The Great Atlantic & Pacific Tea Company, Inc. Announces Results for the Fourth Quarter and...

MONTVALE, N.J. -- Company Reports Fiscal 2005 EBITDA, Adjusted for Non-Operating Items, of $127 Million, up from $113 Million in Prior Year

The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE: GAP) today announced its financial results for the fiscal 2005 fourth quarter

U.S. sales for the 12 week fourth quarter were $1.6 billion, compared with $1.7 billion in the fourth quarter of fiscal 2004. Fiscal 2004 fourth quarter total sales of $2.6 billion include $853 million related to A&P Canada which was sold in August 2005. U.S. total comparable store sales increased 1.4% vs. year-ago. Net loss for the quarter was $39.1 million or $.95 per diluted share this year versus a loss of $5.7 million or $.15 per diluted share last year.

The results for the fourth quarter of fiscal years 2005 and 2004 include items the Company considers non-operating in nature that management excludes when evaluating the results of the U.S. ongoing business. These items are listed on Schedule 3 of the press release. Excluding these items, adjusted U.S. income from operations was $1.7 million in the fourth quarter of fiscal 2005 versus a loss of $18 million in last year's fourth quarter. Adjusted U.S. ongoing operating EBITDA, which is reconciled to net cash from operating activities on Schedule 4, was $41 million in the fourth quarter of fiscal 2005 versus $28 million in last year's fourth quarter.

U.S. sales for the 52 weeks of fiscal 2005 were $7.0 billion versus $7.3 billion in fiscal 2004. Total sales of $8.7 billion for this year and $10.8 billion for last year include sales of $1.7 billion and $3.5 billion, respectively, related to A&P Canada which was sold in August 2005. U.S. total comparable store sales increased 0.5%. Net income for the year was $393 million or $9.64 per diluted share which included the gain on the sale of Canada, compared with a loss of $188 million or $4.88 per diluted share for fiscal 2004.

Fiscal 2005 and fiscal 2004 results include the non-operating items listed on Schedule 3 of the press release. Excluding these items, adjusted U.S. loss from operations was $65 million in fiscal 2005 versus a loss of $89 million in fiscal 2004. Adjusted U.S. ongoing operating EBITDA, which is reconciled to net cash from operating activities on Schedule 4, was $127 million in fiscal 2005 versus $113 million in fiscal 2004.

Christian Haub, Executive Chairman of The Board of Directors, said, "Our successful strategic divestiture and reorganization initiatives in Fiscal 2005 strengthened our financial position, reduced operating costs and facilitated the launch of dynamic retail strategies to restore profitability and stimulate growth. The sale of A&P Canada transformed our balance sheet and provided a significant financial stake in Metro, Inc., an already successful entity that was further strengthened by the addition of our Canadian store operations.

"In the U.S., our reduction of overheads and improved operating and merchandising execution positively impacted fourth quarter results, and combined with exciting store development plans, set the stage for continuing financial progress through this fiscal year and beyond. In addition, our improved performance and financial resources also present the opportunity to participate in the expected consolidation of our industry," Mr. Haub said.

Eric Claus, President & Chief Executive Officer, said "The dedicated efforts of our new leadership team and hard-working associates generated positive operating trends in the second half of Fiscal 2005. Our mid-year headquarters and field reorganization lowered costs and upgraded retail execution, producing solid improvements in identical store sales and ongoing operating EBITDA in the fourth quarter.

"In executing our new strategic plan, we will accelerate development of the outstanding Fresh and Discount store prototypes we recently launched successfully in the Northeast, and introduce a significantly improved Gourmet format in New York City. In the Midwest, our improving Farmer Jack operations will be further revitalized with a quality and value emphasis refreshing its great tradition in the marketplace; while in New Orleans, our Sav-A-Center team goes forward after its remarkable and successful rebuilding effort in the wake of Hurricane Katrina - an accomplishment that has been a tremendous inspiration to our entire A&P family.

Mr. Claus concluded, "In Fiscal 2006, our team will maintain an unwavering focus on profitable store operations, including both development and strict cost management, as we further intensify the drive toward our goal of profitability in Fiscal 2007, and dynamic growth thereafter."

Founded in 1859, A&P is one of the nation's first supermarket chains. The Company operates 405 stores in 9 states and the District of Columbia under the following trade names: A&P, Waldbaum's, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Sav-A-Center and Food Basics.

The Company invites investors and other interested parties to listen to a live audio Webcast to be held at 11:00 AM Eastern Time today, at which members of the Company's senior management team will discuss the Company's fourth quarter and full year financial results. The Webcast may be accessed through a link on the "Investors" page of the Company's Website, www.aptea.com. Listeners who cannot participate in the live broadcast will be able to hear a recorded replay of the broadcast beginning this afternoon and available until June 6, 2006.

Effective March 28, 2003, the Securities and Exchange Commission ("SEC") adopted new rules related to disclosure of certain financial measures not calculated in accordance with Generally Accepted Accounting Principles ("GAAP"). Such new rules require all public companies to provide certain disclosures in press release and SEC filings related to non-GAAP financial measures. We use the non-GAAP measure "EBITDA" to evaluate the Company's liquidity and it is among the primary measures used by management for planning and forecasting of future periods. EBITDA is defined as earnings before interest, taxes, depreciation, amortization, minority interest, equity in earnings of Metro, Inc., discontinued operations and the gain on the sale of A&P Canada. Ongoing, operating EBITDA is defined as EBITDA adjusted for items the Company considers non-operating in nature that management excludes when evaluating the results of the U.S. ongoing business. The Company believes the presentation of these measures is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by the Company's management and makes it easier to compare the Company's results with other companies that have different financing and capital structures or tax rates. In addition, these measures are also among the primary measures used externally by the Company's investors, analysts and peers in its industry for purposes of valuation and comparing the results of the Company to other companies in its industry. Ongoing, operating EBITDA is reconciled to Net Cash provided by Operating Activities on Schedule 4 of this release.

This release contains forward-looking statements about the future performance of the Company, which are based on Management's assumptions and beliefs in light of the information currently available to it. The Company assumes no obligation to update the information contained herein. These forward-looking statements are subject to uncertainties and other factors that could cause actual results to differ materially from such statements including, but not limited to: competitive practices and pricing in the food industry generally and particularly in the Company's principal markets; the Company's relationships with its employees and the terms of future collective bargaining agreements; the costs and other effects of legal and administrative cases and proceedings; the nature and extent of continued consolidation in the food industry; changes in the financial markets which may affect the Company's cost of capital and the ability of the Company to access capital; supply or quality control problems with the Company's vendors; and changes in economic conditions which affect the buying patterns of the Company's customers.

The Great Atlantic & Pacific Tea Company, Inc.
       Schedule 1 - GAAP Earnings for the 12 and 52 weeks ended
                February 25, 2006 and February 26, 2005
                              (Unaudited)
          (In thousands, except share amounts and store data)


                         12 Weeks Ended           52 Weeks Ended
                   ------------------------- -------------------------
                   February 25, February 26, February 25, February 26,
                      2006         2005         2006         2005
                   ------------ ------------ ------------ ------------

Sales              $ 1,607,523  $ 2,560,294  $ 8,740,347  $10,854,911
Cost of merchandise
 sold               (1,121,616)  (1,831,201)  (6,235,275)  (7,813,771)
                   ------------ ------------ ------------ ------------
Gross margin           485,907      729,093    2,505,072    3,041,140
Store operating,
 general and
 administrative
 expense              (541,802)    (715,832)  (2,825,730)  (3,114,062)
                   ------------ ------------ ------------ ------------
(Loss) income from
 operations            (55,895)      13,261     (320,658)     (72,922)
(Loss) gain on sale
 of Canadian
 operations               (339)           -      912,129            -
Interest expense       (15,465)     (27,107)     (92,248)    (114,107)
Interest income          4,311          682       13,457        2,776
Minority interest
 in earnings of
 consolidated
 franchisees                 -         (325)      (1,131)         772
Equity in earnings
 of Metro, Inc.          4,404            -        7,801            -
                   ------------ ------------ ------------ ------------
(Loss) income from
 continuing
 operations before
 income taxes          (62,984)     (13,489)     519,350     (183,481)
Benefit from
 (provision for)
 income taxes           23,958        8,240     (128,927)        (528)
                   ------------ ------------ ------------ ------------
(Loss) income from
 continuing
 operations            (39,026)      (5,249)     390,423     (184,009)
Discontinued
 operations:
(Loss) income from
 operations of
 discontinued
 businesses, net of
 tax                       (78)        (458)       1,626       (1,387)
Gain (loss) on
 disposal of
 discontinued
 operations, net of
 tax                         4            -          581       (2,702)
                   ------------ ------------ ------------ ------------
(Loss) income from
 discontinued
 operations                (74)        (458)       2,207       (4,089)
                   ------------ ------------ ------------ ------------
Net (loss) income  $   (39,100) $    (5,707) $   392,630  $  (188,098)
                   ============ ============ ============ ============

Net (loss) income
 per share - basic:
Continuing
 operations        $     (0.95) $     (0.14) $      9.69  $     (4.77)
Discontinued
 operations              (0.00)       (0.01)        0.05        (0.11)
                   ------------ ------------ ------------ ------------
Net (loss) income
 per share - basic $     (0.95) $     (0.15) $      9.74  $     (4.88)
                   ============ ============ ============ ============

Net (loss) income
 per share - diluted:
Continuing
 operations        $     (0.95) $     (0.14) $      9.59  $     (4.77)
Discontinued
 operations              (0.00)       (0.01)        0.05        (0.11)
                   ------------ ------------ ------------ ------------
Net (loss) income
 per share -
 diluted           $     (0.95) $     (0.15) $      9.64  $     (4.88)
                   ============ ============ ============ ============


Weighted average
 common shares
 outstanding -
 basic              41,042,838   38,651,664   40,301,132   38,558,598
                   ============ ============ ============ ============
Weighted average
 common shares
 outstanding -
 diluted            41,042,838   38,651,664   40,725,942   38,558,598
                   ============ ============ ============ ============


Gross margin rate        30.23%       28.48%       28.67%       28.02%
Store operating,
 general and
 administrative
 expense rate            33.70%       27.96%       32.33%       28.69%


United States
 depreciation and
 amortization      $    43,287  $    46,057  $   196,387  $   201,987
Canada depreciation
 and amortization            -       16,365       10,942       66,118
                   ------------ ------------ ------------ ------------
Total A&P
 depreciation and
 amortization      $    43,287  $    62,422  $   207,329  $   268,105
                   ============ ============ ============ ============


Number of stores
 operated at end of
 quarter                   405          647          405          647
                   ============ ============ ============ ============

Number of
 franchised stores
 served at end of
 quarter                     -           42            -           42
                   ============ ============ ============ ============

            The Great Atlantic & Pacific Tea Company, Inc.
               Schedule 2 - Condensed Balance Sheet Data
                              (Unaudited)
            (In millions, except per share and store data)

                                             February 25, February 26,
                                                 2006         2005
                                             ------------ ------------

Cash and short-term investments                 $    230    $     258

Other current assets                                 980          907
                                                ---------   ----------

Total current assets                               1,210        1,165

Property-net                                         898        1,516

Equity investment in Metro, Inc.                     339            -

Other assets                                          52          121
                                                ---------   ----------

Total assets                                    $  2,499    $   2,802
                                                =========   ==========

Total current liabilities                       $    610    $   1,078

Total non-current liabilities                      1,217        1,490

Stockholders' equity                                 672          234
                                                ---------   ----------

Total liabilities and stockholders' equity      $  2,499    $   2,802
                                                =========   ==========

Other Statistical Data
----------------------

Total Debt and Capital Leases                   $    282    $     697
Total Long Term Real Estate Liabilities              297          328
Restricted Cash, Temporary Investments and
 Marketable Securities                              (465)        (104)
                                                ---------   ----------
Net Debt                                        $    114    $     921

Total Retail Square Footage (in thousands)        16,509       25,583

Book Value Per Share                            $  16.32    $    6.03


                                              For the 52   For the 52
                                             weeks ended  weeks ended
                                             February 25, February 26,
                                                 2006         2005
                                             ------------ ------------
Capital Expenditures                            $    191    $     216

            The Great Atlantic & Pacific Tea Company, Inc.
 Schedule 3 - Reconciliation of GAAP (Loss) Income from Operations to
 Adjusted (Loss) Income from Operations for the 12 and 52 weeks ended
                February 25, 2006 and February 26, 2005
                              (Unaudited)
          (In thousands, except share amounts and store data)

                                12 Weeks Ended      52 Weeks Ended
                              ----------------------------------------
                              February  February   February  February
                              25, 2006  26, 2005   25, 2006  26, 2005
                              --------- --------- ---------- ---------

As reported (loss) income from
 operations                   $(55,895) $ 13,261  $(320,658) $(72,922)
                              --------- --------- ---------- ---------
Adjustments:
  Midwest exit costs            10,375         -    115,271         -
  Net restructuring costs,
   primarily related to the
   sale of the U.S.
   distribution operations to
   C&S                          29,241     7,856    118,648     9,959
  Long-lived asset impairment        -         -     17,728    34,688
  Early extinguishment of debt
   and write-off of deferred
   financing fees                    -         -     33,031      (764)
  Impact of Hurricane Katrina      867         -     19,034         -
  Workers compensation state
   assessment charges            9,689         -      9,689         -
  Self-Insurance reserve
   adjustment                        -    27,256          -    27,256
  Employee benefit costs             -         -          -    (8,600)
  Real estate related activity   7,410   (23,798)   (14,863)  (22,536)
  Visa / Mastercard lawsuit
   settlement                        -         -     (1,547)        -
  Canadian dollar hedge              -         -     15,446         -
  Canada income from
   operations                        -   (42,194)   (57,224)  (56,321)
                              --------- --------- ---------- ---------
       Total adjustments        57,582   (30,880)   255,213   (16,318)
                              --------- --------- ---------- ---------
Adjusted United States income
 (loss) from operations       $  1,687  $(17,619) $ (65,445) $(89,240)
                              ========= ========= ========== =========

As reported United States
 depreciation and amortization $ 43,287  $ 46,057  $ 196,387  $201,987
                              --------- --------- ---------- ---------
Adjustments:
 Accelerated depreciation on
  leasehold improvements        (4,250)        -     (4,250)        -
                              --------- --------- ---------- ---------
Adjusted United States
 depreciation and amortization $39,037  $ 46,057  $ 192,137  $201,987
                              ========= ========= ========== =========

            The Great Atlantic & Pacific Tea Company, Inc.
  Schedule 4 - Reconciliation of GAAP Net Cash (Used In) Provided By
    Operating Activities to Adjusted EBITDA for the 12 and 52 weeks
             ended February 25, 2006 and February 26, 2005
                              (Unaudited)
          (In thousands, except share amounts and store data)

                               12 Weeks Ended       52 Weeks Ended
                             -----------------------------------------
                             February  February   February   February
                             25, 2006  26, 2005   25, 2006   26, 2005
                             --------- --------- ---------- ----------
Net cash (used in) provided
 by operating activities     $ 79,808  $125,565  $ (80,715) $ 114,458
Adjustments to calculate
 EBITDA:
Net interest expense           11,154    26,425     78,791    111,331
Asset disposition initiatives  (7,696)     (261)  (108,068)     1,448
Restructuring charge          (14,318)        -    (77,054)         -
Long lived asset impairment
 charges                       (5,067)   (5,111)   (34,175)   (43,317)
Loss on extinguishment of debt      -         -    (28,623)         -
Loss on derivatives                 -         -    (15,446)         -
(Loss) gain on disposal of
 owned property                (1,049)   32,085     24,787     28,704
(Benefit from) provision for
 income taxes                 (23,958)   (8,240)   128,927        528
Decrease (increase) in income
 tax reserve                   21,564     1,801    (98,079)     1,370
Other share based awards       (2,008)        -     (8,978)         -
Working capital changes
-----------------------
  Accounts receivable          30,360    10,304     56,130    (29,223)
  Inventories                 (76,089)  (85,723)  (109,521)    12,614
  Prepaid expenses and other
   current assets             (16,475)  (20,386)      (585)     6,024
  Accounts payable             11,625    33,094    101,342    (46,295)
  Accrued salaries, wages,
   benefits and taxes          (4,738)    4,913     31,414     24,170
  Other accruals              (40,373)    8,286    (48,931)    34,121
Other assets                    7,300    (1,638)     7,344     19,041
Other non-current liabilities  16,588   (49,431)    76,309    (42,591)
Other, net                        764     4,000     (8,198)     2,800
                             --------- --------- ---------- ----------
     Total A&P EBITDA         (12,608)   75,683   (113,329)   195,183
                             --------- --------- ---------- ----------
Adjustments:
  Midwest exit costs           10,375         -    115,271          -
  Net restructuring costs,
   primarily related to the
   sale of the U.S.
   distribution operations to
   C&S                         24,991     7,856    114,398      9,959
  Long-lived asset impairment       -         -     17,728     34,688
  Early extinguishment of debt
   and write-off of deferred
   financing fees                   -         -     33,031       (764)
  Impact of Hurricane Katrina     867         -     19,034          -
  Workers compensation state
   assessment charges           9,689         -      9,689          -
  Self-Insurance reserve
   adjustment                       -    27,256          -     27,256
  Employee benefit costs            -         -          -     (8,600)
  Real estate related activity  7,410   (23,798)   (14,863)   (22,536)
  Visa / Mastercard lawsuit
   settlement                       -         -     (1,547)         -
  Canadian dollar hedge             -         -     15,446          -
  Canada EBITDA                     -   (58,559)   (68,166)  (122,439)
                             --------- --------- ---------- ----------
       Total adjustments       53,332   (47,245)   240,021    (82,436)
                             --------- --------- ---------- ----------
Adjusted United States
 ongoing operating EBITDA    $ 40,724  $ 28,438  $ 126,692  $ 112,747
                             ========= ========= ========== ==========