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    A&P Adjusts Earnings for Last Year

    MONTVALE, N.J. - The Great Atlantic & Pacific Tea Company Inc. today filed its fiscal year 2001 annual report on Form 10-K with the Securities and Exchange Commission several weeks after the document was due.

    MONTVALE, N.J. - The Great Atlantic & Pacific Tea Company Inc. today filed its fiscal year 2001 annual report on Form 10-K with the Securities and Exchange Commission several weeks after the document was due. The delay was caused by an investigation into how A&P accounted for vendor allowances and inventory in certain regions.

    The company adjusted its earnings for the last fiscal year and restated earnings for the previous two years. Because of the restatement, the company reported income of $12.5 million instead of a loss of $71.9 million.

    A&P said the results of the review, along with "the consideration of certain other accounting practices," led to its decision to restate and adjust its earnings. The delay also means A&P's annual meeting will be postponed from July 19 to July 30.

    Among the revisions were:

    -- Adjustments stemming from A&P's recent discovery of some instances in which vendor allowances were recorded before the accounting period in which they were actually earned, which it said was a violation of company policy. That resulted in an after-tax charge to net income of $9.5 million for the last three fiscal years.

    -- Adjustments to correct an overstatement of perishable inventory in one region, resulting in an after-tax charge to net income of $800,000 for each of those years.

    -- Adjustments stemming from a change in the company's accounting policy for certain one-year and multiyear vendor allowance contracts to reflect the appropriate timing for the recording such allowances. That resulted in an after-tax increase in net income of $28.2 million for each of the three years.

    -- Adjustments to reflect an actuarially-based method of estimating the company's self-insurance reserves, resulting in an after-tax increase in net income of $21.5 million for each of those years.

    -- Adjustments to reflect changes in the timing of recognition of sublet income associated with certain closed stores, resulting in an after-tax charge to net income of $1 million for each of those years.

    As a result of the restatement and the adjustment for the 2001 fiscal year, there is no change in cash balances or debt levels. However, they did result in changes to net income for each year.

    A&P, which employs more than 10,000 people in New Jersey, has been hit with several shareholder lawsuits since the announcement.

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