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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 Commission file number 1-4141
ended February 22, 1997
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) (Zip Code)
Registrant's telephone number, including area code 201-573-9700
Securities registered pursuant to Section 12 (b) of the Act:
Name of each exchange on
Title of each class which registered
Common Stock - $1 par value New York Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
None
(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 No X
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. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant at May 1, 1997 was $432,122,501.
The number of shares of common stock outstanding at May 1, 1997 was
38,248,966.
Documents Incorporated by Reference
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 1996 Annual
Report to Shareholders. The Registrant has filed with the S.E.C. since the
close of its last fiscal year ended February 22, 1997, 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 973 stores
averaging approximately 31,440 square feet per store as of February 22, 1997.
In addition, the Company began franchising its Canadian Food Basics stores in
fiscal 1995. As of February 22, 1997, the Company had 49 Food Basics
Franchise stores in Canada averaging approximately 27,470 square feet per
store. On the basis of reported sales for fiscal 1996, the Company believes
that it is one of the ten 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, Food Emporium, Waldbaum's, Food Mart, Food Bazaar, Miracle Food Mart,
Ultra Mart, Futurestore, Dominion, Food Basics and Compass Foods, 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 and
generic (non-branded) products. In support of its retail operations, the
Company also operates two coffee roasting plants, two bakeries and a
delicatessen food kitchen. The products processed in these facilities are
sold under the Company's own brand names which include America's Choice,
Master Choice, Health Pride, Eight O'Clock, Bokar, Royale, Savings Plus and
Jane Parker. All products produced by A&P's food processing operations are
sold in Company stores. A&P also sells its coffee products to unaffiliated
retail outlets outside of its marketing areas.
Building upon a broad base of A&P supermarkets, the Company has 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 corporate
operations and retail stores. During fiscal 1996, the Company expended
approximately $297 million for capital projects. The Company's plans for
fiscal 1997 anticipate capital expenditures of approximately $310 million
which include the opening of 40 new supermarkets, the remodeling or expansion
of 30 stores and converting 20 Canadian stores to Food Basics Franchised
stores. In addition, the Company is also developing plans for additional
stores to be opened in future fiscal years.
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 processing facilities which produce coffee, dairy and
deli products and certain baked goods. The ingredients for coffee products
are purchased principally from Brazilian and Central American sources. Other
ingredients are obtained from domestic suppliers.
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Employees
As of February 22, 1997, the Company had approximately 84,000 employees, of
which 69% 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 1996 Annual Report to
Shareholders on pages 23,25, 26 and 29 and is herein incorporated by
reference.
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ITEM 2. Properties
At February 22, 1997, the Company operated 973 retail stores and serviced 49
franchised stores. Approximately 9% 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............. 53
Massachusetts........... 22
New Hampshire........... 1
Vermont................. 2
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Total................. 78
Middle Atlantic States:
District of Columbia.... 1
Delaware................ 8
Maryland................ 52
New Jersey.............. 115
New York................ 183
Pennsylvania............ 45
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Total................. 404
Mid-Western States:
Michigan................ 99
Wisconsin............... 47
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Total................. 146
Southern States:
Alabama................. 3
Georgia................. 43
Louisiana............... 25
Mississippi............. 6
North Carolina.......... 20
South Carolina.......... 8
Virginia................ 50
West Virginia........... 1
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Total................. 156
Total United States... 784
Ontario, Canada........... 189
-----
Total Stores.......... 973
=====
Franchised Stores:
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Ontario, Canada 49
---
Total Franchised Stores 49
===
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The total area of all retail stores is approximately 30.6 million square feet
averaging approximately 31,440 square feet per store while the total area of
all franchised stores is approximately 1.4 million square feet averaging
approximately 27,470 square feet per store. The stores built by the Company
over the past several years and those planned for fiscal 1997 generally range
in size from 50,000 to 65,000 square feet, of which approximately 65% to 70%
is utilized as selling area.
The Company operates two coffee roasting plants, two bakeries and a
delicatessen food kitchen in the United States and Canada. In addition, the
Company maintains 16 warehouses which service its store network.
The net book value of real estate pledged as collateral for all mortgage
loans amounted to approximately $48 million as of February 22, 1997.
ITEM 3. Legal Proceedings
The information required is contained in the 1996 Annual Report to
Shareholders on page 29 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 1996.
PART II
ITEM 5. Market for the Registrant's Common Stock and Related Security Holder
Matters
The information required is contained in the 1996 Annual Report to
Shareholders on pages 29 and 31 and is herein incorporated by reference.
ITEM 6. Selected Financial Data
The information required is contained on page 31 of the 1996 Annual Report to
Shareholders and is herein incorporated by reference.
ITEM 7. Management's Discussion and Analysis
The information required is contained in the 1996 Annual Report to
Shareholders on pages 14 through 18 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 14 of this report. Except for the
pages included herein by reference, the Company's 1996 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 29 of the 1996 Annual Report to Shareholders and is herein
incorporated by reference.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
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PART III
ITEMS 10 and 11. Directors and Executive Officers of the Registrant and
Executive Compensation
Executive Officers of the Company
Name Age Current Position
James Wood.......... 67 Chairman of the Board and Co-Chief Executive
Officer
Christian W.E. Haub 32 President and Co-Chief Executive Officer
Fred Corrado........ 57 Vice Chairman of the Board and Chief Financial
Officer
Gerald L. Good...... 54 Executive Vice President - Marketing and
Merchandising
George Graham....... 47 Executive Vice President - U.S. Operations
J. Wayne Harris..... 58 Chairman and Chief Executive Officer - The
Great Atlantic & Pacific Tea Company of
Canada, Limited
Aaron Malinsky 48 Executive Vice President - Development and
Strategic Planning
Peter J. O'Gorman... 58 Executive Vice President - International Store
and Product Development
Ivan K. Szathmary... 60 Executive Vice President - Chief Services
Officer
Robert G. Ulrich.... 62 Senior Vice President - General Counsel
Corporate officers of the Company are elected annually and serve at the
pleasure of the Board of Directors; each of the executive officers listed
above is a corporate officer.
Mr. Wood was elected Chairman of the Board and Chief Executive Officer on
April 29, 1980. Effective April 2, 1997, Mr. Wood became Co-Chief Executive
Officer with Mr. Haub. From December 1988 to December 1993 and at other
prior times he also served as President. He is Chairman of the Executive
Committee and is an ex officio member of the Finance and Retirement Benefits
Committees of the Board.
Mr. Haub was elected President and Co-Chief Executive Officer on April 2,
1997. Prior to assuming his present positions he was President and Chief
Operating Officer of the Company since December 7, 1993. Prior thereto, he
served as Corporate Vice President, Development and Strategic Planning, since
joining the Company in 1991. Mr. Haub has been a member of the Board of
Directors of the Company since December 3, 1991 and is an ex officio member
of the Executive, Finance and Retirement Benefits Committees.
Mr. Corrado was elected as Vice Chairman of the Board on October 6, 1992. He
has also served as Chief Financial Officer since joining the Company in
January 1987. Mr. Corrado also served as Treasurer of the Company in 1987
and from April 18, 1989 through December 5, 1995. Mr. Corrado has been a
member of the Board of Directors of the Company since December 4, 1990, and
is currently the Vice Chairman of the Executive Committee and a member of the
Finance and Retirement Benefits Committees.
Mr. Good was elected Executive Vice President - Marketing and Merchandising
on October 3, 1994. During the past five years and prior to assuming his
present position, he served as Senior Vice President and Chairman, The Great
Atlantic & Pacific Company of Canada, Limited, Senior Vice President - Field
Administration, and as Vice President - Chief Administrative Officer.
Mr. Graham was elected Executive Vice President - U.S. Operations on January
7, 1997. Prior to assuming his present position and for the past five years,
he was successively Executive Vice President, Merchandising Administration,
Senior Vice President - Chief Merchandising Officer and President - Metro
Area Group of the Company.
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Mr. Harris was named Chairman and Chief Executive Officer of the Great
Atlantic and Pacific Tea Company of Canada, Limited on September 19, 1996.
Prior thereto, he was named Corporate Executive Vice President on December
12, 1995, and had been successively Executive Vice President, Canadian
Operations, Chairman Waldbaum's, Inc., and Chief Operating Officer - U.S.
Operations. In 1993 Mr. Harris was Senior Vice President - Northeast
Operations, and prior thereto, Vice President - Operations Greater New York
Metropolitan Area. During the past five years and prior to joining the
Company in September 1992, he was Group President, Cincinnati/Dayton
marketing area of the Kroger Company.
Mr. Malinsky was elected Executive Vice President, Development and Strategic
Planning on August 1, 1996. Prior to rejoining the Company and during the
past five years, Mr. Malinsky was President and Chairman of Victory Markets,
Inc.
Mr. O'Gorman was elected Executive Vice President - International Store and
Product Development on June 26, 1995. During the past five years he was
Executive Vice President - Development and Strategic Planning, and Executive
Vice President - Development.
Dr. Szathmary was elected Executive Vice President and Chief Services Officer
on July 11, 1996. Prior thereto, he was Senior Vice President and Chief
Services Officer since July 1986.
Mr. Ulrich was elected Senior Vice President and General Counsel of the
Company in April 1981.
The Company has filed with the Commission since the close of its fiscal year
ended February 22, 1997 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 proxy statement.
ITEM 12. Security Ownership of Certain Beneficial Owners and Management
The information required is contained in the Company's fiscal 1996 definitive
proxy statement on pages 1 and 5 and is herein incorporated by reference.
ITEM 13. Certain Relationships and Related Transactions
The information required is contained in the Company's fiscal 1996 definitive
proxy statement on pages 1 and 6 and is herein incorporated by reference.
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PART IV
ITEM 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a) Documents filed as part of this report
1) Financial Statements: The financial statements required by Item
8 are included in the fiscal 1996 Annual Report to Shareholders. The
following required items, appearing on pages 19 through 30 of the 1996
Annual Report to Shareholders, are herein incorporated by reference:
Statements of Consolidated Operations
Statements of Consolidated Shareholders' Equity
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.
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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 A to Form 10-Q
rights of security holders, for the quarter ended
including indentures August 27, 1977; and
Registration Statement
No. 33-14624 on Form S-3
filed May 29, 1987
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, and
February 25, 1995; and
attached
b) Supplemental Executive Exhibit 10)b) to Form 10-K
Retirement Plan, amended for the fiscal year ended
and restated February 27, 1993
c) 1975 Stock Option Plan, Exhibit 10) to Form 10-K for
as amended the fiscal year ended
February 23, 1985
d) 1984 Stock Option Plan, Exhibit 10)e) to Form 10-K
as amended for the fiscal year ended
February 23, 1991
e) 1994 Stock Option Plan Exhibit 10)e) to Form 10-K
for the fiscal year ended
February 25, 1995
f) 1994 Stock Option Plan Exhibit 10)f) to Form 10-K
for Non-Employee Directors for the fiscal year ended
February 25, 1995
g) Competitive Advance and Exhibit 10) to Form 10-Q
Revolving Credit Facilities for the quarter ended
Agreement dated as of December 2, 1995, filed on
December 12, 1995. Form SE.
h) Directors' Deferred
Payment Plan
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Exhibit Incorporation by reference
Numbers Description (If applicable)
11) Not Applicable
12) Not Applicable
13) 1996 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
No reports on Form 8-K were filed for the fiscal year ended February
22, 1997.
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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 13, 1997 By: /s/ Fred Corrado
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,
James Wood Co-Chief Executive Officer and Director
/s/ Christian W.E. Haub President, Co-Chief Executive Officer
Christian W.E. Haub and Director
/s/ Fred Corrado Vice Chairman of the Board,
Fred Corrado Chief Financial Officer and Director
/s/ John D. Barline Director
John D. Barline
/s/ Rosemarie Baumeister Director
Rosemarie Baumeister
/s/ Christopher F. Edley Director
Christopher F. Edley
/s/ Helga Haub Director
Helga Haub
/s/ Barbara Barnes Hauptfuhrer Director
Barbara Barnes Hauptfuhrer
/s/ William A. Liffers Director
William A. Liffers
/s/ Fritz Teelen Director
Fritz Teelen
/s/ R.L. "Sam" Wetzel Director
R.L. "Sam" Wetzel
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The above-named persons signed this report on behalf of the registrant on
May 13, 1997.
/s/ Kenneth A. Uhl Vice President, Controller May 16, 1997
Kenneth A. Uhl Date
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