and a member of the Finance Committee. Mr. Haub
served as Chief Operating Officer of our Company from December 7, 1993, becoming
Co-Chief Executive Officer on April 2, 1997, sole CEO on May 1, 1998 and
Chairman of the Board on May 1, 2001. Mr. Haub also served as President of the
Company from December 7, 1993 through February 24, 2002, and from November 4,
2002 through November 1, 2004. Mr. Haub, son of Helga Haub, is a partner and
Co-Chief Executive Officer of Tengelmann Warenhandelsgesellschaft KG, a
partnership organized under the laws of the Federal Republic of Germany
("Tengelmann"). Mr. Haub is on the Board of Directors of the Food Marketing
Institute and on the Board of Trustees of St. Joseph's University in
Philadelphia, Pennsylvania.
Mr. Claus was appointed President & Chief Executive Officer, Canadian
Company on November 11, 2002. Prior to joining our Company, Mr. Claus served as
Chief Executive Officer of Co-Op Atlantic, between February 1997 and November
2002.
Ms. Galgano was appointed Senior Vice President and Corporate Controller
on November 1, 2004. Ms. Galgano served as Vice President, Corporate Controller
from February 2002 to November 2004, Assistant Corporate Controller of our
Company from July 2000 to February 2002 and Director of Corporate Accounting
from October 1999 to July 2000. Prior to joining our Company, Ms. Galgano was
with PricewaterhouseCoopers from July 1997 to July 1999 as Senior Manager and
Manager of the Audit and Business Advisory Services Group.
Mr. Goldstein was elected Executive Vice President and Chief Financial
Officer on November 1, 2004 and Secretary on December 9, 2004. From February
2002 to November 2004, Mr. Goldstein was Senior Vice President & Chief Financial
Officer, and from January 2000 to February 24, 2002, Mr. Goldstein was Senior
Vice President, Finance & Treasurer of our Company. Prior to joining our
Company, Mr. Goldstein was Chief Financial Officer from October 1998 to January
2000 and Vice President of Strategic Planning and Corporate Development from
September 1997 to October 1998 at Vlasic Foods International. Before that, he
was Director of Strategic Planning at the Campbell Soup Company. Vlasic Foods
International filed a petition under the Federal bankruptcy laws in January
2001. Mr. Goldstein is on the Board of Advisers of the Rutgers Business School.
Mr. Jueptner was appointed Executive Vice President of Retail
Development on November 1, 2004. Prior to that, Mr. Jueptner served as Executive
Vice President, A&P U.S. from November 2002 to November 2004, and Senior Vice
President, Chief Strategy Officer from October 2002 to November 2002. Prior to
joining our Company, Mr. Jueptner was Chief Commercial Officer of The Worldwide
Retail Exchange from December 2000 through July 2002. From 1997 through 2000,
Mr. Jueptner held various positions with Campbell Soup Company, lastly, General
Manager, Beverages & Latin America.
Mr. Metzger was appointed Senior Vice President, Chief Information
Officer on February 11, 2002, and has served as the Company's Chief
Information Officer since such date, with the exception of mid-September,
2004 through mid-November, 2004, when he served as the Company's Executive
Vice President, Fresh Store. Prior to that, he was Senior Vice President
and Business Process Initiative Business Leader from May 2001 to February
2002, and Vice President, Supply & Logistics from October 1999 to May 2001.
Prior to joining our Company, Mr. Metzger was Senior Vice President of CS
Integrated LLC from January 1998 to October 1999 and before that, Vice
President, Distribution & Procurement for General Mills Restaurants, Inc.
from October 1993 to November 1997. Mr. Metzger is a director of the
Institute for Standards & Collaboration Commerce, Inc.
Mr. Moss was appointed Vice President and Treasurer on February 24,
2002. Prior to that Mr. Moss was Vice President, Treasury Services and Risk
Management from 1992 to February 2002.
Mr. Piwek was appointed President and Chief Operating Officer on
November 1, 2004. Prior to that, Mr. Piwek served as President and Chief
Executive Officer, A&P U.S. from October 2002 to November 2004, Chairman,
President and Chief Executive Officer of The Great Atlantic & Pacific Company of
Canada, Limited from April 2002 through October 2002, Vice Chairman, President
and Chief Executive Officer of The Great Atlantic & Pacific Company of Canada,
Limited from February 2000 to October 2002, and Vice Chairman and Co-Chief
Executive Officer of The Great Atlantic & Pacific Company of Canada, Limited
from October 1997 through February 2000. Prior to joining the Company, he was
President of Overwaitea Food Group, a retailer and franchisor in British
Columbia and Alberta, Canada.
The information required regarding our directors, executive
compensation and our beneficial ownership reporting compliance is contained
under the captions "Election of Directors", "Executive Compensation" and
"Section 16(a) Beneficial Ownership Reporting Compliance", respectively, in the
Proxy Statement for our 2005 Annual Meeting of Stockholders, to be filed on or
about May 27, 2005 ("Proxy Statement"), and is herein incorporated by reference.
Audit Committee Financial Expert
- --------------------------------
The Board has determined that each member of the Audit Committee is
independent in accordance with the NYSE listing rules, the Company's Standards
of Independence and Rule 10A-3 of the Exchange Act. In addition, the Board has
determined that each member of the Audit Committee qualifies as an "audit
committee financial expert," as defined by the SEC.
Code of Business Conduct and Ethics
- -----------------------------------
Our Company has adopted a Code of Business Conduct and Ethics
applicable to all employees. This Code is applicable to Senior Financial
Executives including the chief executive officer, chief financial officer and
chief accounting officer of our Company. A&P's Code of Business Conduct and
Ethics is available on the Company's Web site at www.aptea.com under "Corporate
Governance." Our Company intends to post on its web site any amendments to, or
waivers from, its Code of Business Conduct and Ethics applicable to Senior
Financial Executives.
ITEM 12 - Security Ownership of Certain Beneficial Owners and Management
Beneficial Ownership of More than 5% of the Company's Common Stock
The information required is contained in our Proxy Statement under the
heading "Security Ownership of Certain Beneficial Owners and Management", and is
herein incorporated by reference.
ITEM 13 - Certain Relationships and Related Transactions
The information required is contained in our Proxy Statement under the
heading "Certain Relationships and Transactions", and is herein incorporated by
reference.
ITEM 14 - Principal Accounting Fees and Services
The information required is contained in our Proxy Statement under the
heading "Independent Registered Public Accounting Firm", and is herein
incorporated by reference.
PART IV
ITEM 15 - Exhibits and Financial Statement Schedules
Documents filed as part of this report.
1) Financial Statements: The financial statements required by Item 8 are
included in the Fiscal 2004 Annual Report to Stockholders. The
following required items are herein incorporated by reference:
Consolidated Statements of Operations
Consolidated Statements of Stockholders' Equity and
Comprehensive (Loss) Income
Consolidated Balance Sheets
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm
2) Financial Statement Schedule:
Schedule II Valuation and Qualifying Accounts and Reserves
All other schedules are omitted because they are not required or do
not apply, or the required information is included elsewhere in the
Consolidated Financial Statements or Notes thereto.
3) Exhibits:
The following are filed as Exhibits to this Report:
EXHIBIT NO. DESCRIPTION
---------- -----------
3.1 Articles of Incorporation of The Great Atlantic
& Pacific Tea Company, Inc., as amended through
July 1987 (incorporated herein by reference to
Exhibit 3(a) to Form 10-K filed on May 27, 1988)
3.2 By-Laws of The Great Atlantic & Pacific Tea
Company, Inc., as amended through December 4,
2004 (incorporated herein by reference to
Exhibit 3.1 to Form 8-K filed on December 4,
2004)
4.1 Indenture, dated as of January 1, 1991 between
the Company and JPMorgan Chase Bank (formerly
The Chase Manhattan Bank as successor by merger
to Manufacturers Hanover Trust Company), as
trustee (the "Indenture") (incorporated herein by
reference to Exhibit 4.1 to Form 8-K)
4.2 First Supplemental Indenture, dated as of
December 4, 2001, to the Indenture, dated as of
January 1, 1991 between our Company and JPMorgan
Chase Bank, relating to the 7.70% Senior Notes
due 2004 (incorporated herein by reference to
Exhibit 4.1 to Form 8-K filed on December 4,
2001)
4.3 Second Supplemental Indenture, dated as of
December 20, 2001, to the Indenture between our
Company and JPMorgan Chase Bank, relating to the
9 1/8% Senior Notes due 2011 (incorporated
herein by reference to Exhibit 4.1 to Form 8-K
filed on December 20, 2001)
4.4 Successor Bond Trustee (incorporated herein by
reference to Exhibit 4.4 to Form 10-K filed on
May 9, 2003)
10.1 Employment Agreement, made and entered into as of
the 11th day of November, 2002, by and between
our Company and Eric Claus, and Offer Letter
dated the 22nd day of October, 2002 (incorporated
herein by reference to Exhibit 10.1 to Form 10-Q
filed on January 10, 2003)
10.2 Employment Agreement, made and entered into as of
the 1st day of November, 2000, by and between the
Company and William P. Costantini (incorporated
herein by reference to Exhibit 10 to Form 10-Q
filed on January 16, 2001) ("Costantini
Agreement")
10.3 Amendment to Costantini Agreement dated April
30, 2002 (incorporated herein by reference to
Exhibit 10.7 to Form 10-K filed on July 5, 2002)
10.4 Confidential Separation and Release Agreement by
and between William P. Costantini and The Great
Atlantic & Pacific Tea Company, Inc. dated
November 4, 2004 (incorporated herein by
reference to Exhibit 10.4 to Form 10-Q filed on
January 7, 2005)
10.5 Employment Agreement, made and entered into as
of the 16th day of June, 2003, by and between
our Company and Brenda Galgano (incorporated
herein by reference to Exhibit 10.9 to Form 10-Q
filed on October 17, 2003)
10.6 Employment Agreement, made and entered into as of
the 24th day of February, 2002, by and between
our Company and Mitchell P. Goldstein
(incorporated herein by reference to Exhibit 10.8
to Form 10-K filed on July 5, 2002)
10.7 Employment Agreement, made and entered into as of
the 2nd day of October, 2002, by and between our
Company and Peter Jueptner (incorporated herein
by reference to Exhibit 10.26 to Form 10-Q filed
on October 22, 2002) ("Jueptner Agreement")
10.8* Amendment to Jueptner Agreement dated November
10, 2004
10.9 Offer Letter dated the 18th day of September
2002, by and between our Company and Peter
Jueptner (incorporated herein by reference to
Exhibit 10.10 to Form 10-Q filed on January 10,
2003)
10.10 Employment Agreement, made and entered into as
of the 14th day of May, 2001, by and between our
Company and John E. Metzger, as amended February
14, 2002 (incorporated herein by reference to
Exhibit 10.13 to Form 10-K filed on July
5, 2002) ("Metzger Agreement")
10.11* Amendment to Metzger Agreement dated
September 13, 2004
10.12* Amendment to Metzger Agreement dated
October 25, 2004
10.13* Employment Agreement, made and entered into as
of the 1st day of March 2005, by and between our
Company and William J. Moss
10.14 Employment Agreement, made and entered into as
of the 28th day of October, 2002, by and between
our Company and Brian Piwek, and Offer Letter
dated the 23rd day of October, 2002
(incorporated herein by reference to Exhibit
10.14 to Form 10-Q filed on January 10, 2003)
("Piwek Agreement")
10.15* Amendment to Piwek Agreement dated February 4,
2005
10.16 Supplemental Executive Retirement Plan effective
as of September 1, 1997 (incorporated herein by
reference to Exhibit 10.B to Form 10-K filed on
May 27, 1998)
10.17 Supplemental Retirement and Benefit Restoration
Plan effective as of January 1, 2001
(incorporated herein by reference to Exhibit
10(j) to Form 10-K filed on May 23, 2001)
10.18 1994 Stock Option Plan (incorporated herein by
reference to Exhibit 10(e) to Form 10-K filed on
May 24, 1995)
10.19 1998 Long Term Incentive and Share Award Plan
(incorporated herein by reference to Exhibit
10(k) to Form 10-K filed on May 19, 1999)
10.20* Form of Stock Option Grant
10.21* Description of 2005 Turnaround Incentive
Compensation Program
10.22* Form of Restricted Share Unit Award Agreement
10.23 1994 Stock Option Plan (incorporated herein by
reference to Exhibit 10(e) to Form 10-K filed on
May 24, 1995)
10.24 1994 Stock Option Plan for Non-Employee
Directors (incorporated herein by reference to
Exhibit 10(f) to Form 10-K filed on May 24,
1995)
10.25 2004 Non-Employee Director Compensation
effective as of July 14, 2004 (incorporated
herein by reference to Exhibit 10.15 to Form
10-Q filed on July 29, 2004)
10.26* Description of Management Incentive Plan
10.27 Credit Agreement dated as of February 23, 2001,
among our Company, The Great Atlantic & Pacific
Company of Canada, Limited and the other
Borrowers party hereto and the Lenders party
hereto, The Chase Manhattan Bank, as U.S.
Administrative Agent, and The Chase Manhattan
Bank of Canada, as Canadian Administrative Agent
("Credit Agreement") (incorporated herein by
reference to Exhibit 10 to Form 10-K filed on May
23, 2001)
10.28 Amendment No. 1 and Waiver, dated as of November
16, 2001 to Credit Agreement (incorporated
herein by reference to Exhibit 10.23 to Form
10-K filed on July 5, 2002)
10.29 Amendment No. 2 dated as of March 21, 2002 to
Credit Agreement (incorporated herein by
reference to Exhibit 10.24 to Form 10-K filed on
July 5, 2002)
10.30 Amendment No. 3 dated as of April 23, 2002 to
Credit Agreement (incorporated herein by
reference to Exhibit 10.25 to Form 10-K filed on
July 5, 2002)
10.31 Waiver dated as of June 14, 2002 to Credit
Agreement (incorporated herein by reference to
Exhibit 10.26 to Form 10-K filed on July 5, 2002)
10.32 Amendment No. 4 dated as of October 10, 2002 to
Credit Agreement (incorporated herein by
reference to Exhibit 10.27 to Form 10-Q filed on
October 22, 2002)
10.33 Amendment No. 5 dated as of February 21, 2003 to
Credit Agreement (incorporated herein by
reference to Exhibit 10.1 to Form 8-K filed on
March 7, 2003)
10.34 Amendment No. 6 dated as of March 25, 2003 to
Credit Agreement (incorporated herein by
reference to Exhibit 10.28 to Form 10-K filed on
May 9, 2003)
13* Fiscal 2004 Annual Report to Stockholders
14 Code of Business Conduct and Ethics
(incorporated herein by reference to
Exhibit 14 to Form 10-K filed on May 21, 2004)
16 Letter on Change in Certifying Accountant
(incorporated herein by reference to
Forms 8-K filed on September 18, 2002 and
September 24, 2002, and Form 8-K/A
filed on September 24, 2002)
18 Preferability Letter Issued by
PricewaterhouseCoopers LLP (incorporated herein
by reference to Exhibit 18 to Form 10-Q filed on
July 29, 2004)
21* Subsidiaries of Registrant
23* Consent of Independent Registered Public
Accounting Firm
31.1* Certification of the Chief Executive Officer
Pursuant Section 302 of the Sarbanes-Oxley Act
of 2002
31.2* Certification of the Chief Financial Officer
Pursuant Section 302 of the Sarbanes-Oxley Act
of 2002
32* Certification Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
* Filed with this 10-K
Report of Independent Registered Public Accounting Firm on
Financial Statement Schedule
To the Stockholders and Board of Directors
of The Great Atlantic & Pacific Tea Company, Inc.:
Our audits of the consolidated financial statements, of management's
assessment of the effectiveness of internal control over financial reporting
and of the effectiveness of internal control over financial reporting referred
to in our report dated May 10, 2005 appearing in the Fiscal Year 2004 Annual
Report to Shareholders of The Great Atlantic & Pacific Tea Company, Inc.
(which report, consolidated financial statements and assessment are
incorporated by reference in this Annual Report on Form 10-K) also included an
audit of the financial statement schedule listed in Item 15(a)(2) of this Form
10-K. In our opinion, this financial statement schedule presents fairly, in
all material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements.
PricewaterhouseCoopers LLP
Florham Park, New Jersey
May 10, 2005
Schedule II
The Great Atlantic & Pacific Tea Company, Inc.
Valuation and Qualifying Accounts and Reserves
Years Ended February 22, 2003, February 28, 2004, and February 26, 2005
(in thousands)
Additions Additions
Allowance for Impact of Charged to Charged to
Bad Debts for Beginning Adoption of Costs & Other Foreign Ending
Year Ended Balance FIN 46-R Expenses Accounts Deductions (1) Exchange Balance
- -------------- ------------- ------------- ------------- ------------- -------------- ------------- ---------
Feb. 22, 2003 9,200 - 6,929 - (6,584) 254 9,799
Feb. 28, 2004 9,799 (4,200) 5,225 - (4,554) 46 6,316
Feb. 26, 2005 6,316 - (1,745) - 1,072 70 5,713
Additions Additions
Stock Loss Impact of Charged to Charged to
Reserve for Beginning Adoption of Costs & Other Foreign Ending
Year Ended Balance FIN 46-R Expenses Accounts Deductions Exchange Balance
- -------------- ------------- ------------- ------------- ------------- ------------- ------------ ---------
Feb. 22, 2003 7,326 - 709 - - 46 8,081
Feb. 28, 2004 8,081 - (1,147) - (251) 109 6,792
Feb. 26, 2005 6,792 - 3,016 - - 81 9,889
Deferred Tax Additions Additions
Valuation Impact of Charged to Charged to
Allowance for Beginning Adoption of Costs & Other Foreign Ending
Year Ended Balance FIN 46-R Expenses Accounts Deductions Exchange Balance
- -------------- ------------- ------------- ------------- ------------- ------------ ------------- ---------
Feb. 22, 2003 - - 161,495 - - - 161,495
Feb. 28, 2004 161,495 - 67,682 - - - 229,177
Feb. 26, 2005 229,177 - 89,632 - - - 318,809
(1) Deductions to allowance for Bad Debts represent write-offs of accounts
receivable balances.
SIGNATURES
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.
(registrant)
Date: May 10, 2005 By: /s/ Mitchell P. Goldstein
--------------------------------------------------
Mitchell P. Goldstein, Executive Vice President,
Chief Financial Officer & Secretary
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/ Christian W.E. Haub Chairman of the Board and
- ------------------------------------ Chief Executive Officer
Christian W.E. Haub
/s/ John D. Barline Director
- ------------------------------------
John D. Barline
/s/ Jens-Jurgen Bockel Director
- ------------------------------------
Jens-Jurgen Bockel
/s/ Bobbie A. Gaunt Director
- ------------------------------------
Bobbie Gaunt
/s/ Helga Haub Director
- ------------------------------------
Helga Haub
/s/ Dan P. Kourkoumelis Director
- ------------------------------------
Dan P. Kourkoumelis
/s/ Edward Lewis Director
- ------------------------------------
Edward Lewis
/s/ Richard L. Nolan Director
- ------------------------------------
Richard L. Nolan
/s/ Maureen B. Tart-Bezer Director
- ------------------------------------
Maureen B. Tart-Bezer
The above-named persons signed this report on behalf of the registrant on May
10, 2005.
/s/ Brenda M. Galgano Senior Vice President, Corporate Controller
- -----------------------------------
Brenda M. Galgano May 10, 2005
Exhibit 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
Section 302 Certification
I, Christian W.E. Haub, certify that:
1. I have reviewed this annual report on Form 10-K of The Great Atlantic &
Pacific Tea Company, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this annual report our conclusion about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this annual report based on such evaluation; and
d) disclosed in this annual report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
/s/ Christian W. E. Haub Date: May 10, 2005
- ------------------------
Christian W. E. Haub
Chairman of the Board
and
Chief Executive Officer
Exhibit 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
Section 302 Certification
I, Mitchell P. Goldstein, certify that:
1. I have reviewed this annual report on Form 10-K of The Great Atlantic &
Pacific Tea Company, Inc.;
2. Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and we have:
a) designed such disclosure controls and procedures, or caused such
disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including
its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this annual report is
being prepared;
b) designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles;
c) evaluated the effectiveness of the registrant's disclosure controls and
procedures and presented in this annual report our conclusion about the
effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this annual report based on such evaluation; and
d) disclosed in this annual report any change in the registrant's internal
control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is likely to
materially affect, the registrant's internal control over financial
reporting; and
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation of internal control over financial reporting, to
the registrant's auditors and the audit committee of registrant's board of
directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
/s/ Mitchell P. Goldstein Date: May 10, 2005
- -------------------------
Mitchell P. Goldstein
Executive Vice President, Chief
Financial Officer & Secretary
Exhibit 32
Certification Accompanying Periodic Report
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. ss. 1350)
The undersigned, Christian W. E. Haub, Chairman of the Board and Chief Executive
Officer of The Great Atlantic & Pacific Tea Company, Inc. ("Company"), and
Mitchell P. Goldstein, Executive Vice President, Chief Financial Officer &
Secretary of the Company, each hereby certifies that (1) the Annual Report of
the Company on Form 10-K for the period ended February 26, 2005 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 the results of operations of the
Company.
Dated: May 10, 2005 /s/ Christian W. E. Haub
------------------------
Christian W. E. Haub
Chairman of the Board
and
Chief Executive Officer
Dated: May 10, 2005 /s/ Mitchell P. Goldstein
-------------------------
Mitchell P. Goldstein
Executive Vice President,
Chief Financial Officer &
Secretary