Company posts second quarter 2002 ongoing operating loss of $.26 per share, Takes valuation allowance on deferred tax asset of $134 million or $3.48 per share.

Montvale, New Jersey, October 18, 2002: – The Great Atlantic & Pacific Tea Company, Inc. (A&P, NYSE Symbol: GAP) today announced second quarter and year to date results for the 12 and 28 weeks ended September 7, 2002.

Sales in the quarter were $2.50 billion versus $2.55 billion in the second quarter of fiscal 2001. Comparable store sales increased 0.5%. Excluding charges arising from the Company’s previously announced asset disposition program and a tax valuation allowance taken in the quarter, the ongoing operating loss per share in the quarter was $.26, compared with an ongoing operating loss of $.05 in fiscal 2001. Including these items, the second quarter loss was $3.76, compared with a $.05 loss in the second quarter of fiscal 2001.

Sales for the 28 weeks year to date were $5.81 billion versus $5.94 billion in fiscal year 2001. Comparable store sales increased 0.3% for the first half of the year. The ongoing operating loss per share was $.12 for the first half of fiscal 2002 compared with a loss of $.07 per share last year. The net loss including all items was a loss of $3.71 per share for 2002, versus a loss of $.07 for 2001.

The second quarter’s ongoing operating loss of $.26 per share excludes the impacts of two items which are included in the reported net loss per share of $3.76 for the quarter.

• During the second quarter, the Company completed several activities related to its previously announced Asset Disposition Initiative. The activities included closure of 2 stores and associated severance and product markdowns, which resulted in a cost of $0.02 per share; and,

• During the second quarter, in accordance with provisions of FAS 109, the Company’s tax provision included a charge of $134 million or $3.48 per share to establish a tax valuation allowance against the Company’s U.S. net deferred tax asset. Accounting rules require an objective analysis of the recoverability of deferred tax assets that is primarily based on historic cumulative losses and generally does not incorporate management’s expectation of future operating results. In future periods, U.S. earnings or losses will not be tax affected until suchtime as the certainty of future tax benefits can be reasonably assured. The valuation allowance has no direct impact on the future cashflow or any financings of the Company.

“In anticipation of ongoing difficult conditions, we are aggressively reducing costs, improving operations and refining our gross margin investment strategy going forward, to protect our business while improving our earnings trend.

“We have made excellent progress in the implementation of our supply chain & business process initiative. We are now on target to complete this important undertaking by the end of this fiscal year, a full year ahead of schedule and below the estimated cost. The new tools and processes we are putting in place will be instrumental in driving efficiency and performance in our supply & logistics, merchandising and category management, and store operations. This will be a critical enabler of both our long-range development, and many of the immediate actions we are taking to improve our operating performance,” Mr. Haub concluded.

Founded in 1859, A&P was one of the nation’s first supermarket chains, and is today one of North America’s 10 largest. In the second quarter, the Company opened 10 new stores and remodeled or expanded 13 stores. The Company currently operates 692 stores in 15 states, the District of Columbia and Ontario, Canada under the following trade names: A&P, Waldbaum’s, The Food Emporium, Super Foodmart, Super Fresh, Farmer Jack, Kohl’s, Sav-A-Center, Dominion, The Barn Markets, Food Basics and Ultra Food & Drug. The Company also manufactures and distributes the Eight O’Clock line of whole bean coffees. The Company invites investors to listen to an audio Webcast of its quarterly discussion of earnings by accessing a link on the “Investor Relations” page of its Website, www.aptea.com. The live broadcast is on Friday, October 18, 2002 at 11 AM Eastern Time, with replays available from the afternoon of October 18 through November 18.

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.

For financial questions, call William J. Moss
Vice President, Treasurer
(201) 571-4019

For non-financial questions, call Richard P. De Santa
Vice President, Corporate Affairs
(201) 571-4495

2002-2Q-Schedules.pdf - PDF - 44k
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