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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED ~~JULY~~OCTOBER 146, 2012

¨	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 333-168065

TOPS HOLDING CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		26-1252536
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

6363 Main Street, Williamsville, New York 14221		(716) 635-5000
(Address of principal executive office, including zip code)		(Telephone Number)

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 whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of ~~August~~November 2719, 2012, 144,776 shares of common stock of the registrant were outstanding.

TOPS HOLDING CORPORATION

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION (Unaudited)
~~ITEM 1.~~	~~FINANCIAL~~ITEM ~~STATEMENTS~~1.	FINANCIAL STATEMENTS
	Condensed Consolidated Balance Sheets as of July 14, 2012 and December 31, 2011		1
		Condensed Consolidated Balance Sheets as of October 6, 2012 and December 31, 2011		1
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the 12-week and 28-week periods ended July 14, 2012 and July 16, 2011		2
		Condensed Consolidated Statements of Operations and Comprehensive Income for the 12-week and 40-week periods ended October 6, 2012 and October 8, 2011		2
	Condensed Consolidated Statements of Cash Flows for the 28-week periods ended July 14, 2012 and July 16, 2011		3
		Condensed Consolidated Statements of Cash Flows for the 40-week periods ended October 6, 2012 andOctober 8, 2011		3
	~~Notes to Condensed Consolidated Financial Statements~~	Notes to Condensed Consolidated Financial Statements	4	4
~~ITEM 2.~~	~~MANAGEMENT’S~~ITEM ~~DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	20	21
~~ITEM 3.~~	~~QUANTITATIVE~~ITEM ~~AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	28	29
~~ITEM 4.~~	~~CONTROLS~~ITEM ~~AND PROCEDURES~~4.	CONTROLS AND PROCEDURES	29	30
PART II – OTHER INFORMATION
~~ITEM 1.~~	~~LEGAL~~ITEM ~~PROCEEDINGS~~1.	LEGAL PROCEEDINGS	29	31
~~ITEM 1A.~~	~~RISK~~ITEM ~~FACTORS~~1A.	RISK FACTORS	29	31
~~ITEM 6.~~	~~EXHIBITS~~ITEM 6.	EXHIBITS	30	31
~~SIGNATURE~~	SIGNATURE		30	31

PART I – FINANCIAL INFORMATION (Unaudited)

ITEM 1. FINANCIAL STATEMENTS

TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except share and per share amounts)

(Unaudited)

	July 14, 2012			December 31, 2011
	October 6, 2012			December 31, 2011
Assets
Current assets:
Cash and cash equivalents	$	5332,~~971~~275		$	19,181
Accounts receivable, net		5352,~~156~~399			55,987
Inventory, net		~~118~~123,~~629~~890			115,309
Prepaid expenses and other current assets		1014,~~758~~774			12,990
Income taxes refundable		~~116~~117			285
Current deferred tax assets		1,971			1,971
Total current assets		~~238~~225,~~601~~426			205,723
Property and equipment, net		~~340~~346,~~489~~050			358,263
Intangible assets, net (Note 3)		68,270			72,125
Goodwill (Note 4)		13,409			462
Other assets		9,581			11,101
Intangible assets, net (Note 4)		67,700			71,663
Total assets	$	656,941		$	647,212
Other assets		8,908			11,101
Total assets	$	661,493		$	647,212
Liabilities and Shareholders’ Deficit
Current liabilities:
Accounts payable	$	8669,~~513~~798		$	75,608
Accrued expenses and other current liabilities (Note 4)		70,773			74,677
Accrued expenses and other current liabilities (Note 5)		86,204			74,677
Current portion of capital lease obligations (Note 5)		13,465			12,701
Current portion of capital lease obligations (Note 6)		13,895			12,701
Current portion of long-term debt (Note 6)		351			434
Current portion of long-term debt (Note 7)		307			434
Total current liabilities		~~171~~170,~~102~~204			163,420
Capital lease obligations (Note 5)		152,723			159,814
Capital lease obligations (Note 6)		151,359			159,814
Long-term debt (Note 6)		350,337			355,240
Long-term debt (Note 7)		350,392			355,240
Other long-term liabilities		2627,~~502~~996			23,893
Non-current deferred tax liabilities		45,~~976~~273			4,309
Total liabilities		705,~~640~~224			706,676
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 11)
Shareholders’ deficit:
Common shares ($0.001 par value; 300,000 authorized shares, 144,776 shares issued and outstanding as of July 14, 2012 and December 31, 2011)		—			—
Common shares ($0.001 par value; 300,000 authorized shares, 144,776 shares issued and outstanding as of October 6, 2012 and December 31, 2011)		—			—
Paid-in capital		(~~912~~648	)		(1,528	)
Accumulated deficit		(4641,~~526~~822	)		(56,675	)
Accumulated other comprehensive loss, net of tax		(1,261	)		(1,261	)
Total shareholders’ deficit		(4843,~~699~~731	)		(59,464	)
Total liabilities and shareholders’ deficit	$	~~656~~661,~~941~~493		$	647,212

See notes to unaudited condensed consolidated financial statements.

- 1 -

TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME ~~(LOSS)~~

(Dollars in thousands)

(Unaudited)

	12-week periods ended						2840-week periods ended
	July 14, 2012			July 16, 2011			July 14, 2012			July 16, 2011
	October 6, 2012			October 8, 2011			October 6, 2012			October 8, 2011
Net sales	$	~~562~~538,~~361~~431		$	~~559~~538,~~514~~606		$	1,~~266~~805,~~741~~172		$	1,~~276~~815,~~773~~379
Cost of goods sold		(~~390~~377,~~514~~477	)		(~~395~~375,~~139~~211	)		(~~881~~1,~~221~~258,698	)		(~~895~~1,~~883~~271,094	)
Distribution costs		(11,~~511~~091	)		(910,~~393~~470	)		(2536,~~278~~369	)		(2334,~~556~~026	)
Gross profit		~~160~~149,~~336~~863			~~154~~152,~~982~~925			~~360~~510,~~242~~105			~~357~~510,~~334~~259
Operating expenses:
Wages, salaries and benefits		(7572,~~125~~334	)		(7669,~~356~~691	)		(~~174~~246,~~355~~689	)		(~~175~~245,~~338~~029	)
Selling and general expenses		(2221,~~400~~905	)		(23,~~438~~774	)		(5274,~~218~~123	)		(5680,~~821~~595	)
Administrative expenses (inclusive of share-based compensation expense of $264, $264, $616 and $612)		(18,543	)		(18,019	)		(42,413	)		(43,502	)
Administrative expenses (inclusive of share-based compensation expense of $264, $264, $880 and $876)		(17,078	)		(17,639	)		(59,491	)		(61,141	)
Rent expense, net		(34,~~568~~485	)		(4,~~212~~301	)		(914,~~548~~033	)		(1014,~~115~~416	)
Depreciation and amortization		(12,~~023~~011	)		(1112,~~746~~040	)		(2840,~~052~~063	)		(2638,~~787~~827	)
Advertising		(53,~~118~~601	)		(43,~~412~~838	)		(1014,~~764~~365	)		(1014,~~402~~240	)
Impairment		—			(1,891	)		—			(1,891	)
Impairment charges		—			(900	)		—			(2,791	)
Total operating expenses		(~~136~~131,~~777~~414	)		(~~140~~132,~~074~~183	)		(~~317~~448,~~350~~764	)		(~~324~~457,~~856~~039	)
Operating income		2318,~~559~~449			1420,~~908~~742			4261,~~892~~341			3253,~~478~~220
Interest expense, net		(13,~~709~~406	)		(1413,~~297~~997	)		(3245,~~021~~427	)		(3347,~~588~~585	)
Income (loss) before income taxes		9,850			611			10,871			(1,110	)
Income before income taxes		5,043			6,745			15,914			5,635
Income tax expense		(~~352~~339	)		(~~318~~305	)		(~~722~~1,061	)		(~~685~~990	)
Net income (loss)		9,498			293			10,149			(1,795	)
Net income		4,704			6,440			14,853			4,645
Other comprehensive income		—			—			—			—
Comprehensive income (loss)	$	9,498		$	293		$	10,149		$	(1,795	)
Comprehensive income	$	4,704		$	6,440		$	14,853		$	4,645

See notes to unaudited condensed consolidated financial statements.

- 2 -

TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

(Unaudited)

	28-week periods ended
	40-week periods ended
	July 14, 2012			July 16, 2011
	October 6, 2012			October 8, 2011
Cash flows provided by operating activities:
Net income (loss)	$	10,149		$	(1,795	)
Net income	$	14,853		$	4,645
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		3651,~~331~~784			3551,~~729~~454
Amortization of deferred financing costs		12,~~520~~193			12,~~411~~030
LIFO inventory valuation adjustments		794			2,161
Deferred income taxes		964			959
Deferred income taxes		667			665
Share-based compensation expense		880			876
Share-based compensation expense		616			612
LIFO inventory valuation adjustments		295			1,044
Impairment		—			1,891
Impairment charges		—			2,791
Other		(~~554~~429	)		~~255~~584
Changes in operating assets and liabilities:
Decrease in accounts receivable, net		23,~~831~~616			~~1,467~~232
Increase in inventory, net		(41,~~114~~518	)		(31,~~713~~678	)
Decrease in prepaid expenses and other current assets		2,232			4,407
Increase in prepaid expenses and other current assets		(1,459	)		(1,482	)
Decrease (increase) in income taxes refundable		169			(3	)
Decrease in income taxes refundable		168			5
Increase (decrease) in accounts payable		10,724			(3,909	)
Decrease in accounts payable		(5,690	)		(15,260	)
Decrease in accrued expenses and other current liabilities		(3,196	)		(2,853	)
Increase in accrued expenses and other current liabilities		9,899			5,927
Increase (decrease) in other long-term liabilities		23,~~529~~969			(~~1,271~~670	)
Net cash provided by operating activities		6079,~~698~~525			3551,~~054~~457
Cash flows used in investing activities:
Cash paid for property and equipment		(15,200	)		(25,908	)
Acquisition of Grand Union supermarkets		(27,359	)		—
Proceeds from insurable loss recovery		1,150			—
Cash paid for property and equipment		(24,892	)		(37,348	)
Proceeds from sale of assets		—			650
Proceeds from insurable loss recovery		1,150			50
Net cash used in investing activities		(14,050	)		(25,258	)
Proceeds from sale of assets		—			1,250
Net cash used in investing activities		(51,101	)		(36,048	)
Cash flows used in financing activities:
Borrowings on ABL Facility		66,600			~~356~~454,~~300~~500
Repayments on ABL Facility		(71,600	)		(~~358~~459,~~800~~500	)
Principal payments on capital leases		(69,~~789~~850	)		(58,~~803~~426	)
Repayments of long-term debt borrowings		(~~250~~360	)		(~~227~~327	)
Change in bank overdraft position		~~181~~(120	)		8339
Deferred financing costs incurred		—			(57	)
Net cash used in financing activities		(1115,~~858~~330	)		(813,~~579~~471	)
Net increase in cash and cash equivalents		3413,~~790~~094			1,~~217~~938
Cash and cash equivalents-beginning of period		19,181			17,419
Cash and cash equivalents-end of period	$	5332,~~971~~275		$	1819,~~636~~357

See notes to unaudited condensed consolidated financial statements.

- 3 -

TOPS HOLDING CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. DESCRIPTION OF THE COMPANY AND BASIS OF PRESENTATION

The Company

Tops Holding Corporation (“Holding” or “Company”) is the parent of Tops Markets, LLC (“Tops Markets”), a supermarket retailer in Upstate New York, Northern Pennsylvania and Vermont. Holding was incorporated on October 5, 2007 and commenced operations on December 1, 2007. Holding is owned by various funds affiliated with Morgan Stanley Private Equity, an affiliate of Morgan Stanley & Co., Incorporated (“Morgan Stanley”), Graycliff Partners (“Graycliff”) (formerly, HSBC Private Equity Partners), two minority investors and a company employee. Holding has no other business operations as its sole purpose is the ownership of Tops Markets. ~~The~~During ~~Company~~early ~~operates~~October as2012, aTops ~~food~~Markets ~~retailer~~ completed the acquisition (“GU Acquisition”) of 21 retail supermarkets in Upstate New York and ~~Northern~~Vermont ~~Pennsylvania~~from ~~under~~GU ~~the~~Markets ~~banner~~LLC ~~Tops~~(“GU Markets”), an affiliate of C&S Wholesale Grocers, Inc. (“C&S”). As of ~~July~~October 146, 2012, the Company ~~operated~~operates ~~124~~146 supermarkets under the banners of Tops, GU Family Markets, Grand Union and Bryants, with an additional five supermarkets operated by franchisees.

Accounting Policies

~~The~~A summary of the Company’s significant accounting policies is included in Note 1 to the audited consolidated financial statements of Tops Holding Corporation ~~for~~in the ~~fiscal year ended December 31,~~ 2011, ~~which appear in the Company’s~~ Annual Report on Form 10-K ~~filed with the Securities and Exchange Commission (“SEC”) on March 29, 2012~~.

Basis of Presentation and Principles of Consolidation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the requirements for Form 10-Q, and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. The condensed consolidated financial statements include the accounts of the Company and all of its subsidiaries. All intercompany transactions have been eliminated.

The Company operates on a 52/53 week fiscal year ending on the Saturday closest to December 31. Fiscal years include 13 four-week reporting periods, with an additional week in the thirteenth reporting period for 53-week fiscal years. The first quarter of each fiscal year includes four reporting periods, while the remaining quarters include three reporting periods.

The Company’s condensed consolidated financial statements for the 12-week and 2840-week periods ended ~~July~~October 146, 2012 and ~~July~~October 168, 2011 are unaudited, and, in the opinion of management, contain all adjustments that are of a normal and recurring nature ~~necessary~~ necessary for a fair statement of financial position and results of operations for such periods.

Segments

AsThe ~~of July 14, 2012, the~~ Company’s ~~operated 124~~ supermarkets ~~with an additional five supermarkets operated by franchisees. The supermarkets~~ offer grocery, produce, frozen, dairy, meat, floral, seafood, health and beauty care, general merchandise, deli and bakery goods. The Company operates one supermarket format where each supermarket offers the same general mix of products with similar pricing to similar categories of customers. The Company has concluded that each individual supermarket is an operating segment. As of ~~July~~October 146, 2012, 79 ~~of the~~ supermarkets offered pharmacy services and 4446 fuel centers were in operation, inclusive of the Company’s franchise locations. The Company’s retail operations, which represent substantially all of the Company’s consolidated sales, earnings and total assets, are its only reportable segment.

These operating segments have been aggregated into one reportable segment because, in the Company’s judgment, the operating segments have similar historical economic characteristics and are expected to have similar economic characteristics and long-term financial performance in the future. The principal measures and factors considered in determining whether the economic characteristics are similar are gross profit percentages, capital expenditures, competitive risks and employee labor agreements. In addition, each operating segment has similar products and types of customers, similar methods of distribution and a similar regulatory environment.

- 4 -

The following table presents sales revenue by type of similar product (dollars in thousands):

	12-week periods ended										2840-week periods ended
	July 14, 2012					July 16, 2011					July 14, 2012					July 16, 2011
	October 6, 2012					October 8, 2011					October 6, 2012					October 8, 2011
	Amount		% ofTotal			Amount		% ofTotal			Amount		% ofTotal			Amount		% ofTotal
			% of					% of					% of					% of
Non- perishables(1)	$	310,620		55.2	%	$	308,003		55.0	%	$	709,027		56.0	%	$	718,213		56.2	%
	Amount		Total			Amount		Total			Amount		Total			Amount		Total
Perishables(2)		157,382		28.0	%		155,393		27.8	%		341,381		27.0	%		344,051		26.9	%
Non-perishables(1)	$	303,924		56.4	%	$	306,687		56.9	%	$	1,012,951		56.1	%	$	1,024,900		56.5	%
Fuel		53,241		9.5	%		52,127		9.3	%		118,127		9.3	%		110,493		8.7	%
Perishables(2)		143,741		26.7	%		141,048		26.2	%		485,122		26.9	%		485,099		26.7	%
Pharmacy		37,085		6.6	%		40,211		7.2	%		88,872		7.0	%		95,305		7.5	%
Fuel		50,896		9.5	%		47,633		8.8	%		169,023		9.4	%		158,126		8.7	%
Other(3)		4,033		0.7	%		3,780		0.7	%		9,334		0.7	%		8,711		0.7	%
Pharmacy		35,920		6.7	%		39,590		7.4	%		124,792		6.9	%		134,894		7.4	%
	$	562,361		100.0	%	$	559,514		100.0	%	$	1,226,741		100.0	%	$	1,276,773		100.0	%
Other(3)		3,950		0.7	%		3,648		0.7	%		13,284		0.7	%		12,360		0.7	%
	$	538,431		100.0	%	$	538,606		100.0	%	$	1,805,172		100.0	%	$	1,815,379		100.0	%

(1)	Non-perishables consist of grocery, dairy, frozen, general merchandise, health and beauty care and other non-perishable related products.

(2)	Perishables consist of produce, meat, seafood, bakery, deli, floral, prepared foods and other perishable related products.

(3)	Other primarily consists of franchise income and service commission income, such as lottery, money orders and money transfers.

The table above includes $2.0 million of net sales generated by the 21 supermarkets acquired in the GU Acquisition during each of the 12-week and 40-week periods ended October 6, 2012.

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and notes thereto. The most significant estimates used by management are related to the accounting for vendor allowances, valuation of long-lived assets including intangible assets, acquisition accounting, lease classification, self-insurance reserves, inventory valuation, and income taxes. Actual results could differ from these estimates.

Fair Value of Financial Instruments

The provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurements and Disclosures” establish a framework for measuring fair value and a hierarchy that categorizes and prioritizes the sources to be used to estimate fair value as follows:

Level 1 – observable inputs such as quoted prices in active markets;

Level 2 – inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (interest rates, yield curves, etc.), and inputs that are derived principally from or corroborated by observable market data by correlation or other means (market corroborated inputs); and

Level 3 – unobservable inputs that reflect the Company’s determination of assumptions that market participants would use in pricing the asset or liability. These inputs are developed based on the best information available, including the Company’s own data.

Financial instruments include cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities, capital lease obligations and long-term debt. The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate fair value because of the short-term nature of these financial instruments. At ~~July~~October 146, 2012 and December 31, 2011, the estimated fair value and the carrying value of our debt instruments were as follows (dollars in thousands):

	July 14, 2012		December 31, 2011
	October 6, 2012		December 31, 2011
Carrying value of debt instruments:
Current portion of capital lease obligations	$	13,~~465~~895	$	12,701
Current portion of long-term debt		~~351~~307		434
Long-term capital lease obligations		~~152~~151,~~723~~359		159,814
Long-term debt		350,~~337~~392		355,240
Total carrying value of debt instruments		~~516~~515,~~876~~953		528,189
Fair value of debt instruments		~~521~~516,~~579~~599		530,652
Excess of fair value over book value	$	~~4,703~~646	$	2,463

- 5 -

The fair value of the Company’s senior secured notes was based on quoted market prices, a Level 2 source. The fair value of the Company’s other long-term debt and capital lease obligations was based on the net present value of future cash flows using ~~forward~~estimated ~~interest~~applicable ~~rate~~market ~~yield~~interest ~~curves~~rates infor ~~effect~~the Company at ~~July~~October 146, 2012 and December 31, 2011, a Level 3 measurement technique.

Fair value measurements of non-financial assets and non-financial liabilities are primarily used in the impairment analysis of long-lived assets, goodwill and intangible assets. Long-lived assets and definite-lived intangible assets are measured at fair value on a nonrecurring basis using Level 3 inputs. As described in Note 8 9, the Company recorded ~~a $1.9 million~~long-lived asset impairment charges of ~~long-lived~~$0.9 ~~assets~~million and $2.8 million within the condensed consolidated statements of operations and ~~other~~ comprehensive income ~~(loss)~~ for the 12-week and 2840-week periods ended ~~July~~October 168, 2011, respectively. ~~The~~When applicable, goodwill and the Tops tradename isare reviewed annually for impairment on December 1, or more frequently, if impairment indicators arise. See Note 1 to the Company’s consolidated financial statements in the 2011 Annual Report on Form 10-K for further discussion of the Company’s policies for valuing long-lived assets and intangible assets.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2012, the FASB issued ASU No. 2012-02, “Intangibles—Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.” The amendments permit an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with ASC 350-30, “Intangibles—Goodwill and Other—General Intangibles Other than Goodwill.” The amendments are effective for the Company’s annual and interim impairment tests performed for the fiscal year beginning December 30, 2012, with early adoption permitted. ~~Because~~The ~~the measurement of a potential impairment loss has not changed, the~~ amendments will not have an effect on the Company’s consolidated financial statements.

3. ~~INTANGIBLE~~BUSINESS ~~ASSETS,~~ACQUISITION ~~NET~~

~~Intangible~~During ~~assets~~early October 2012, ~~net~~the Company completed the GU Acquisition of ~~accumulated~~21 ~~amortization~~retail supermarkets in Upstate New York and Vermont. In addition to cash consideration of $27.4 million paid to GU Markets, ~~consist~~the Company incurred $0.3 million and $1.0 million of transaction costs that have been recorded in administrative expenses in the ~~following~~condensed ~~(dollars~~consolidated statements of operations and comprehensive income for the 12-week and 40-week periods ended October 6, 2012. The acquisition is being accounted for under the acquisition method of accounting in ~~thousands):~~accordance with ASC 805, “Business Combinations.”

								Weighted
	Gross					Net		Average
	Carrying		Accumulated			Carrying		Amortization
July 14, 2012	Amount		Amortization			Amount		Period
Tradename – indefinite	$	41,011		—		$	41,011	Indefinite life
Customer relationships		28,591		(21,368	)		7,223	8.4
Favorable/unfavorable lease rights		17,789		(7,722	)		10,067	9.3
Franchise agreements		11,538		(4,853	)		6,685	11.0
Tradenames – finite		4,310		(1,890	)		2,420	8.5
Other		1,178		(314	)		864	5.0
	$	104,417	$	(36,147	)	$	68,270	9.1
	Gross					Net
	Carrying		Accumulated			Carrying
December 31, 2011	Amount		Amortization			Amount
Tradename – indefinite	$	41,011		—		$	41,011
Customer relationships		28,591		(19,643	)		8,948
Favorable/unfavorable lease rights		17,789		(6,610	)		11,179
Franchise agreements		11,538		(4,288	)		7,250
Tradenames – finite		4,310		(1,504	)		2,806
Other		1,168		(237	)		931
	$	104,407	$	(32,282	)	$	72,125

The Company believes the acquisition creates significant strategic value due to the expansion it provides to the Company’s supermarket base with minimal incremental general and administrative expenses.

~~The~~Under ~~Tops~~the ~~tradename~~purchase method of accounting, the aggregate purchase price is ~~reviewed~~allocated ~~annually~~to ~~for~~the ~~impairment~~net tangible and intangible assets based upon their estimated fair values on ~~December 1~~the acquisition date. The Company has engaged a third party valuation specialist to assist with the valuation of assets acquired. As the values of certain assets and liabilities are preliminary in nature, orthe ~~more~~fair ~~frequently~~values for the property and equipment, iffavorable/unfavorable ~~impairment~~lease ~~indicators~~rights, ~~arise.~~tradenames and goodwill are subject to adjustment as additional information is ~~Based~~obtained. onFor purposes of a preliminary allocation of the ~~Company’s~~assets ~~assessment~~acquired and liabilities assumed, nothe ~~impairment~~excess ~~indicators~~of ~~existed~~the ~~during~~purchase price over the ~~28-week~~estimated ~~periods~~fair ~~ended~~value ~~July~~of net tangible and intangible assets has been assigned to goodwill, which is tax deductible. 14The purchase price allocations will be finalized within twelve months of the closing of the acquisition. When the valuations are finalized, ~~2012~~changes to the preliminary valuation of assets acquired or liabilities assumed may result in material adjustments to the fair value of property and ~~July 16~~equipment, ~~2011~~identifiable intangible assets acquired, including tradenames, and any related goodwill initially recorded.

~~During~~The fair value of inventory was determined based upon the ~~12-week~~Company’s ~~periods~~estimated ~~ended~~replacement ~~July 14~~cost. The fair values of buildings, ~~2012~~personal property and ~~July 16,~~site ~~2011~~improvements, ~~amortization~~all ~~expense~~of ~~was~~which ~~$1.6~~are ~~million~~included in property and ~~$2.0~~equipment ~~million~~in the succeeding table, ~~respectively.~~were ~~During~~determined using the ~~28-week~~cost ~~periods~~approach. ~~ended~~The ~~July 14,~~fair ~~2012~~value ~~and July 16,~~of ~~2011,~~land ~~amortization~~was ~~expense~~determined ~~was~~using $3the market approach.9 ~~million~~The ~~and~~fair ~~$4.7~~values ~~million,~~of ~~respectively.~~intangible ~~Such~~assets ~~amortization~~were isprimarily ~~included~~determined inusing ~~administrative~~the ~~expenses~~income inapproach which, for the ~~condensed~~tradenames, ~~consolidated~~is ~~statements~~based upon the present value of ~~operations~~the economic royalty savings associated with the tradenames and ~~comprehensive~~revenue ~~income~~projections ~~(loss)~~attributed to the tradenames. Tradenames are being amortized on an accelerated basis based upon a brand obsolescence assumption.

- 6 -

AsThe offollowing ~~July 14,~~table ~~2012,~~summarizes ~~expected~~the ~~future~~preliminary ~~amortization~~allocation of ~~intangible~~the purchase price to the assets isacquired and liabilities assumed as ~~follows~~of the transaction date (dollars in thousands):

2012 (remaining period)	$	3,181
Assets acquired:
2013		6,303
Inventory	$	7,358
2014		5,469
Accounts receivable		28
2015		4,163
Prepaid expenses		325
2016		2,893
Property and equipment		7,235
Thereafter		4,789
Goodwill		12,947
Favorable lease rights		2,385
Tradenames		1,000
Total assets acquired		31,278
Liabilities assumed:
Accrued expenses and other current liabilities		803
Unfavorable lease rights		2,244
Capital lease obligation		872
Total liabilities assumed		3,919
Acquisition price	$	27,359

4.Unaudited ~~ACCRUED~~Pro ~~EXPENSES~~Forma ~~AND~~Financial ~~OTHER~~Information ~~CURRENT LIABILITIES~~

~~Accrued~~The ~~expenses~~following table summarizes the Company’s unaudited pro forma operating results for the 12-week and ~~other~~40-week ~~current~~periods ~~liabilities~~ended ~~consist~~October 6, of2012 and October 8, 2011, giving effect to the ~~following~~GU Acquisition as if it occurred on January 1, 2011 (dollars in thousands):

	July 14, 2012		December 31, 2011
	12-week periods ended				40-week periods ended
Wages, taxes and benefits	$	15,309	$	21,779
	October 6, 2012		October 8, 2011		October 6, 2012		October 8, 2011
Lottery		10,377		10,124
Net sales	$	564,411	$	565,754	$	1,881,156	$	1,892,910
Interest payable		8,906		7,846
Operating income		21,345		22,831		66,307		55,771
Sales and use tax		4,373		964
Net income		7,600		8,529		19,819		7,196
Self-insurance reserves		3,864		3,468
Gift cards		2,702		4,517
Professional and legal fees		2,212		1,538
Union medical, pension and 401(k)		2,177		3,226
Repairs and maintenance		2,101		2,271
Money orders		1,813		3,133
Utilities		1,808		2,192
Property and equipment expenditures		1,009		1,718
Other		14,122		11,901
	$	70,773	$	74,677

The results of operations of the acquired supermarkets have been included in our condensed consolidated statements of operations following the respective closing dates of the individual supermarket acquisitions that ranged from September 24, 2012 to October 5, 2012. ~~CAPITAL~~The ~~LEASE~~acquired ~~OBLIGATIONS~~supermarkets contributed net sales of $2.0 million during each of the 12-week and 40-week periods ended October 6, 2012. It is impracticable to disclose net earnings for the post-acquisition period for these acquired supermarkets as net earnings of these supermarkets were not tracked on a collective basis due to the integration of administrative functions, including field supervision.

~~The~~This ~~Company~~pro ~~has~~forma afinancial ~~number~~information ofis ~~capital~~not ~~leases~~intended into ~~effect~~represent ~~for~~or ~~store~~be indicative ~~properties~~of ~~and~~what ~~equipment.~~would ~~The~~have ~~initial~~occurred ~~lease~~if ~~terms~~the ~~generally~~transactions ~~range~~had uptaken place prior to ~~twenty-five~~ ~~years~~the ~~and~~beginning ~~will~~of ~~expire~~the atperiods ~~various~~presented ~~times~~and ~~through~~should ~~2032,~~not ~~with~~be ~~options~~taken toas ~~renew~~representative ~~for~~of ~~additional~~the ~~periods.~~Company’s ~~The~~future ~~majority~~consolidated results of ~~the~~operations. ~~store~~This ~~leases~~pro ~~provide~~forma financial ~~for~~information ~~base~~does ~~rental,~~not ~~plus~~contemplate ~~real~~the ~~estate~~cost ~~taxes,~~savings ~~insurance,~~expected ~~common~~to ~~area~~be ~~maintenance~~realized ~~and~~from ~~other~~the ~~operating expenses~~achievement ~~applicable~~of tosynergies, ~~the~~including, ~~leased~~without ~~premises.~~limitation, ~~Some~~purchasing ~~leases~~savings ~~contain~~by ~~escalation~~leveraging ~~clauses~~the ~~for~~Company’s ~~future~~relationships ~~rents~~with its suppliers and ~~contingent~~the reduction ~~rents~~of ~~based~~duplicative onselling, ~~sales~~general ~~volume~~and administrative expenses.

As4. ofGOODWILL ~~July 14,~~AND ~~2012~~INTANGIBLE ASSETS, ~~future~~NET ~~minimum lease rental payments applicable to capital lease obligations follow (dollars in thousands):~~

2012 (remaining period)	$	14,170
2013		29,983
2014		27,235
2015		24,293
2016		22,960
Thereafter		85,333
Total minimum lease payments		203,974
Less amounts representing interest		(86,615	)
Present value of net minimum lease payments		117,359
Less current obligations		(13,465	)
Long-term obligations	$	103,894

The following table summarizes the change in the Company’s goodwill balance during the 40-week period ended October 6, 2012 (dollars in thousands):

The Company entered into sale-leaseback transactions in various years involving certain properties that did not qualify for sale-leaseback accounting as the lease agreements included various forms of continuing involvement. As a result, the transactions have been classified as financing transactions in accordance with FASB ASC Topic 840, “Leases.”


Balance – December 31, 2011	$	462
Acquisition (Note 3)		12,947

Balance – October 6, 2012	$	13,409

Under the financing method, the assets remain on the consolidated balance sheet and proceeds received by the Company from these transactions are recorded as capital lease obligations, allocated between land and building. Payments under these leases are applied as payments of imputed interest and deemed principal on the underlying building obligations, with no underlying cash payments deemed attributable to the land obligations. The related land assets are not depreciated, and at the end of the lease terms, the remaining capital lease obligations will equal the net book value of the land. The capital lease obligations as of July 14, 2012 and December 31, 2011 include $48.8 million of obligations related to land. At the expiration of the lease terms, or when the Company’s continuing involvement under the lease agreements ends, the related land and obligations will be removed from the balance sheet, with no underlying cash payments.

- 7 -

6.Intangible ~~DEBT~~assets, net of accumulated amortization, consist of the following (dollars in thousands):


								Weighted
	Gross					Net		Average
	Carrying		Accumulated			Carrying		Amortization
October 6, 2012	Amount		Amortization			Amount		Period
Tradename – indefinite	$	41,011	$	—		$	41,011		Indefinite life
Customer relationships		28,591		(22,107	)		6,484		8.4
Favorable/unfavorable lease rights		16,222		(6,084	)		10,138		9.7
Franchise agreements		11,538		(5,095	)		6,443		11.0
Tradenames – finite		5,310		(2,056	)		3,254		8.5
Other		716		(346	)		370		5.0

	$	103,388	$	(35,688	)	$	67,700		9.4


December 31, 2011	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Tradename – indefinite	$	41,011	$	—		$	41,011
Customer relationships		28,591		(19,643	)		8,948
Favorable/unfavorable lease rights		17,789		(6,610	)		11,179
Franchise agreements		11,538		(4,288	)		7,250
Tradenames – finite		4,310		(1,504	)		2,806
Other		706		(237	)		469

	$	103,945	$	(32,282	)	$	71,663

The Tops tradename is reviewed annually for impairment on December 1, or more frequently, if impairment indicators arise. Based on the Company’s assessment, no impairment indicators existed during the 40-week periods ended October 6, 2012 and October 8, 2011.

During the 12-week periods ended October 6, 2012 and October 8, 2011, amortization expense was $1.5 million and $1.9 million, respectively. During the 40-week periods ended October 6, 2012 and October 8, 2011, amortization expense was $5.4 million and $6.6 million, respectively. Such amortization is included in administrative expenses in the condensed consolidated statements of operations and comprehensive income.

As of October 6, 2012, expected future amortization of intangible assets is as follows (dollars in thousands):


2012 (remaining period)	$	1,671
2013		6,558
2014		5,703
2015		4,379
2016		3,094
Thereafter		5,284

5. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued expenses and other current liabilities consist of the following (dollars in thousands):


	October 6, 2012		December 31, 2011
Interest payable	$	16,951	$	7,846
Wages, taxes and benefits		16,425		21,779
Lottery		11,004		10,124
Union medical, pension and 401(k)		5,494		3,226
Self-insurance reserves		3,864		3,468
Money orders		3,686		3,133
Sales and use tax		3,368		964
Gift cards		2,732		4,517
Property and equipment expenditures		2,543		1,718
Professional and legal fees		2,307		1,538
Repairs and maintenance		2,056		2,271
Utilities		1,635		2,192
Other		14,139		11,901

	$	86,204	$	74,677

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6. CAPITAL LEASE OBLIGATIONS

The Company has a number of capital leases in effect for store properties and equipment. The initial lease terms generally range up to 25 years and will expire at various times through 2032, with options to renew for additional periods. The majority of the store leases provide for base rental, plus real estate taxes, insurance, common area maintenance and other operating expenses applicable to the leased premises. Some leases contain escalation clauses for future rents and contingent rents based on sales volume.

As of October 6, 2012, future minimum lease rental payments applicable to capital lease obligations follow (dollars in thousands):


2012 (remaining period)	$	7,136
2013		30,526
2014		27,612
2015		24,336
2016		22,987
Thereafter		85,334

Total minimum lease payments		197,931
Less amounts representing interest		(81,506	)

Present value of net minimum lease payments		116,425
Less current obligations		(13,895	)

Long-term obligations	$	102,530

Under the financing method, the assets remain on the consolidated balance sheet and proceeds received by the Company from these transactions are recorded as capital lease obligations, allocated between land and building. Payments under these leases are applied as payments of imputed interest and deemed principal on the underlying building obligations, with no underlying cash payments deemed attributable to the land obligations. The related land assets are not depreciated, and at the end of the lease terms, the remaining capital lease obligations will equal the net book value of the land. The capital lease obligations as of October 6, 2012 and December 31, 2011 include $48.8 million of obligations related to land. At the expiration of the lease terms, or when the Company’s continuing involvement under the lease agreements ends, the related land and obligations will be removed from the balance sheet, with no underlying cash payments.

7. DEBT

Long-term debt is comprised of the following (dollars in thousands):

	July 14, 2012			December 31, 2011
	October 6, 2012			December 31, 2011
Senior Notes	$	350,000		$	350,000
Discount on Senior Notes, net		(2,~~232~~110	)		(2,495	)
Other loans		2,~~109~~060			2,219
Mortgage note payable		~~811~~749			950
ABL Facility		—			5,000
Total debt		350,~~688~~699			355,674
Current portion		(~~351~~307	)		(434	)
Total long-term debt	$	350,~~337~~392		$	355,240

On October 9, 2009, the Company issued $275.0 million of senior secured notes, bearing interest of 10.125% (the “Senior Notes”). The Company received proceeds from the issuance of the Senior Notes, net of a $4.5 million original issue discount, of $270.5 million. On February 12, 2010, the Company issued an additional $75.0 million of Senior Notes on the same terms as the October 2009 issuance. The Company received proceeds of $76.1 million from this issuance, including a $1.1 million original issue premium. The Senior Notes mature October 15, 2015 and require semi-annual interest payments on April 15 and October 15. The Senior Notes are collateralized by (i) first-priority interests, subject to certain exceptions, in the Company’s warehouse distribution facility in Lancaster, New York, certain owned real property acquired by the Company, Tops Markets and the guarantors, Tops PT, LLC and Tops Gift Card Company, LLC, following the issue date of the Senior Notes, intellectual property, equipment, stock of subsidiaries and substantially all other assets of the Company, Tops Markets and the guarantors (other than leasehold interests in real property), other than assets securing the Company’s asset-based lending facility (the “ABL Facility”) on a first priority basis (collectively, the “Notes Priority Collateral”), and (ii) second-priority interests, subject to certain exceptions and permitted liens, in the assets of the Company, Tops Markets and the guarantors that secure the ABL Facility on a first-priority basis, including present and future receivables, inventory, prescription lists, deposit accounts and certain related rights and proceeds relating thereto (collectively, the “ABL Priority Collateral”).

~~Also~~- ~~effective October~~ 9, ~~2009, the Company entered into the ABL Facility, which expires on October 9, 2013. The ABL Facility allowed a maximum borrowing capacity of $70.0 million, including a sub~~-~~limit for the issuance of letters of credit, subject to a borrowing base calculation. The ABL Facility was amended on January 29, 2010 to increase the amount available under the revolving~~ credit facility by $30.0 million to $100.0 million, subject to a borrowing base calculation. Based upon the borrowing base calculation as of July 14, 2012, the unused availability under the ABL Facility was $74.4 million, after giving effect to $14.8 million of letters of credit outstanding thereunder. As of December 31, 2011, $13.1 million of letters of credit were outstanding. Revolving loans under the ABL Facility will, at the Company’s option, bear interest at either i) LIBOR plus a margin of 350 to 400 basis points, determined based on levels of borrowing availability, or ii) the prime rate plus a margin of 250 to 300 basis points, determined based on levels of borrowing availability. The ABL Facility is collateralized primarily by (i) first-priority interests, subject to certain exceptions, in the ABL Priority Collateral and (ii) second-priority interests, subject to certain exceptions, in the Notes Priority Collateral.

The instruments governing the Senior Notes and ABL Facility impose customary affirmative and negative covenants on the Company, including restrictions on indebtedness, liens, type of business, acquisitions, investments, sale or transfer of assets, payment of dividends, transactions involving affiliates, and change in control. Failure to meet any of these covenants would be an event of default.

- 8 -

7Also effective October 9, 2009, the Company entered into the ABL Facility, which expires on October 9, 2013. ~~INCOME~~The ~~TAXES~~ABL Facility initially allowed a maximum borrowing capacity of $70.0 million, including a sub-limit for the issuance of letters of credit, subject to a borrowing base calculation. The ABL Facility was amended on January 29, 2010 to increase the amount available under the revolving credit facility by $30.0 million to $100.0 million, subject to a borrowing base calculation. Based upon the borrowing base calculation as of October 6, 2012, the unused availability under the ABL Facility was $80.2 million, after giving effect to $14.8 million of letters of credit outstanding thereunder. As of December 31, 2011, $13.1 million of letters of credit were outstanding under the ABL Facility. Revolving loans under the ABL Facility will, at the Company’s option, bear interest at either i) LIBOR plus a margin of 350 to 400 basis points, determined based on levels of borrowing availability, or ii) the prime rate plus a margin of 250 to 300 basis points, determined based on levels of borrowing availability. The ABL Facility is collateralized primarily by (i) first-priority interests, subject to certain exceptions, in the ABL Priority Collateral and (ii) second-priority interests, subject to certain exceptions, in the Notes Priority Collateral.

8. INCOME TAXES

Income tax expense was as follows (dollars in thousands):

	12-week periods ended						2840-week periods ended
	July 14, 2012			July 16, 2011			July 14, 2012			July 16, 2011
	October 6, 2012			October 8, 2011			October 6, 2012			October 8, 2011
Current	$	~~(55~~42	)	$	—11		$	~~(55~~97	)	$	~~(20~~31	)
Deferred		(297	)		~~(318~~294	)		~~(667~~964	)		~~(665~~959	)
Total income tax expense	$	~~(352~~339	)	$	~~(318~~305	)	$	~~(722~~1,061	)	$	~~(685~~990	)

While the Company maintains a 100% valuation allowance against its net deferred tax assets, the income tax expense for the 12-week period ended ~~July~~October 146, 2012 reflects the partial reversal of valuation allowance against net deferred tax assets. The overall effective tax rate was 3.6.7%. The effective tax rate would have been 3940.61% without the impact of ~~federal tax credits and~~ adjustments to the valuation allowance.

The income tax expense for the 12-week period ended ~~July~~October 168, 2011 reflects the establishment of ~~additional~~ additional valuation allowance against net deferred tax assets during the period. The overall effective tax rate was 524.05%. The effective tax rate would have been 35.6% without the impact of the additional valuation allowance ~~and discrete charges~~.

While the Company maintains a 100% valuation allowance against its net deferred tax assets, the income tax expense for the 2840-week period ~~ended~~ ~~July~~ended October 146, 2012 reflects the partial reversal of valuation allowance against net deferred tax assets. The overall effective tax rate was 6.67%. The effective tax rate would have been 39.68% without the impact of ~~federal tax credits and~~ adjustments to the valuation allowance.

The income tax expense for the 2840-week period ended ~~July~~October 168, 2011 reflects the establishment of additional valuation allowance against net deferred tax assets during the period. The overall effective tax rate was ~~(61~~17.7)6%. The effective tax rate would have been 3335.98% without the impact of the additional valuation allowance ~~and discrete charges~~.

89. IMPAIRMENT CHARGES

On June 30, 2011, the FTC approved an application by Tops to sell three supermarkets acquired in the January 2010 Penn Traffic acquisition to Hometown Markets, LLC (“Hometown Markets”). The sale of these supermarkets closed in late July and early August 2011. As a result of the sale, the Company recorded a $1.9 million impairment within the condensed consolidated ~~statements~~statement of operations and ~~other~~ comprehensive income ~~(loss)~~ for the ~~12 and 28~~40-week ~~periods~~period ended ~~July~~October 168, 2011, representing the excess of the carrying value of assets over the sale price.

9During November 2011, the Company executed an agreement to sell the remaining supermarket acquired from Penn Traffic that was subject to the Final Order from the FTC requiring divestiture. ~~RELATED~~As ~~PARTY~~a ~~TRANSACTIONS~~result of the sale, the Company recorded a $0.9 million impairment within the condensed consolidated statements of operations and comprehensive income for the 12-week and 40-week periods ended October 8, 2011, representing the excess of the carrying value of assets over the sale price.

~~Effective November 30, 2007, the Company entered into a Transaction and Monitoring Fee Agreement with Morgan Stanley and Graycliff~~10. InRELATED ~~consideration~~PARTY ofTRANSACTIONS services provided, the Company incurs an annual monitoring fee of $0.8 million to Morgan Stanley and $0.2 million to Graycliff, payable in quarterly installments. During each of the 12-week periods ended July 14, 2012 and July 16, 2011, monitoring fees of $0.3 million were paid. During each of the 28-week periods ended July 14, 2012 and July 16, 2011, monitoring fees of $0.5 million were paid. These fees are included in administrative expenses in the condensed consolidated statements of operations and comprehensive income (loss).

10Effective November 30, 2007, the Company entered into a Transaction and Monitoring Fee Agreement with Morgan Stanley and Graycliff. ~~COMMITMENTS~~In ~~AND~~consideration ~~CONTINGENCIES~~of services provided, the Company incurs an annual monitoring fee of $0.8 million to Morgan Stanley and $0.2 million to Graycliff, payable in quarterly installments. During each of the 12-week periods ended October 6, 2012 and October 8, 2011, monitoring fees of $0.2 million were paid. During each of the 40-week periods ended October 6, 2012 and October 8, 2011, monitoring fees of $0.7 million were paid. These fees are included in administrative expenses in the condensed consolidated statements of operations and comprehensive income.

~~Purchase~~- ~~Commitments~~10 -

On November 12, 2009, the Company entered into a supply contract with C&S Wholesale Grocers, Inc. (“C&S”) whereby C&S provides warehousing, logistics, procurement and purchasing services in support of the majority of the Company’s supply chain. The agreement expires on September 24, 2016. The agreement provides that the actual costs of performing these services shall be reimbursed to C&S on an “open-book” or “cost-plus” basis, whereby the parties will negotiate annual budgets that will be reconciled against actual costs on a periodic basis. The parties will also annually negotiate services specifications and performance standards that will govern warehouse operations. The agreement defines the parties’ respective responsibilities for the procurement and purchase of merchandise intended for use or resale at the Company’s stores, as well as the parties’ respective remuneration for warehousing and procurement/purchasing activities. In consideration for the services it provides under the agreement, C&S will be paid an annual fee and will have incentive income opportunities based upon the Company’s cost savings and increases in retail sales volume.

Effective December 1, 2010, the Company extended the term of its existing supply contract with McKesson through January 31, 2014 for the supply of substantially all of the Company’s prescription drugs and other health and beauty care products requirements. The Company is required to purchase a minimum of $400 million of product during the period from December 1, 2010 to January 1, 2014. The Company has purchased $233.7 million of product under this contract through July 14, 2012.

- 9 -

11. COMMITMENTS AND CONTINGENCIES

Purchase Commitments

On November 12, 2009, the Company entered into a supply contract with C&S whereby C&S provides warehousing, logistics, procurement and purchasing services in support of the majority of the Company’s supply chain. The agreement expires on September 24, 2016. The agreement provides that the actual costs of performing these services shall be reimbursed to C&S on an “open-book” or “cost-plus” basis, whereby the parties will negotiate annual budgets that will be reconciled against actual costs on a periodic basis. The parties will also annually negotiate services specifications and performance standards that will govern warehouse operations. The agreement defines the parties’ respective responsibilities for the procurement and purchase of merchandise intended for use or resale at the Company’s stores, as well as the parties’ respective remuneration for warehousing and procurement/purchasing activities. In consideration for the services it provides under the agreement, C&S is paid an annual fee and has incentive income opportunities based upon the Company’s cost savings and increases in retail sales volume.

On September 24, 2012, the Company entered into a supplemental supply contract with C&S to provide similar services in support of the 21 supermarkets acquired in the GU Acquisition. The agreement expires on September 23, 2022. The agreement requires the Company to purchase a minimum of 1.8 million cases of merchandise per year, with certain exclusions including general merchandise and health and beauty care products.

Effective December 1, 2010, the Company extended the term of its existing supply contract with McKesson through January 31, 2014 for the supply of substantially all of the Company’s prescription drugs and other health and beauty care products requirements. The Company is required to purchase a minimum of $400 million of product during the period from December 1, 2010 to January 1, 2014. The Company has purchased $263.8 million of product under this contract through October 6, 2012.

Effective July 24, 2010, the Company extended its existing IT outsourcing agreement with HP Enterprise Services, LLC (formerly known as Electronic Data Systems, LLC), or HP, through December 31, 2017 to provide a wide range of information systems services. Under the agreement, HP provides data center operations, mainframe processing, business applications and systems development to enhance the Company’s customer service and efficiency. The charges under this agreement are based upon the services requested at predetermined rates.

The costs of these purchase commitments are not reflected in the Company’s condensed consolidated balance sheets.

Environmental Liabilities

The Company is contingently liable for potential environmental issues of some of its properties. As the Company is unable to determine the amount of any potential liability, no amounts were accrued as of ~~July 14~~October 6, 2012 and December 31, 2011.

Collective Bargaining Agreements

The Company employs over 1213,000 associates. Approximately 9188% of these associates are members of United Food and Commercial Workers, or UFCW, District Union Local One, or Local One, or two other UFCW unions that represented certain of the employees from the retained Penn Traffic supermarkets. All other associates are non-union with approximately 3% serving in our Grand Union acquired supermarket locations, and the remaining non-union associates serving primarily in management, field support, or pharmacist roles. The Company is a party to ~~five~~six collective bargaining agreements with Local One ~~that~~expiring ~~expire~~ between April 2014 and ~~July~~October ~~2014~~2015. The two non-Local One UFCW collective bargaining agreements expire in April 2013 and March 2015, respectively.

Multiemployer Pension Plan

At the time we entered into our original supply agreement with C&S, certain of our warehouse personnel became employees of C&S, with C&S assuming our obligations under several other multiemployer pension plans. Although we are not a sponsoring employer of, and make no contribution payments to any of these other multiemployer pension plans, we have certain contractual indemnification ~~obligations for withdrawal liability that may arise in the event of C&S’s withdrawal from such plans, or upon termination of the supply agreement.~~

obligations for withdrawal liability that may arise in the event of C&S’s withdrawal from such plans, or upon termination of the supply agreement.

Legal Proceedings

The Company is ~~involved~~unaware inof legal proceedings ~~arising~~that ~~from the daily operations of its business, including general liability claims, unemployment claims and workers’ compensation claims which~~ are ~~covered~~expected byto ~~reserves~~materially ~~and~~impact ~~insurance. The Company believes that~~ the ~~ultimate resolution of such proceedings will not have a material adverse effect on the~~ Company’s consolidated financial ~~position, results~~statements ofas ~~operations~~a ~~or cash flows~~whole. ~~Such legal proceedings~~Accordingly, ~~however,~~no are subject to inherent uncertainties, and the outcome of individual matters are not predictable. It is possible that the Company could be required to make expenditures, in excess of established provisions, in amounts ~~that~~related ~~cannot reasonably be estimated. As the Company is unable~~ to ~~determine~~legal ~~the amount of any potential liability, no amounts~~ proceedings were accrued as of ~~July 14~~October 6, 2012 and December 31, 2011.

- 11. ~~GUARANTOR FINANCIAL STATEMENTS~~ -

The obligations of Holding and Tops Markets under the Senior Notes are jointly and severally, fully and unconditionally guaranteed by Tops Gift Card Company, LLC and Tops PT, LLC (“Guarantor Subsidiaries”), both of which are 100%-owned subsidiaries of Tops Markets. Tops Gift Card Company, LLC was established in October 2008, while Tops PT, LLC was established in January 2010. Tops Markets is a joint issuer of the Senior Notes and is wholly-owned by Holding. Separate financial statements of Holding, Tops Markets and of the Guarantor Subsidiaries are not presented as the guarantees are full and unconditional and the Guarantor Subsidiaries are jointly and severally liable.

The following supplemental financial information sets forth, on a condensed consolidating basis, balance sheets as of July 14, 2012 and December 31, 2011 for Holding, Tops Markets, and the Guarantor Subsidiaries, and statements of operations and comprehensive income (loss) for the 12 and 28-week periods ended July 14, 2012 and July 16, 2011, and statements of cash flows for the 28-week periods ended July 14, 2012 and July 16, 2011. Within such condensed consolidated financial statements, the Company has corrected the 2011 presentation to reflect an income tax allocation for Tops Markets.

- 10 -

12. GUARANTOR FINANCIAL STATEMENTS

The obligations of Holding and Tops Markets under the Senior Notes are jointly and severally, fully and unconditionally guaranteed by Tops Gift Card Company, LLC and Tops PT, LLC (“Guarantor Subsidiaries”), both of which are 100%-owned subsidiaries of Tops Markets. Tops Gift Card Company, LLC was established in October 2008, and Tops PT, LLC was established in January 2010. Tops Markets is a joint issuer of the Senior Notes and is wholly-owned by Holding. Separate financial statements of Holding, Tops Markets and of the Guarantor Subsidiaries are not presented as the guarantees are full and unconditional and the Guarantor Subsidiaries are jointly and severally liable. Tops Markets was the acquiring entity of the 21 supermarkets acquired as part of the October 2012 GU Acquisition.

The following supplemental financial information sets forth, on a condensed consolidated basis, balance sheets as of October 6, 2012 and December 31, 2011 for Holding, Tops Markets, and the Guarantor Subsidiaries, statements of operations and comprehensive income for the 12-week and 40-week periods ended October 6, 2012 and October 8, 2011, and statements of cash flows for the 40-week periods ended October 6, 2012 and October 8, 2011. The Company has corrected the 2011 presentation to reflect an income tax allocation for Tops Markets.

- 12 -

TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

~~JULY~~OCTOBER 146, 2012

(Dollars in thousands)

(Unaudited)

	Tops HoldingCorporation			Tops Markets, LLC			GuarantorSubsidiaries		Eliminations			Consolidated
	Tops Holding						Guarantor
	Corporation			Tops Markets, LLC			Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	5331,~~132~~380		$	~~839~~895	$	—		$	5332,~~971~~275
Accounts receivable, net		—			41,~~283~~418			1110,~~873~~981		—			5352,~~156~~399
Intercompany receivables		—			4,~~312~~531			3743,~~548~~207		(4147,~~860~~738	)		—
Inventory, net		—			8490,~~183~~327			3433,~~446~~563		—			~~118~~123,~~629~~890
Prepaid expenses and other current assets		—			811,~~729~~861			2,~~029~~913		—			1014,~~758~~774
Income taxes refundable		—			~~116~~117			—		—			~~116~~117
Current deferred tax assets		—			1,363			—		608			1,971
Total current assets		—			~~193~~180,~~118~~997			8691,~~735~~559		(4147,~~252~~130	)		~~238~~225,~~601~~426
Property and equipment, net		—			~~267~~274,~~633~~206			7271,~~856~~844		—			~~340~~346,~~489~~050
Intangible assets, net		—			60,316			7,954		—			68,270
Goodwill		—			13,409			—		—			13,409
Other assets		—			30,285			3,041		(23,745	)		9,581
Intangible assets, net		—			60,191			7,509		—			67,700
Investment in subsidiaries		(42,879	)		116,588			—		(73,709	)		—
Other assets		—			32,227			3,041		(26,360	)		8,908
Total assets	$	(42,879	)	$	667,940		$	170,586	$	(138,706	)	$	656,941
Investment in subsidiaries		(37,547	)		120,578			—		(83,031	)		—
Total assets	$	(37,547	)	$	681,608		$	173,953	$	(156,521	)	$	661,493
Liabilities and Shareholders’ (Deficit) Equity
Current liabilities:
Accounts payable	$	—		$	6553,~~737~~636		$	2016,~~776~~162	$	—		$	8669,~~513~~798
Intercompany payables		4,~~312~~531			3743,~~548~~207			—		(4147,~~860~~738	)		—
Accrued expenses and other current liabilities		1,~~508~~653			5165,~~460~~708			1819,~~547~~585		(742	)		7086,~~773~~204
Current portion of capital lease obligations		—			13,~~127~~505			~~338~~390		—			13,~~465~~895
Current portion of long-term debt		—			~~351~~307			—		—			~~351~~307
Current deferred tax liabilities		—			—			11		(11	)		—
Total current liabilities		56,~~820~~184			~~168~~176,~~223~~363			3936,~~672~~148		(4248,~~613~~491	)		~~171~~170,~~102~~204
Capital lease obligations		—			~~149~~148,~~498~~269			3,~~225~~090		—			~~152~~151,~~723~~359
Long-term debt		—			353,~~378~~433			—		(3,041	)		350,~~337~~392
Other long-term liabilities		—			2122,~~212~~286			5,~~290~~710		—			2627,~~502~~996
Non-current deferred tax liabilities		—			17,~~700~~997			58,~~811~~427		(1821,~~535~~151	)		45,~~976~~273
Total liabilities		56,~~820~~184			~~710~~718,~~011~~348			53,~~998~~375		(6472,~~189~~683	)		~~705~~703,~~640~~224
Total shareholders’ (deficit) equity		(4843,~~699~~731	)		(4236,~~071~~740	)		~~116~~120,~~588~~578		(7483,~~517~~838	)		(4843,~~699~~731	)
Total liabilities and shareholders’ (deficit) equity	$	(4237,~~879~~547	)	$	~~667~~681,~~940~~608		$	~~170~~173,~~586~~953	$	(~~138~~156,~~706~~521	)	$	~~656~~661,~~941~~493

- 1113 -

TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEET

DECEMBER 31, 2011

(Dollars in thousands)

(Unaudited)

	Tops HoldingCorporation			Tops Markets, LLC			GuarantorSubsidiaries		Eliminations			Consolidated
	Tops Holding						Guarantor
	Corporation			Tops Markets, LLC			Subsidiaries		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	18,351		$	830	$	—		$	19,181
Accounts receivable, net		—			44,809			11,178		—			55,987
Intercompany receivables		—			3,800			15,556		(19,356	)		—
Inventory, net		—			79,972			35,337		—			115,309
Prepaid expenses and other current assets		—			10,654			2,336		—			12,990
Income taxes refundable		—			285			—		—			285
Current deferred tax assets		—			1,363			—		608			1,971
Total current assets		—			159,234			65,237		(18,748	)		205,723
Property and equipment, net		—			282,207			76,056		—			358,263
Intangible assets, net		—			63,146			8,979		—			72,125
Goodwill		—			462			—		—			462
Intangible assets, net		—			62,684			8,979		—			71,663
Other assets		—			27,687			3,041		(19,627	)		11,101
Investment in subsidiaries		(54,493	)		110,306			—		(55,813	)		—
Total assets	$	(54,493	)	$	642,580		$	153,313	$	(94,188	)	$	647,212
Liabilities and Shareholders’ (Deficit) Equity
Current liabilities:
Accounts payable	$	—		$	58,359		$	17,249	$	—		$	75,608
Intercompany payables		3,800			15,556			—		(19,356	)		—
Accrued expenses and other current liabilities		1,171			57,537			16,713		(744	)		74,677
Current portion of capital lease obligations		—			12,348			353		—			12,701
Current portion of long-term debt		—			434			—		—			434
Current deferred tax liabilities		—			—			11		(11	)		—
Total current liabilities		4,971			144,234			34,326		(20,111	)		163,420
Capital lease obligations		—			156,456			3,358		—			159,814
Long-term debt		—			358,281			—		(3,041	)		355,240
Other long-term liabilities		—			20,262			3,631		—			23,893
Non-current deferred tax liabilities		—			17,033			1,692		(14,416	)		4,309
Total liabilities		4,971			696,266			43,007		(37,568	)		706,676
Total shareholders’ (deficit) equity		(59,464	)		(53,686	)		110,306		(56,620	)		(59,464	)
Total liabilities and shareholders’ (deficit) equity	$	(54,493	)	$	642,580		$	153,313	$	(94,188	)	$	647,212

- 1214 -

TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE 12-WEEK PERIOD ENDED ~~JULY~~OCTOBER 146, 2012

(Dollars in thousands)

(Unaudited)

	Tops HoldingCorporation			Tops Markets, LLC			GuarantorSubsidiaries			Eliminations			Consolidated
	Tops Holding						Guarantor
Net sales	$	—		$	423,588		$	138,995		$	(222	)	$	562,361
	Corporation			Tops Markets, LLC			Subsidiaries			Eliminations			Consolidated
Cost of goods sold		—			(298,231	)		(92,283	)		—			(390,514	)
Net sales	$	—		$	404,355		$	134,282		$	(206	)	$	538,431
Distribution costs		—			(8,279	)		(3,232	)		—			(11,511	)
Cost of goods sold		—			(288,206	)		(89,271	)		—			(377,477	)
Gross profit		—			117,078			43,480			(222	)		160,336
Distribution costs		—			(7,982	)		(3,109	)		—			(11,091	)
Gross profit		—			108,167			41,902			(206	)		149,863
Operating expenses:
Wages, salaries and benefits		—			(5452,~~433~~518	)		(2019,~~692~~816	)		—			(7572,~~125~~334	)
Selling and general expenses		—			(16,~~268~~937	)		(65,~~354~~174	)		~~222~~206			(2221,~~400~~905	)
Administrative expenses		(628	)		(1312,~~544~~256	)		(4,~~371~~194	)		—			(1817,~~543~~078	)
Rent expense, net		—			(12,~~529~~467	)		(2,~~039~~018	)		—			(34,~~568~~485	)
Depreciation and amortization		—			(8,~~933~~914	)		(3,~~090~~097	)		—			(12,~~023~~011	)
Advertising		—			(32,~~734~~645	)		(~~1,384~~956	)		—			(53,~~118~~601	)
Total operating expenses		(628	)		(9895,~~441~~737	)		(3735,~~930~~255	)		~~222~~206			(~~136~~131,~~777~~414	)
Operating (loss) income		(628	)		1812,~~637~~430			56,~~550~~647			—			2318,~~559~~449
Interest expense, net		—			(13,~~665~~364	)		(4442	)		—			(13,~~709~~406	)
Equity income from subsidiaries		105,~~126~~332			3,~~325~~989			—			(139,~~451~~321	)		—
Income before income taxes		94,~~498~~704			83,~~297~~055			56,~~506~~605			(139,~~451~~321	)		95,~~850~~043
Income tax benefit (expense)		—			12,~~829~~277			(2,~~181~~616	)		—			(~~352~~339	)
Net income		94,~~498~~704			105,~~126~~332			3,~~325~~989			(139,~~451~~321	)		94,~~498~~704
Other comprehensive income		—			—			—			—			—
Comprehensive income	$	94,~~498~~704		$	105,~~126~~332		$	3,~~325~~989		$	(139,~~451~~321	)	$	94,~~498~~704

- 1315 -

TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE 12-WEEK PERIOD ENDED ~~JULY~~OCTOBER 168, 2011

(Dollars in thousands)

(Unaudited)

	Tops HoldingCorporation			Tops Markets, LLC			GuarantorSubsidiaries			Eliminations			Consolidated
	Tops Holding						Guarantor
Net sales	$	—		$	417,903		$	141,840		$	(229	)	$	559,514
	Corporation			Tops Markets, LLC			Subsidiaries			Eliminations			Consolidated
Cost of goods sold		—			(300,520	)		(94,619	)		—			(395,139	)
Net sales	$	—		$	404,076		$	134,735		$	(205	)	$	538,606
Distribution costs		—			(6,619	)		(2,774	)		—			(9,393	)
Cost of goods sold		—			(284,998	)		(90,213	)		—			(375,211	)
Gross profit		—			110,764			44,447			(229	)		154,982
Distribution costs		—			(7,507	)		(2,963	)		—			(10,470	)
Gross profit		—			111,571			41,559			(205	)		152,925
Operating expenses:
Wages, salaries and benefits		—			(5449,~~701~~694	)		(2119,~~655~~997	)		—			(7669,~~356~~691	)
Selling and general expenses		—			(16,~~357~~658	)		(7,~~310~~321	)		~~229~~205			(23,~~438~~774	)
Administrative expenses		(646	)		(12,~~746~~519	)		(4,~~627~~474	)		—			(1817,~~019~~639	)
Rent expense, net		—			(2,~~157~~222	)		(2,~~055~~079	)		—			(4,~~212~~301	)
Depreciation and amortization		—			(89,~~930~~108	)		(2,~~816~~932	)		—			(1112,~~746~~040	)
Advertising		—			(32,~~072~~703	)		(1,~~340~~135	)		—			(43,~~412~~838	)
Impairment		—			—			(~~1,891~~900	)		—			(~~1,891~~900	)
Total operating expenses		(646	)		(9792,~~963~~904	)		(4138,~~694~~838	)		~~229~~205			(~~140~~132,~~074~~183	)
Operating (loss) income		(646	)		1218,~~801~~667			2,~~753~~721			—			1420,~~908~~742
Interest expense, net		—			(1413,~~249~~951	)		(4846	)		—			(1413,~~297~~997	)
Equity income from subsidiaries		~~939~~7,086			1,~~634~~616			—			(28,~~573~~702	)		—
Income before income taxes		~~293~~6,440			~~186~~6,332			2,~~705~~675			(28,~~573~~702	)		~~611~~6,745
Income tax benefit (expense)		—			~~753~~754			(1,~~071~~059	)		—			(~~318~~305	)
Net income		~~293~~6,440			~~939~~7,086			1,~~634~~616			(28,~~573~~702	)		~~293~~6,440
Other comprehensive income		—			—			—			—			—
Comprehensive income	$	~~293~~6,440		$	~~939~~7,086		$	1,~~634~~616		$	(28,~~573~~702	)	$	~~293~~6,440

- 1416 -

TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

AND COMPREHENSIVE INCOME

FOR THE 2840-WEEK PERIOD ENDED ~~JULY~~OCTOBER 146, 2012

(Dollars in thousands)

(Unaudited)

	Tops HoldingCorporation			Tops Markets, LLC			GuarantorSubsidiaries			Eliminations			Consolidated
	Tops Holding						Guarantor
Net sales	$	—		$	961,236		$	306,089		$	(584	)	$	1,266,741
	Corporation			Tops Markets, LLC			Subsidiaries			Eliminations			Consolidated
Cost of goods sold		—			(679,315	)		(201,906	)		—			(881,221	)
Net sales	$	—		$	1,365,591		$	440,371		$	(790	)	$	1,805,172
Distribution costs		—			(18,280	)		(6,998	)		—			(25,278	)
Cost of goods sold		—			(967,521	)		(291,177	)		—			(1,258,698	)
Gross profit		—			263,641			97,185			(584	)		360,242
Distribution costs		—			(26,262	)		(10,107	)		—			(36,369	)
Gross profit		—			371,808			139,087			(790	)		510,105
Operating expenses:
Wages, salaries and benefits		—			(~~126~~179,~~620~~138	)		(4767,~~735~~551	)		—			(~~174~~246,~~355~~689	)
Selling and general expenses		—			(3855,~~785~~722	)		(1419,~~017~~191	)		~~584~~790			(5274,~~218~~123	)
Administrative expenses		(12,~~465~~093	)		(3043,~~782~~038	)		(1014,~~166~~360	)		—			(4259,~~413~~491	)
Rent expense, net		—			(47,~~787~~254	)		(46,~~761~~779	)		—			(914,~~548~~033	)
Depreciation and amortization		—			(2029,~~897~~811	)		(710,~~155~~252	)		—			(2840,~~052~~063	)
Advertising		—			(710,~~919~~564	)		(23,~~845~~801	)		—			(1014,~~764~~365	)
Total operating expenses		(12,~~465~~093	)		(~~229~~325,~~790~~527	)		(86121,~~679~~934	)		~~584~~790			(~~317~~448,~~350~~764	)
Operating (loss) income		(12,~~465~~093	)		3346,~~851~~281			1017,~~506~~153			—			4261,~~892~~341
Interest expense, net		—			(3145,~~916~~280	)		(~~105~~147	)		—			(3245,~~021~~427	)
Equity income from subsidiaries		1116,~~614~~946			610,~~282~~271			—			(1727,~~896~~217	)		—
Income before income taxes		1014,~~149~~853			811,~~217~~272			1017,~~401~~006			(1727,~~896~~217	)		1015,~~871~~914
Income tax benefit (expense)		—			35,~~397~~674			(46,~~119~~735	)		—			(~~722~~1,061	)
Net income		1014,~~149~~853			1116,~~614~~946			610,~~282~~271			(1727,~~896~~217	)		1014,~~149~~853
Other comprehensive income		—			—			—			—			—
Comprehensive income	$	1014,~~149~~853		$	1116,~~614~~946		$	610,~~282~~271		$	(1727,~~896~~217	)	$	1014,~~149~~853

- 1517 -

TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

AND COMPREHENSIVE ~~(LOSS)~~ INCOME

FOR THE 2840-WEEK PERIOD ENDED ~~JULY~~OCTOBER 168, ~~2011~~ 2011

(Dollars in thousands)

(Unaudited)

	Tops HoldingCorporation			Tops Markets, LLC			GuarantorSubsidiaries			Eliminations			Consolidated
	Tops Holding						Guarantor
Net sales	$	—		$	958,836		$	318,530		$	(593	)	$	1,276,773
	Corporation			Tops Markets, LLC			Subsidiaries			Eliminations			Consolidated
Cost of goods sold		—			(683,238	)		(212,645	)		—			(895,883	)
Net sales	$	—		$	1,362,912		$	453,265		$	(798	)	$	1,815,379
Distribution costs		—			(16,800	)		(6,756	)		—			(23,556	)
Cost of goods sold		—			(968,236	)		(302,858	)		—			(1,271,094	)
Gross profit		—			258,798			99,129			(593	)		357,334
Distribution costs		—			(24,307	)		(9,719	)		—			(34,026	)
Gross profit		—			370,369			140,688			(798	)		510,259
Operating expenses:
Wages, salaries and benefits		—			(~~125~~175,~~986~~680	)		(4969,~~352~~349	)		—			(~~175~~245,~~338~~029	)
Selling and general expenses		—			(3956,~~681~~339	)		(1725,~~733~~054	)		~~593~~798			(5680,~~821~~595	)
Administrative expenses		(12,~~426~~072	)		(3143,~~141~~660	)		(1015,~~935~~409	)		—			(4361,~~502~~141	)
Rent expense, net		—			(57,~~303~~525	)		(46,~~812~~891	)		—			(1014,~~115~~416	)
Depreciation and amortization		—			(2029,~~358~~466	)		(69,~~429~~361	)		—			(2638,~~787~~827	)
Advertising		—			(79,~~226~~929	)		(34,~~176~~311	)		—			(1014,~~402~~240	)
Impairment		—			—			(12,~~891~~791	)		—			(12,~~891~~791	)
Total operating expenses		(12,~~426~~072	)		(~~229~~322,~~695~~599	)		(94133,~~328~~166	)		~~593~~798			(~~324~~457,~~856~~039	)
Operating (loss) income		(12,~~426~~072	)		2947,~~103~~770			47,~~801~~522			—			3253,~~478~~220
Interest expense, net		—			(3347,~~449~~400	)		(~~139~~185	)		—			(3347,~~588~~585	)
Equity (loss) income from subsidiaries		(369	)		2,816			—			(2,447	)		—
Equity income from subsidiaries		6,717			4,432			—			(11,149	)		—
(Loss) income before income taxes		(1,795	)		(1,530	)		4,662			(2,447	)		(1,110	)
Income before income taxes		4,645			4,802			7,337			(11,149	)		5,635
Income tax benefit (expense)		—			1,~~161~~915			(12,~~846~~905	)		—			(~~685~~990	)
Net (loss) income		(1,795	)		(369	)		2,816			(2,447	)		(1,795	)
Net income		4,645			6,717			4,432			(11,149	)		4,645
Other comprehensive income		—			—			—			—			—
Comprehensive (loss) income	$	(1,795	)	$	(369	)	$	2,816		$	(2,447	)	$	(1,795	)
Comprehensive income	$	4,645		$	6,717		$	4,432		$	(11,149	)	$	4,645

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TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE 2840-WEEK PERIOD ENDED ~~JULY~~OCTOBER 146, 2012

(Dollars in thousands)

(Unaudited)

	Tops HoldingCorporation			Tops Markets, LLC			GuarantorSubsidiaries			Eliminations			Consolidated
	Tops Holding						Guarantor
Net cash (used in) provided by operating activities	$	(512	)	$	36,778		$	24,432		$	—		$	60,698
	Corporation			Tops Markets, LLC			Subsidiaries			Eliminations			Consolidated
Net cash (used in) provided by operating activities	$	(731	)	$	48,430		$	31,826		$	—		$	79,525
Cash flows used in investing activities:
Cash paid for property and equipment		—			(11,784	)		(3,416	)		—			(15,200	)
Acquisition of Grand Union supermarkets		—			(27,359	)		—			—			(27,359	)
Cash paid for property and equipment		—			(19,902	)		(4,990	)		—			(24,892	)
Change in intercompany receivables position		—			(731	)		(27,651	)		28,382			—
Proceeds from insurable loss recovery		—			—			1,150			—			1,150
Change in intercompany receivables position		—			(512	)		(21,992	)		22,504			—
Net cash used in investing activities		—			(47,992	)		(31,491	)		28,382			(51,101	)
Net cash used in investing activities		—			(12,296	)		(24,258	)		22,504			(14,050	)
Cash flows provided by (used in) financing activities:
Borrowings on ABL Facility		—			66,600			—			—			66,600
Repayments on ABL Facility		—			(71,600	)		—			—			(71,600	)
Principal payments on capital leases		—			(6,624	)		(165	)		—			(6,789	)
Change in intercompany payables position		731			27,651			—			(28,382	)		—
Change in intercompany payables position		512			21,992			—			(22,504	)		—
Principal payments on capital leases		—			(9,580	)		(270	)		—			(9,850	)
Change in bank overdraft position		—			181			—			—			181
Repayments of long-term debt borrowings		—			(360	)		—			—			(360	)
Repayments of long-term debt borrowings		—			(250	)		—			—			(250	)
Change in bank overdraft position		—			(120	)		—			—			(120	)
Net cash provided by (used in) financing activities		~~512~~731			1012,~~299~~591			(~~165~~270	)		(2228,~~504~~382	)		(1115,~~858~~330	)
Net increase in cash and cash equivalents		—			3413,~~781~~029			965			—			3413,~~790~~094
Cash and cash equivalents-beginning of period		—			18,351			830			—			19,181
Cash and cash equivalents-end of period	$	—		$	5331,~~132~~380		$	~~839~~895		$	—		$	5332,~~971~~275

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TOPS HOLDING CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE 2840-WEEK PERIOD ENDED ~~JULY~~OCTOBER 168, 2011

(Dollars in thousands)

(Unaudited)

	Tops HoldingCorporation			Tops Markets, LLC			GuarantorSubsidiaries			Eliminations			Consolidated
	Tops Holding						Guarantor
Net cash (used in) provided by operating activities	$	(476	)	$	24,304		$	11,226		$	—		$	35,054
	Corporation			Tops Markets, LLC			Subsidiaries			Eliminations			Consolidated
Net cash (used in) provided by operating activities	$	(713	)	$	35,274		$	16,896		$	—		$	51,457
Cash flows used in investing activities:
Cash paid for property and equipment		—			(1018,~~516~~933	)		(1518,~~392~~415	)		—			(2537,~~908~~348	)
Proceeds from sale of assets		—			—			~~650~~1,250			—			~~650~~1,250
Change in intercompany receivables position		—			(476	)		3,796			(3,320	)		—
Proceeds from insurable loss recovery		—			—			50			—			50
Net cash used in investing activities		—			(10,992	)		(10,946	)		(3,320	)		(25,258	)
Change in intercompany receivables position		—			(713	)		654			59			—
Net cash used in investing activities		—			(19,646	)		(16,461	)		59			(36,048	)
Cash flows provided by (used in) financing activities:
Borrowings on ABL Facility		—			~~356~~454,~~300~~500			—			—			~~356~~454,~~300~~500
Repayments on ABL Facility		—			(~~358~~459,~~800~~500	)		—			—			(~~358~~459,~~800~~500	)
Principal payments on capital leases		—			(58,~~580~~130	)		(~~223~~296	)		—			(58,~~803~~426	)
Repayments of long-term debt borrowings		—			(~~227~~327	)		—			—			(~~227~~327	)
Change in bank overdraft position		—			339			—			—			339
Deferred financing costs incurred		—			(57	)		—			—			(57	)
Change in bank overdraft position		—			8			—			—			8
Change in intercompany payables position		713			(654	)		—			(59	)		—
Change in intercompany payables position		476			(3,796	)		—			3,320			—
Net cash provided by (used in) financing activities		713			(13,829	)		(296	)		(59	)		(13,471	)
Net cash provided by (used in) financing activities		476			(12,152	)		(223	)		3,320			(8,579	)
Net increase in cash and cash equivalents		—			1,799			139			—			1,938
Net increase in cash and cash equivalents		—			1,160			57			—			1,217
Cash and cash equivalents-beginning of period		—			16,689			730			—			17,419
Cash and cash equivalents-end of period	$	—		$	1718,~~849~~488		$	~~787~~869		$	—		$	1819,~~636~~357

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12. SUBSEQUENT EVENT

On July 19, 2012, the Company announced an agreement with GU Markets LLC, an affiliate of C&S, to acquire 21 supermarkets in Upstate New York and Vermont. The transaction is expected to close during the fall of 2012 and is subject to customary closing conditions. The aggregate purchase price of approximately $28 million, inclusive of inventory and real property associated with two of the supermarkets, is expected to be funded using cash on hand.

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ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and related notes and other financial information appearing elsewhere in this report. This report contains forward-looking statements that involve risks and uncertainties. Our actual results may differ from those indicated in the forward-looking statements. See “Forward-Looking Statements” below.

COMPANY OVERVIEW

We are a leading supermarket retailer in our Upstate New York, ~~and~~ Northern Pennsylvania and Vermont markets. Introduced in 1962, our Tops brand is widely recognized as a strong retail supermarket brand name in our markets supported by strong customer loyalty and attractive supermarket locations. We are headquartered in Williamsville, New York and have over 1213,000 associates.

FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements, which are generally statements about future events, plans, objectives and performance. Generally, the words “believe,” “expect,” “intend,” “estimate,” “anticipate,” “project,” “will” and similar expressions identify forward-looking statements. Forward-looking statements reflect our current expectations, based on currently available information, and are not guarantees. Although we believe that the expectations reflected in such forward-looking statements are reasonable, these expectations could prove inaccurate as such statements involve risks and uncertainties, many of which are beyond our ability to control or predict. Should one or more of these risks or uncertainties, or other risks or uncertainties not currently known to us or that we currently deem to be immaterial, materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Important factors relating to these risks and uncertainties include, but are not limited to the following:

•

risks of claims relating to the Penn Traffic acquisition that may not have been properly discharged in the bankruptcy process;

•

the severity of current economic conditions and the impact on consumer demand and spending and our pricing strategy;

•

pricing and market strategies, the expansion, consolidation and other activities of competitors, and our ability to respond to the promotional practices of competitors;

• our ability to ~~effectively~~ increase or maintain our profit margins;

•

the success of our expansion and renovation plans;

•

fluctuations in utility, fuel and commodity prices which could impact consumer spending and buying habits and the cost of doing business;

•

risks inherent in our motor fuel operations;

•

our exposure to local economies and other adverse conditions due to our geographic concentration;

•

risks of natural disasters and severe weather conditions;

•

supply problems with our suppliers and vendors;

•

our relationships with unions and unionized employees, and the terms of future collective bargaining agreements or labor strikes;

•

increased operating costs resulting from rising employee benefit costs or pension funding obligations;

•

changes in, or the failure or inability to comply with, laws and governmental regulations applicable to the operation of our pharmacy and other businesses;

•

the adequacy of our insurance coverage against claims of our customers in connection with our pharmacy services;

•

estimates of the amount and timing of payments under our self-insurance policies;

- 20 -

•

risks of liability under environmental laws and regulations;

•

our ability to maintain and improve our information technology systems;

•

events that give rise to actual or potential food contamination, drug contamination or food-borne illness or any adverse publicity relating to these types of concerns, whether or not valid;

•

threats or potential threats to security;

•

our ability to retain key personnel;

•

risks of data security breaches or losses of confidential customer information;

- 21 -

•

risks relating to our substantial indebtedness;

•

claims or legal proceedings against us;

•

decisions by our controlling shareholders that may conflict with the interests of the holders of our debt; and

•

other factors discussed under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2011 and elsewhere in this report.

We caution that one should not place undue reliance on forward-looking statements, which speak only as of the date ~~on which~~ they are made. We disclaim any intention, obligation or duty to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

BASIS OF PRESENTATION

We operate on a 52/53 week fiscal year ending on the Saturday closest to December 31. Our fiscal years include 13 four-week reporting periods, with an additional week in the thirteenth reporting period for 53-week fiscal years. Our first quarter of each fiscal year includes four reporting periods, while the remaining quarters include three reporting periods.

Our condensed consolidated financial statements for the 12-week and 2840-week periods ended ~~July~~October 146, 2012 and ~~July~~October 168, 2011 are unaudited, and, in the opinion of management, contain all adjustments that are of a normal and recurring nature necessary for a fair ~~condensed~~ ~~consolidated~~ statement of financial position and results of operations for such periods.

RECENT EVENTS AFFECTING OUR RESULTS OF OPERATIONS AND THE COMPARABILITY OF REPORTED RESULTS OF OPERATIONS

Acquisition of Penn Traffic

On January 29, 2010, we completed the Penn Traffic acquisition, which involved the acquisition of substantially all of the assets of The Penn Traffic Company out of bankruptcy, including Penn Traffic’s 79 retail supermarkets. We have retained 50 of the acquired supermarkets. Three supermarkets were sold during late July and early August 2011, one supermarket was closed in October 2011, and one supermarket was sold in January 2012. ~~Net~~As ~~sales~~these ~~and~~supermarkets ~~operating~~had ~~loss~~an ~~for~~immaterial ~~these~~impact ~~five~~on ~~supermarkets~~the ~~were~~Company’s ~~$9.8 million~~consolidated ~~and~~financial ~~$1.6 million~~statements, ~~respectively,~~they have not been considered for ~~the~~separate ~~12-week~~classification ~~period~~as ~~ended~~discontinued ~~July 16,~~operations. ~~2011,~~Net sales and operating loss for these five supermarkets were $2233.19 million and $12.57 million, respectively, for the 2840-week period ended ~~July~~October 168, 2011. The supermarket that was sold in January 2012 had an immaterial impact on our condensed consolidated financial statements for the 2840-week period ended ~~July~~October 146, 2012.

Grand Union Acquisition

During early October 2012, Tops Markets completed the GU Acquisition of 21 retail supermarkets in Upstate New York and Vermont from GU Markets. These supermarkets contributed $2.0 million of net sales during each of the 12-week and 40-week periods ended October 6, 2012, which is immaterial to the condensed consolidated statements of operations and comprehensive income for the 12-week and 40-week periods ended October 6, 2012. The GU Acquisition could impact the Company’s segment reporting conclusions.

RESULTS OF OPERATIONS

12-Week Period Ended ~~July~~October 146, 2012 Compared with 12-Week Period Ended ~~July~~October 168, 2011

Summary

The results of operations during the 12-week period ended ~~July~~October 146, 2012 when compared with the 12-week period ended ~~July~~October 168, 2011 were primarily impacted by a $53.4 million ~~increase~~decline in ~~gross~~inside ~~profit~~sales, ~~which~~reflecting ~~was~~a ~~caused~~$3.7 million decrease in pharmacy ~~part~~sales byattributable ato $4the recent conversion of certain drugs from name brand only to having generic equivalents.2 ~~million favorable~~Our ~~change~~gross profit margin declined 60 basis points due to increased participation in ~~year-over-year~~our ~~non-cash~~fuel ~~LIFO~~rewards ~~adjustments~~program and lower gasoline margins. Additionally, weour ~~experienced~~2011 results reflect a $32.34 million reduction in ~~operating~~health and welfare and labor expenses, ~~largely~~upon ~~related~~the toratification aof $1the new Local One union agreements.9 ~~million~~These ~~decrease~~factors inwere ~~utility~~partially ~~costs~~offset ~~and~~by a ~~$1.9~~reduction ~~million~~in ~~impairment~~other ~~recognized during~~operating ~~the~~expenses ~~prior~~resulting ~~year~~from ~~period~~our successful cost containment initiatives.

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Net Sales

The following table includes a comparison of the components of our net sales for the 12-week periods ended ~~July~~October 146, 2012 and ~~July~~October 168, 2011.

(Dollars in thousands)

	12-week periods ended				~~$Change~~			~~%Change~~
	July 14, 2012		July 16, 2011
	October 6, 2012		October 8, 2011		$ Change			% Change
Inside sales	$	~~509~~487,~~120~~535	$	~~507~~490,~~387~~973	$	1(3,~~733~~438	)		(0.37	)%
Gasoline sales		5350,~~241~~896		5247,~~127~~633		13,~~114~~263			26.19	%
Net sales	$	~~562~~538,~~361~~431	$	~~559~~538,~~514~~606	$	~~2,847~~(175	)		0.50	%

Inside sales ~~increased~~decreased ~~during the 12-week period ended July 14, 2012 compared with the 12-week period ended July 16, 2011~~ due to a 1.63% ~~increase~~decrease in same store sales, as well as the ~~$3.2~~sale ~~million~~or ~~inside~~closure ~~sales contribution~~ of afive ~~supermarket opened in September 2011. The increase in same store sales was largely attributable to the timing~~ of the ~~Easter~~acquired ~~holiday~~Penn ~~and~~Traffic ~~our~~supermarkets ~~Monopoly® promotion. The week following Easter, historically a very poor sales week, occurred~~ during the ~~2012~~second ~~first~~half ~~quarter~~of ~~(16-week~~2011 ~~period~~and ~~ended~~early ~~April 21,~~January 2012), ~~versus~~that ~~the~~contributed ~~2011 second quarter (12-week period ended July 16, 2011)~~$3.5 ~~Additionally,~~million ~~there was a change in timing~~ of ~~our~~inside ~~Monopoly®~~sales ~~marketing~~during ~~promotion,~~the ~~which ran from April through July in 2012, compared with January through April in~~ 2011 period. Inside sales were negatively impacted by a significant decline in pharmacy sales, largely the result of the recent conversion of certain drugs from ~~being~~name brand only to having generic equivalents. This conversion had an estimated 5075 basis points, or $3.7 million, impact on same store sales. ~~Inside~~These ~~sales~~factors were ~~also~~partially ~~impacted~~ offset by the ~~sale~~$5.8 million orinside ~~closure~~sales ofcontribution ~~five~~ of ~~the~~new ~~acquired Penn Traffic~~ supermarkets ~~during~~opened ~~the~~since ~~second~~September ~~half of~~ 2011, ~~and~~including ~~early~~the ~~January 2012 that contributed~~ $92.80 million contribution of ~~inside~~the ~~sales~~21 ~~during~~acquired ~~the~~Grand ~~2011~~Union ~~period~~supermarkets.

Gasoline sales increased ~~during the 12-week period ended July 14, 2012 compared with the 12-week period ended July 16, 2011~~ due to a 5.52% increase in the number of gallons sold, primarily due to the addition of ~~five~~six new fuel stations since ~~July~~August 2011., ~~This~~as ~~was~~well ~~partially~~as ~~offset by~~ a 31.26% ~~decrease~~increase in the retail price per gallon.

Gross Profit

The following table includes a comparison of cost of goods sold, distribution costs and gross profit for the 12-week periods ended ~~July~~October 146, 2012 and ~~July~~October 168, 2011.

(Dollars in thousands)

	12-weekperiod endedJuly 14, 2012			% ofNet Sales			12-weekperiod endedJuly 16, 2011			% ofNet Sales			$Change			%Change
	12-week						12-week
Cost of goods sold	$	(390,514	)		69.4	%	$	(395,139	)		70.6	%	$	4,625			1.2	%
	period ended			% of			period ended			% of			$			%
Distribution costs		(11,511	)		2.0	%		(9,393	)		1.7	%		(2,118	)		(22.5	)%
	October 6, 2012			Net Sales			October 8, 2011			Net Sales			Change			Change
Gross profit	$	160,336			28.5	%	$	154,982			27.7	%	$	5,354			3.5	%
Cost of goods sold	$	(377,477	)		70.1	%	$	(375,211	)		69.7	%	$	(2,266	)		(0.6	)%
Distribution costs		(11,091	)		2.1	%		(10,470	)		1.9	%		(621	)		(5.9	)%
Gross profit	$	149,863			27.8	%	$	152,925			28.4	%	$	(3,062	)		(2.0	)%

WeAs ~~experienced~~ a ~~change~~percentage inof ~~LIFO~~net ~~inventory~~sales, ~~valuation~~the ~~adjustments~~increase ~~from~~in ~~expense~~cost of ~~$2.8~~goods ~~million~~sold ~~during~~was ~~the~~attributable ~~12-week period ended July 16, 2011~~ to ~~income~~a of $1.41 million ~~during~~increase ~~the~~in promotional ~~12-week~~expense, ~~period~~largely ~~ended~~due ~~July 14,~~to ~~2012.~~increased ~~Excluding~~participation ~~the~~in ~~impact~~our offuel ~~non-cash~~rewards ~~LIFO adjustments~~program, ~~cost~~as ofwell ~~goods sold~~ as a ~~percentage of net sales was 69.7% and 70.~~$1~~% during the 12-week periods ended July 14, 2012 and July 16, 2011, respectively~~.3 ~~This~~million ~~improvement~~reduction ~~was a result of a continuation of pricing improvements commenced~~ in ~~2011,~~gasoline ~~promotional spending changes and sales mix~~margins.

As a percentage of net sales, the increase in distribution costs ~~during the 12-week period ended July 14, 2012 compared with the 12-week period ended July 16, 2011~~ was due to ~~a $0.9 million benefit during~~ the ~~2011~~continuation period from the “open book” supply agreement with C&S related to favorable gross margin, largely attributable to commodity forward buy activities. This benefit was not duplicated during the 2012 period. Additionally, we incurred a $0.4 million negative impact of incremental ~~workers’ compensation claims, as well as adverse development of previously existing claims, sustained by~~ C&S ~~during~~ ~~the 2012 period. Additional C&S~~ labor costs ~~were also occurred~~ in connection with an IT system conversion and the transition of warehousing and distribution activities between two locations as part of a collective bargaining agreement between C&S and its union employees that service our supermarkets.

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Operating Expenses

The following table includes a comparison of operating expenses for the 12-week periods ended ~~July~~October 146, 2012 and ~~July~~October 168, 2011.

(Dollars in thousands)

	12-weekperiod endedJuly 14, 2012		% ofNet Sales			12-weekperiod endedJuly 16, 2011		% ofNet Sales			$Change			%Change
	12-week					12-week
Wages, salaries and benefits	$	75,125		13.4	%	$	76,356		13.6	%	$	(1,231	)		(1.6	)%
	period ended		% of			period ended		% of			$			%
Selling and general expenses		22,400		4.0	%		23,438		4.2	%		(1,038	)		(4.4	)%
	October 6, 2012		Net Sales			October 8, 2011		Net Sales			Change			Change
Administrative expenses		18,543		3.3	%		18,019		3.2	%		524			2.9	%
Wages, salaries and benefits	$	72,334		13.4	%	$	69,691		12.9	%	$	2,643			3.8	%
Rent expense		3,568		0.6	%		4,212		0.8	%		(644	)		(15.3	)%
Selling and general expenses		21,905		4.1	%		23,774		4.4	%		(1,869	)		(7.9	)%
Depreciation and amortization		12,023		2.1	%		11,746		2.1	%		277			2.4	%
Administrative expenses		17,078		3.2	%		17,639		3.3	%		(561	)		(3.2	)%
Advertising		5,118		0.9	%		4,412		0.8	%		706			16.0	%
Rent expense		4,485		0.8	%		4,301		0.8	%		184			4.3	%
Impairment		—		0.0	%		1,891		0.3	%		(1,891	)		(100.0	)%
Depreciation and amortization		12,011		2.2	%		12,040		2.2	%		(29	)		(0.2	)%
Total	$	136,777		24.3	%	$	140,074		25.0	%	$	(3,297	)		(2.4	)%
Advertising		3,601		0.7	%		3,838		0.7	%		(237	)		(6.2	)%
Impairment charge		—		0.0	%		900		0.2	%		(900	)		(100.0	)%
Total	$	131,414		24.4	%	$	132,183		24.5	%	$	(769	)		(0.6	)%

Wages, Salaries and Benefits

As a percentage of net sales, the ~~decrease~~increase in wages, salaries and benefits was largely attributable to the ratification of three union agreements by Local One during September 2011 for which predecessor agreements had expired earlier in the 12year. As part of these ratified agreements, certain employees were entitled to lump sum wage payments in lieu of hourly pay rate increases. These lump sum payments were recognized as expense on a pro-~~week~~rata ~~period~~basis ~~ended~~during ~~July 14~~the contract years to which they pertain. As a result of these agreed upon payments, ~~2012~~we ~~compared~~revised ~~with~~our estimated wage increase projections for the periods subsequent to the respective expiration dates of the five Local One agreements. These revised projections resulted in a $0.7 million reduction of wages expense during the 12-week period ended ~~July~~October 168, 2011 ~~was~~related ~~attributable~~ to a $0the first 28 weeks of fiscal 2011.9 ~~million~~Also ~~reduction~~as inpart ~~self-insured~~of ~~workers’~~the ~~compensation~~Local ~~expense~~One ~~due~~agreements ratified during September 2011, our 2011 health and welfare contribution rates were reduced to a2010 levels retroactive to the beginning of the year. With respect to these agreements, this contribution rate reduction resulted in ~~claims~~a ~~occurrences~~$1.7 bymillion ~~our~~reduction of ~~workforce~~expense during the 12-week period ended October 8, as2011 ~~well~~related asto the ~~more~~first ~~effective~~28 ~~leveraging~~weeks of ~~labor~~fiscal 2011.

Selling and General Expenses

As a percentage of net sales, the decrease in selling and general expenses ~~during~~was ~~the~~largely ~~12-week~~due ~~period~~to ~~ended~~a ~~July 14~~$1.4 million decrease in utility costs, primarily ~~2012~~attributable ~~compared~~to ~~with~~lower commodity costs for electricity. Additionally, during the 12-week period ended ~~July~~October 166, ~~2011~~2012, ~~was~~we ~~largely~~recorded ~~due to~~ a $1.92 million ~~decrease~~reversal inof ~~utility~~a ~~costs,~~liability ~~primarily~~ attributable to ~~lower~~the ~~commodity~~transition ~~costs~~services ~~for~~agreement following the ~~electricity~~acquisition of the Penn Traffic supermarkets in 2010. ~~This~~These ~~was~~factors were partially offset by a $10.14 million ~~increase~~of inexpense ~~self-insured~~related ~~general~~to ~~liability~~a ~~expense~~lease ~~due~~termination toagreement ~~the~~associated ~~adverse~~with ~~development~~a ofclosed ~~existing~~supermarket ~~claims~~recorded during the 12-week period ended October 6, 2012.

Administrative Expenses

Administrative expenses remained consistent during the 12-week period ended ~~July~~October 146, 2012 compared with the 12-week period ended ~~July~~October 168, 2011.

Rent Expense, Net

Rent expense reflects our rental expense for our supermarkets under operating leases, net of income we receive from various entities that rent space in our supermarkets under subleases. ~~The~~Rent ~~decrease~~expense inremained ~~rent~~consistent ~~expense~~ during the 12-week period ended ~~July~~October 146, 2012 compared with the 12-week period ended ~~July~~October 168, 2011 ~~was due to a $0~~.8 ~~million settlement gain recognized during the 2012 period related to the termination of sub-lease agreements for in-store banks in three of our supermarkets.~~

Depreciation and Amortization

Depreciation and amortization expense remained consistent during the 12-week period ended ~~July~~October 146, 2012 compared with the 12-week period ended ~~July~~ October 168, 2011.

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Advertising

~~The~~Advertising ~~increase~~remained inconsistent ~~advertising~~ during the 12-week period ended ~~July~~October 146, 2012 compared with the 12-week period ended ~~July~~October 168, 2011 ~~was largely due to the change in timing of our Monopoly® marketing promotion, which ran from April through July in 2012, compared with January through April in 2011~~.

Impairment Charge

OnDuring ~~June 30,~~ November 2011, ~~the~~we ~~FTC~~executed ~~approved~~an ~~our~~agreement ~~application~~ to sell ~~three~~the ~~supermarkets~~remaining supermarket toacquired ~~Hometown~~from ~~Markets.~~Penn ~~The~~Traffic ~~sale~~that ofwas ~~these~~subject ~~supermarkets~~to ~~closed~~the inFinal ~~late~~Order ~~July~~from ~~and~~the ~~early~~FTC ~~August 2011~~requiring divestiture. As a result of the sale, we recorded a $10.9 million impairment ~~during the 12-week period ended July 16~~, ~~2011,~~ representing the excess of the carrying value of assets over the sale price. ~~No such impairments were recognized during the 12-week period ended July 14, 2012.~~

Interest Expense, Net

The $0.6 million decrease in interest expense ~~during the 12-week period ended July 14, 2012 compared with the 12-week period ended July 16, 2011~~ was attributable to a $0.45 million reduction in capital lease interest expense resulting from the decrease in outstanding principal balances, as well as reduced borrowings under our ABL Facility.

Income Tax Expense

While we maintain a 100% valuation allowance against our net deferred tax assets, the income tax expense for the 12-week period ended ~~July~~October 146, 2012 reflects the partial reversal of additional valuation against net deferred tax assets. The overall effective tax rate was 3.6.7%. The effective tax rate would have been 3940.61% without the impact of ~~federal tax credits and~~ adjustments to the valuation allowance.

The income tax expense for the 12-week period ended ~~July~~October 168, 2011 reflects the establishment of additional valuation allowance against net deferred tax assets during the period. The overall ~~effective~~ effective tax rate was 524.05%. The effective tax rate would have been 35.6% without the impact of the additional valuation allowance.

2840-Week Period Ended ~~July~~October 146, 2012 Compared with 2840-Week Period Ended ~~July~~October 168, 2011

Summary

The results of operations during the 2840-week period ended ~~July~~October 146, 2012 when compared with the 2840-week period ended ~~July~~October 168, 2011 were primarily impacted by a $28.93 million increase in gross profit, which included a $1.4 million favorable change in year-over-year non-cash LIFO adjustments. This increase in gross profit, also attributable to an increased margin rate on sales, was despite a $10.0 million reduction in sales due to a net reduction in store count given the sale or closure of five of the acquired Penn Traffic supermarkets during the second half of 2011 and early January 2012. We experienced a $7.5 million reduction in operating expenses, largely related to a $45.26 million decrease in utility costs and aimpairment charges of $12.98 million ~~impairment~~ recognized during the prior year period.

Net Sales

The following table includes a comparison of the components of our net sales for the 2840-week periods ended ~~July~~October 146, 2012 and ~~July~~October 168, 2011.

(Dollars in thousands)

28-week periods ended

$Change

%Change

40-week periods ended

July 14, 2012

July 16, 2011

October 6, 2012

October 8, 2011

$ Change

% Change

Inside sales

1,~~148~~636,~~614~~149

1,~~166~~657,~~280~~253

(1721,~~666~~104

)

(1.53

Gasoline sales

~~118~~169,~~127~~023

~~110~~158,~~493~~126

710,~~634~~897

6.9

Net sales

1,~~266~~805,~~741~~172

1,~~276~~815,~~773~~379

(10,~~032~~207

)

(0.86

Inside sales decreased ~~during the 28-week period ended July 14, 2012 compared with the 28-week period ended July 16, 2011~~ due to a 0.47% decrease in same store sales, combined with the impact of the sale or closure of five of the acquired Penn Traffic supermarkets during the second half of 2011 and early January 2012 that contributed $2225.15 million of inside sales during the 2011 period. Inside sales were negatively impacted by a significant decline in pharmacy sales, largely the result of the recent conversion of certain drugs from ~~being~~name brand only to having generic equivalents. This conversion had an estimated 3044 basis points, or $7.5 million, impact on same store sales. These factors were partially offset by the $812.36 million ~~of incremental~~ inside sales contribution ~~during~~of ~~the~~new ~~2012~~supermarkets ~~period~~opened ~~related~~since toSeptember ~~two~~2011, ~~supermarkets~~including ~~opened~~the ~~during~~$2.0 ~~March~~million ~~and~~contribution ~~September~~of ~~2011~~the 21 acquired Grand Union supermarkets.

-Gasoline 24sales -increased due to a 4.3% increase in the number of gallons sold, primarily due to the addition of seven new fuel stations since July 2011. Additionally, the sales increase was impacted by a 2.5% increase in the retail price per gallon.

- 25 -

Gasoline sales increased during the 28-week period ended July 14, 2012 compared with the 28-week period ended July 16, 2011 due to a 3.9% increase in the number of gallons sold, primarily due to the addition of five new fuel stations since July 2011. Additionally, the sales increase was impacted by a 2.9% increase in the retail price per gallon.

Gross Profit

The following table includes a comparison of cost of goods sold, distribution costs and gross profit for the 2840-week periods ended ~~July~~October 146, 2012 and ~~July~~October 168, 2011.

(Dollars in thousands)

	28-weekperiod endedJuly 14, 2012			% ofNet Sales			28-weekperiod endedJuly 16, 2011			% ofNet Sales			$Change			%Change
	40-week						40-week
Cost of goods sold	$	(881,221	)		69.6	%	$	(895,883	)		70.2	%	$	14,662			1.6	%
	period ended			% of			period ended			% of			$			%
Distribution costs		(25,278	)		2.0	%		(23,556	)		1.8	%		(1,722	)		(7.3	)%
	October 6, 2012			Net Sales			October 8, 2011			Net Sales			Change			Change
Gross profit	$	360,242			28.4	%	$	357,334			28.0	%	$	2,908			0.8	%
Cost of goods sold	$	(1,258,698	)		69.7	%	$	(1,271,094	)		70.0	%	$	12,396			1.0	%
Distribution costs		(36,369	)		2.0	%		(34,026	)		1.9	%		(2,343	)		(6.9	)%
Gross profit	$	510,105			28.3	%	$	510,259			28.1	%	$	(154	)		0.0	%

WeAs ~~experienced~~ a ~~decrease~~percentage inof ~~LIFO~~net ~~inventory valuation expense from $2.2 million during the 28-week period ended July 16~~sales, ~~2011 to $0.8 million during~~ the ~~28-week~~decrease ~~period~~in ~~ended July 14, 2012. Excluding the impact of non-cash LIFO adjustments,~~ cost of goods sold ~~as a percentage of net sales~~ was ~~69.5%~~attributable ~~and~~to ~~70.0% during the 28-week periods ended July 14, 2012 and July 16, 2011, respectively. This improvement was~~ a ~~result of a~~ continuation of pricing improvements commenced in 2011, promotional spending changes and sales mix. ~~These factors were partially offset by the higher proportion of gasoline sales versus inside sales, as gasoline sales occur at higher cost of goods sold percentages.~~

As a percentage of net sales, the increase in distribution costs ~~during the 28-week period ended July 14, 2012 compared with the 28-week period ended July 16, 2011~~ was due to a $0.9 million benefit during the 2011 period from the “open book” supply agreement with C&S related to favorable gross margin, largely attributable to commodity forward buy activities. This benefit was not duplicated during the 2012 period. Additionally, we incurred a $0.4 million negative impact of incremental workers’ compensation claims, as well as adverse development of previously existing claims, sustained by C&S during the 2012 period. Additional C&S labor costs were also occurred in connection with an IT system conversion and the transition of warehousing and distribution activities between two locations as part of a collective bargaining agreement between C&S and its union employees that service our supermarkets.

Operating Expenses

The following table includes a comparison of operating expenses for the 2840-week periods ended ~~July~~October 146, 2012 and ~~July~~October 168, 2011.

(Dollars in thousands)

	28-weekperiod endedJuly 14, 2012		% ofNet Sales			28-weekperiod endedJuly 16, 2011		% ofNet Sales			$Change			%Change
	40-week					40-week
Wages, salaries and benefits	$	174,355		13.8	%	$	175,338		13.7	%	$	(983	)		(0.6	)%
	period ended		% of			period ended		% of			$			%
Selling and general expenses		52,218		4.1	%		56,821		4.5	%		(4,603	)		(8.1	)%
	October 6, 2012		Net Sales			October 8, 2011		Net Sales			Change			Change
Administrative expenses		42,413		3.3	%		43,502		3.4	%		(1,089	)		(2.5	)%
Wages, salaries and benefits	$	246,689		13.7	%	$	245,029		13.5	%	$	1,660			0.7	%
Rent expense		9,548		0.8	%		10,115		0.8	%		(567	)		(5.6	)%
Selling and general expenses		74,123		4.1	%		80,595		4.4	%		(6,472	)		(8.0	)%
Depreciation and amortization		28,052		2.2	%		26,787		2.1	%		1,265			4.7	%
Administrative expenses		59,491		3.3	%		61,141		3.4	%		(1,650	)		(2.7	)%
Advertising		10,764		0.9	%		10,402		0.8	%		362			3.5	%
Rent expense		14,033		0.8	%		14,416		0.8	%		(383	)		(2.7	)%
Impairment		—		0.0	%		1,891		0.1	%		(1,891	)		(100.0	)%
Depreciation and amortization		40,063		2.2	%		38,827		2.1	%		1,236			3.2	%
Total	$	317,350		25.1	%	$	324,856		25.4	%	$	(7,506	)		(2.3	)%
Advertising		14,365		0.8	%		14,240		0.8	%		125			0.9	%
Impairment charges		—		0.0	%		2,791		0.2	%		(2,791	)		(100.0	)%
Total	$	448,764		24.9	%	$	457,039		25.2	%	$	(8,275	)		(1.8	)%

- 25 -

Wages, Salaries and Benefits

~~Wages~~As a percentage of net sales, the increase in wages, salaries and benefits ~~remained~~was ~~consistent~~attributable ~~during~~to ~~the~~a ~~28-week~~$1.6 ~~period~~million ~~ended~~increase ~~July 14~~in union health and welfare benefits due to a negotiated 10% increase in year-over-year contribution rates, ~~2012~~and ~~compared~~a ~~with~~$1.2 million increase in vacation expense due to additional paid time off provided to associates of the ~~28-week~~acquired ~~period~~Penn ~~ended~~Traffic ~~July 16,~~supermarkets under the collective bargaining agreements ratified during 2011. These factors were partially offset by the more effective leveraging of labor.

Selling and General Expenses

As a percentage of net sales, the decrease in selling and general expenses ~~during the 28-week period ended July 14, 2012 compared with the 28-week period ended July 16, 2011~~ was largely due to a $45.26 million decrease in utility costs, primarily attributable to lower commodity costs for electricity~~. Additionally~~, weand ~~recognized~~ a $1.0 million ~~gain~~decrease ~~related~~in tocleaning anand ~~insurable~~other ~~flood~~services ~~loss~~due ~~recovery~~to ~~that~~the ~~was~~successful ~~recorded~~renegotiation ~~within~~of ~~selling~~certain ~~and~~contracts. ~~general~~During ~~expenses during~~ the 2840-week period ended ~~July~~October 146, 2012., ~~This~~we ~~was~~recorded ~~partially offset by~~ a $1.3 2 million ~~increase~~reversal inof ~~self-insured~~a ~~general~~ liability ~~expense~~attributable ~~due~~ to the ~~adverse~~transition ~~development~~services agreement following the acquisition of ~~existing~~the ~~claims~~Penn Traffic supermarkets in 2010.

- 26 -

Additionally, we recognized a $1.0 million gain related to an insurable flood loss recovery that was recorded within selling and general expenses during the 40-week period ended October 6, 2012. These factors were partially offset by a $1.6 million increase in self-insured general liability expense due to the adverse development of existing claims.

Administrative Expenses

The decrease in administrative expenses ~~during the 28-week period ended July 14, 2012 compared with the 28-week period ended July 16, 2011~~ was primarily attributable to a $0.89 million reduction in IT outside professional fees and software maintenance expenses.

Rent Expense, Net

Rent expense reflects our rental expense for our supermarkets under operating leases, net of income we receive from various entities that rent space in our supermarkets under subleases. ~~The~~Rent ~~decrease~~expense inremained ~~rent~~relatively ~~expense~~consistent during the 2840-week period ended ~~July~~October 146, 2012 compared with the 2840-week period ended ~~July~~October 168, 2011 ~~was due to a $0~~.8 ~~million settlement gain recognized during the 2012 period related to the termination of sub-lease agreements for in-store banks in three of our supermarkets.~~

Depreciation and Amortization

The increase in depreciation and amortization ~~during the 28-week period ended July 14, 2012 compared with the 28-week period ended July 16, 2011~~ was largely due ~~attributable~~ to incremental depreciation and amortization associated with 2011 and 2012 capital expenditure activity.

Advertising

Advertising remained consistent during the 2840-week period ended ~~July~~October 146, 2012 compared with the 2840-week period ended ~~July~~October 168, 2011.

Impairment Charges

On June 30, 2011, the FTC approved our application to sell three supermarkets acquired in the January 2010 Penn Traffic acquisition to Hometown Markets. The sale of these supermarkets closed in late July and early August 2011. As a result of the sale, we recorded a $1.9 million impairment, representing the excess of the carrying value of assets over the sale price. ~~No such impairments were recognized during the 28-week period ended July 14, 2012.~~

During November 2011, we executed an agreement to sell the remaining supermarket acquired from Penn Traffic that was subject to the Final Order from the FTC requiring divestiture. As a result of the sale, we recorded a $0.9 million impairment, representing the excess of the carrying value of assets over the sale price.

No such impairments were recognized during the 40-week period ended October 6, 2012.

Interest Expense, Net

The $12.6 2 million decrease in interest expense ~~during the 28-week period ended July 14, 2012 compared with the 28-week period ended July 16, 2011~~ was attributable to a $1.05 million reduction in capital lease interest expense resulting from the decrease in outstanding principal balances, as well as reduced borrowings under our ABL Facility.

Income Tax Expense

While we maintain a 100% valuation allowance against our net deferred tax assets, the income tax expense for the 2840-week period ended ~~July~~October 146, 2012 reflects the partial reversal of additional valuation allowance against net deferred tax assets. The overall effective tax rate was 6.67%. The effective tax rate would have been 39.68% without the impact of ~~federal tax credits and~~ adjustments to the valuation allowance.

- 26 -

LIQUIDITY AND CAPITAL RESOURCES

See Note 67 to our condensed consolidated financial statements included in this report for a description of our credit facilities.

Our primary sources of cash are cash flows generated from our operations and borrowings under our ABL Facility. We believe that these sources will be sufficient to meet working capital requirements, anticipated capital expenditures and scheduled debt payments for at least the next twelve months. Our ability to satisfy debt service obligations, to fund planned capital expenditures and to make acquisitions will depend upon our future operating performance, which will be affected by prevailing economic conditions in the grocery industry and financial, business, and other factors, some of which are beyond our control.

On- ~~July 19,~~27 ~~2012, we announced an agreement with GU Markets LLC, an affiliate of C&S, to acquire 21 supermarkets in Upstate New York and Vermont. The transaction is expected to close during~~- the fall of 2012 and is subject to customary closing conditions. The aggregate purchase price of approximately $28 million, inclusive of inventory and real property associated with two of the supermarkets, is expected to be funded using cash on hand.

During early October 2012, we completed the GU Acquisition and acquired 21 retail supermarkets in Upstate New York and Vermont. The $27.4 million aggregate purchase price was funded using cash on hand.

Cash Flows Information

The following is a summary of cash provided by or used in each of the indicated types of activities:

(Dollars in thousands)

	28-week periods ended
	40-week periods ended
	July 14, 2012			July 16, 2011
	October 6, 2012			October 8, 2011
Cash provided by (used in):
Operating activities	$	6079,~~698~~525		$	3551,~~054~~457
Investing activities		(1451,~~050~~101	)		(2536,~~258~~048	)
Financing activities		(1115,~~858~~330	)		(813,~~579~~471	)

Cash provided by operating activities during the 2840-week period ended ~~July~~October 146, 2012 increased $2528.61 million compared with the 2840-week period ended ~~July~~October 168, 2011 due to ana $8.6.2 million increase in earnings, adjusted for non-cash income and expenses. Additionally, changes in operating assets and liabilities represented a source of cash of $119.20 million during the 2840-week period ended ~~July~~October 146, 2012, compared to a use of cash of $512.9 million during the 2840-week period ended ~~July~~October 168, 2011. This period-over-period change was primarily attributable to the timing of vendor payments and the resulting changes in accounts payable during the respective periods.

Cash used in investing activities during the 2840-week period ended ~~July~~October 146, 2012 ~~decreased~~increased $1115.21 million compared with the 2840-week period ended ~~July~~October 168, 2011, ~~largely~~primarily due to cash consideration paid in connection with the GU Acquisition and the timing of capital expenditure activities. We expect to invest $35 million to $40 million in capital expenditures during the next 12 months.

Cash used in financing activities increased $31.39 million during the 2840-week period ended ~~July~~October 146, 2012 compared with the 2840-week period ended ~~July~~October 168, 2011 as a result of the change in net borrowings and repayments related to our ABL Facility.

Multiemployer Pension Plans

We contribute to the United Food and Commercial Workers District Union Local One (“Local One”) plan, a defined benefit multiemployer pension plan, under our collective bargaining agreements with Local One. The Local One plan generally provides retirement benefits to participants based on their service to contributing employers. During the 2840-week periods ended ~~July~~October 146, 2012 and ~~July~~October 168, 2011, we made contributions of $57.12 million and $46.9 million, respectively, to this plan.

We are required to increase our annual contributions to the Local One plan pursuant to our collective bargaining agreements and the Local One plan’s rehabilitation plan. We are also contingently liable for withdrawal liability in the event that we withdraw from the Local One plan. We have no intention to withdraw from the Local One plan. In accordance with applicable accounting rules, ~~our~~no contingent withdrawal liability is ~~not~~ reflected in our condensed consolidated financial statements. ~~We have no intention to withdraw from the Local One plan.~~

In addition, at the time we entered into our original supply agreement with C&S, certain of our warehouse personnel became employees of C&S, with C&S assuming our obligations under several other multiemployer pension plans. Although we are not a sponsoring employer of, and make no contribution payments to any of these other multiemployer pension plans, we have certain contractual indemnification obligations for withdrawal liability that may arise in the event of C&S’s withdrawal from such plans, or upon termination of the supply agreement.

- 27 -

Off-Balance Sheet Arrangements

Other than our operating leases, contingent multiemployer pension liabilities previously discussed, and letters of credit, we are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, net sales, expenses, results of operations, liquidity, capital expenditures or capital resources.

Inflation

Product cost inflation could vary from our estimates due to general economic conditions, weather, availability of raw materials and ingredients in the products that we sell and their packaging, and other factors beyond our control.

- 28 -

CRITICAL ACCOUNTING POLICIES

Our condensed consolidated financial statements are prepared in accordance with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reported periods. Our audited consolidated financial statements as of December 31, 2011 include a description of certain critical accounting policies, including those related to vendor allowances, inventory valuation, valuation of tradename, valuation of long-lived assets, leases, self-insurance programs and income taxes.

Refer to our audited consolidated financial statements as of December 31, 2011 for a description of certain critical accounting policies, including those related to vendor allowances, inventory valuation, valuation of tradename, valuation of long-lived assets, leases, self-insurance programs and income taxes.

Recent Accounting Pronouncements

~~There~~In ~~are~~July ~~currently~~2012, nothe ~~recent~~FASB ~~accounting~~issued ~~pronouncements~~ASU ~~which~~No. 2012-02, ~~had~~“Intangibles—Goodwill orand ~~are~~Other ~~expected~~(Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment.” The amendments permit an entity first to ~~have~~assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a ~~material~~basis ~~impact~~for ondetermining whether it is necessary to perform the ~~Company’s~~quantitative ~~consolidated~~impairment ~~financial~~test ~~statements~~in asaccordance ofwith ASC 350-30, “Intangibles—Goodwill and Other—General Intangibles Other than Goodwill.” The amendments are effective for our annual and interim impairment tests performed for the ~~date~~fiscal ofyear ~~this~~beginning ~~report~~December 30, 2012, with early adoption permitted. The amendments will not have an effect on our consolidated financial statements.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We do not utilize financial instruments for trading or other speculative purposes, nor do we utilize leveraged financial instruments.

We use derivative financial instruments from time to time primarily to manage our exposure to fluctuations in interest rates and, to a lesser extent, adverse fluctuations in commodity prices and other market risks. We do not enter into derivative financial instruments for trading purposes. As a matter of policy, all of our derivative positions are intended to reduce risk by hedging an underlying economic exposure. Because of the high correlation between the hedging instrument and the underlying exposure, fluctuations in the value of the instruments generally are offset by reciprocal changes in the value of the underlying exposure. The interest rate derivatives we use are straightforward instruments with liquid markets.

We manage our exposure to interest rates and changes in the fair value of our debt instruments primarily through the strategic use of variable and fixed rate debt, and interest rate swaps. As of ~~July~~October 146, 2012, we did not have any outstanding interest rate swaps designated as fair value or cash flow hedges.

The table below provides information about our outstanding debt as of October 6, 2012. The amounts shown for each year represent the contractual maturities of long-term 28debt, excluding capital leases. Interest rates reflect the weighted average rate for the outstanding instruments. The Fair-Value column includes the fair-value of our debt instruments as of October 6, 2012. Refer to Note 1 of our condensed consolidated financial statements included in this report for information about our accounting policy for financial instruments.

The table below provides information about our outstanding debt as of July 14, 2012. The amounts shown for each year represent the contractual maturities of long-term debt, excluding capital leases. Interest rates reflect the weighted average rate for the outstanding instruments. The Fair-Value column includes the fair-value of our debt instruments as of July 14, 2012. Refer to Note 1 of our condensed consolidated financial statements included in this report for information about our accounting policy for financial instruments.

(Dollars in thousands)

	Expected Fiscal Year of Maturity
	Remainderof 2012			2013			2014			2015			2016		Thereafter		Fair Value
		Remainder
	of 2012			2013			2014			2015			2016		Thereafter		Fair Value
Debt
Fixed rate	$	~~184~~73		$	2,290		$	280		$	350,166		$	—	$	—	$	~~374~~372,~~794~~059
Average interest rate		7.1	%		3.5	%		7.1	%		10.1	%		N/A		N/A
Variable rate	$	—		$	—		$	—		$	—		$	—	$	—	$	—
Average interest rate		N/A			N/A			N/A			N/A			N/A		N/A

COMMODITY PRICE RISK

We purchase products that are impacted by commodity prices and are therefore subject to price volatility caused by weather, market conditions and other factors that are not considered predictable or within our control.

- 29 -

ITEM 4.

CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

As of ~~July~~October 146, 2012, the Chief Executive Officer and the Chief Financial Officer, together with certain designated members of the finance and accounting organization, evaluated the Company’s disclosure controls and procedures. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that those disclosure controls and procedures were effective as of ~~July~~October 146, 2012.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

There was no change in the Company’s internal control over financial reporting during the 2812-week period ended ~~July~~October 146, 2012 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 30 -

PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS

The Company is ~~subject~~unaware toof ~~various~~ legal proceedings ~~and~~that ~~claims,~~are ~~either~~expected ~~asserted~~to ormaterially ~~unasserted,~~impact ~~which arise in~~ the ~~ordinary course of business. The~~ Company’s isconsolidated ~~also~~financial ~~subject~~statements toas ~~certain environmental claims. While the outcome of these claims cannot be predicted with certainty, management does not believe that the outcome of any of these legal matters will have~~ a ~~material adverse effect on our results of operations, financial position or cash flows~~whole.

ITEM 1A.

RISK FACTORS

There are no material changes from risk factors for the Company disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011.

- 29 -

ITEM 6.

EXHIBITS

ExhibitNo.
31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101		The following financial information from the quarterly report on Form 10-Q of Tops Holding Corporation for the quarter ended ~~July~~October 146, 2012, formatted in XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations and Comprehensive Income ~~(Loss)~~, (ii) Condensed Consolidated Balance Sheets, (iii) Condensed Consolidated Statements of Cash Flows, and (iv) Notes to the Condensed Consolidated Financial Statements.

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

TOPS HOLDING CORPORATION
By:		/s/ William R. Mills
		William R. Mills
		Senior Vice President and Chief Financial Officer
		August 27, 2012
		November 19, 2012

- 3031 -

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