| [  X  ] | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|-----------------------------|---------------------------------------------------------------------------------------|

| [       ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|----------------------------------------------|-------------------------------------------------------------------------------------------|

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| ·   | Failure to execute on our turnaround plan could adversely affect our Company’s liquidity, financial condition and results of operations. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | As a result of the Bankruptcy Filing, our historical financial information may not be indicative of our future financial performance. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Operating during the Bankruptcy Filing may restrict our ability to pursue our strategic and operational initiatives.  |
|--------------------|----------------------------------------------------------------------------------------------------------------------------|

|         | · |   | incur indebtedness;                                                      |
|--------------|--------|--------|--------------------------------------------------------------------------|
|    | · |   | incur or create liens;                                                   |
|    | · |   | dispose of assets;                                                       |
|         | · |   | prepay certain indebtedness and make other restricted payments;          |
|         | · |   | enter into sale and leaseback transactions; and                          |
|         | · |   | modify the terms of certain indebtedness and certain material contracts. |

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| ·   | The pursuit of the Bankruptcy Filing may have an adverse effect on our business and results of operations. |
|--------------------|------------------------------------------------------------------------------------------------------------|

| ·   | We may not be able to remain in compliance with the requirements of the DIP Credit Agreement therefore the lending commitments under the DIP Credit Agreement may be terminated by the DIP Lender. |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Date               | Minimum Cumulative EBITDA                                |
|--------------------|----------------------------------------------------------|
| August 13, 2011    | $         - |
| September 10, 2011 |  10.0                                               |
| October 8, 2011    | 20.0                                                     |
| November 5, 2011   | 35.0                                                     |
| December 3, 2011   | 50.0                                                     |
| December 31, 2011  | 65.0                                                     |
| January 28, 2012   | 90.0                                                     |
| February 25, 2012  | 100.0                                                    |
| March 24, 2012     | 110.0                                                    |
| April 21, 2012     | 125.0                                                    |
| May 19, 2012       |  150.0                                              |
| June 16, 2012      | 175.0                                                    |

| ·   | If we are unable to implement a plan of reorganization or if sufficient debtor-in-possession financing is not available we could be required to seek a sale of our Company or certain of its material assets pursuant to Section 363 of the Bankruptcy Code, or liquidate under Chapter 7 of the Bankruptcy Code. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | As a result of approval and implementation of a proposed plan, should such occur, certain changes in ownership of our Company could occur, which could adversely affect our ability to utilize our significant net operating loss carry-forwards upon our emergence from the Bankruptcy Filing. |
|--------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   |  We may experience increased levels of employee attrition. |
|--------------------|-----------------------------------------------------------------|

| ·   | Trading in our securities during the pendency of the Bankruptcy Filing is highly speculative and poses substantial risks. Our common stock may be cancelled and holders of such common stock may not receive any distribution with respect to, or be able to recover any portion of, their investments. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our common stock and 9 3/8% senior quarterly interest bonds are no longer listed on a national securities exchange and are quoted only on the Pink Sheets, which could negatively affect our stock price, bond price and marketplace liquidity. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Various operating factors and general economic conditions affecting the food industry may affect our business and may adversely affect our operating results. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  ·   | We face a high level of competition, including the threat of further consolidation inthe food industry, which could adversely affect our sales and future profits. |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·    | We are concentrated in the New York, New Jersey and Philadelphia metropolitanareas and, as a result, our business is significantly influenced by the economicconditions and other characteristics of these areas. |
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| ·   | Our vendors may shorten our payment terms, which would impair our ability to effectively manage our cash flow. |
|--------------------|----------------------------------------------------------------------------------------------------------------|

| ·    | We rely on C&S for a substantial amount of our products. |
|--------------------------|--------------------------------------------------------------|

| ·   | We may be adversely affected by unexpected changes in the insurance market or changes in factors affecting our self-insurance reserve estimates. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | We may be adversely affected by rising utility and fuel costs. |
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| ·    | Current economic conditions have been, and may continue to be volatile. |
|--------------------------|-------------------------------------------------------------------------|

| ·  | We have certain substantial equity holders that may support strategies that areopposed to your interests or with which you disagree. |
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| ·  | We could be affected if consumers lose confidence in the food supply chain or thequality and safety of our products. |
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| ·  | Threats or potential threats to security of food and drug safety may adversely affectour business. |
|--------------|----------------------------------------------------------------------------------------------------|

| ·  | Various aspects of our business are subject to federal, state and local laws andregulations. Our compliance with these regulations may require additionalexpenditures and could adversely affect our ability to conduct our business asplanned. Changes in these laws and regulations could increase our compliance costs. |
|--------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | Certain risks are inherent in providing pharmacy services, and our insurance may notbe adequate to cover any claims against us. |
|--------------|---------------------------------------------------------------------------------------------------------------------------------|

| ·  | Litigation, legal or administrative proceedings and other claims could expose us tosignificant liabilities and thus negatively affect our financial results. |
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| ·    | We are affected by increasing labor, benefit and other operating costs and acompetitive labor market and are subject to the risk of workforce disruptions. |
|--------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | We participate in various multi-employer pension plans for substantially allemployees represented by unions. |
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| ·  | We face the risk of being held liable for environmental damages that have or mayoccur. |
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| ·  | The loss of key personnel could negatively affect our business. |
|--------------|-----------------------------------------------------------------|

| ·    | Any difficulties we experience with respect to our information technology systemscould lead to significant costs or losses. |
|--------------------------|-----------------------------------------------------------------------------------------------------------------------------|

| ·  | Our substantial indebtedness could impair our financial condition and our ability tofulfill our debt obligations, including our obligations under the notes. |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| Stores, Not Including Stores in Owned Shopping Centers                                                                                                                                                                                                                                                                                                                                                                                                |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Land and building owned                                                                                                                                                                                                                                                                                                                                                                                                                               | 6      |
| Building owned and land leased                                                                                                                                                                                                                                                                                                                                                                                                                        | 22     |
| Total stores                                                                                                                                                                                                                                                                                                                                                                                                                                          | 28     |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
| Shopping Centers                                                                        |   |
| Land and building owned                                                                                                                                                                                                                                                                                                                                                                                                                               | 4      |
| Building owned and land leased                                                                                                                                                                                                                                                                                                                                                                                                                        | 1      |
| Total stores                                                                                                                                                                                                                                                                                                                                                                                                                                          | 5      |
|                                                                                                                                                                                                                                                                                                                                                                                                                                                  |   |
| Administrative and Other Properties                                                                                                                                                                                                                                    |   |
| Land and building owned                                                                                                                                                                                                                                                                                                                                                                                                                               | 6      |
| Undeveloped land                                                                                                                                                                                                                                                                                                                                                                                                                                      | 12     |
| Total other properties                                                                                                                                                                                                                                                                                                                                                                                                                                | 18     |
| Total Properties                                                                                                                                                                                                                                                                                                                                                                                                                                      | 51     |

| Company Stores:                                                       |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
| Connecticut                                                                                                                                                                                                                                                                                                                                         | 16     |
| District of Columbia                                                                                                                                                                                                                                                                                                                                | 1      |
| Delaware                                                                                                                                                                                                                                                                                                                                            | 13     |
| Maryland                                                                                                                                                                                                                                                                                                                                            | 25     |
| New Jersey                                                                                                                                                                                                                                                                                                                                          | 136    |
| New York                                                                                                                                                                                                                                                                                                                                            | 164    |
| Pennsylvania                                                                                                                                                                                                                                                                                                                                        | 37     |
| Virginia                                                                                                                                                                                                                                                                                                                                            | 1      |
| Total Stores                                                                                                                                                                                                                                                                                                                                        | 393    |

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|             | First Quarter |   | Second Quarter |   | Third Quarter |   | Fourth Quarter |   |
|------------------|---------------|--------|----------------|--------|---------------|--------|----------------|--------|
| Fiscal Year 2010 |          |   |           |   |          |   |           |   |
| High             |  $8.86   |   |  $4.74    |   |  $4.36   |   |  $3.32    |   |
| Low              |  $4.04   |   |  $2.61    |   |  $2.86   |   |  $0.16    |   |
| Fiscal Year 2009 |          |   |           |   |          |   |           |   |
| High             |  $7.47   |   |  $7.02    |   |  $12.31  |   |  $12.89   |   |
| Low              |  $3.02   |   |  $3.63    |   |  $6.35   |   |  $7.27    |   |

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| Last Business Day of Fiscal Year | S&P 500 | A&P | Peer Group |
|----------------------------------|-------------|---------|------------|
|                             | $           | $       | $          |
| 02/24/06                         | 100         | 100     | 100        |
| 02/23/07                         | 113         | 118     | 129        |
| 02/22/08                         | 105         | 106     | 114        |
| 02/28/09                         | 57          | 15      | 64         |
| 02/27/10                         | 86          | 28      | 77         |
| 02/26/11                         | 102         | 1       | 63         |

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|                                                       |   |                                             |      |   |           |   |      |           |   |   | Fiscal 2007  |   |   |        |      |
|------------------------------------------------------------|--------|--------------------------------------------------|-----------|--------|----------------|--------|-----------|----------------|--------|--------|--------------|--------|--------|-------------|-----------|
|                                                       |   | Fiscal 2010(j)                                   |      |   | Fiscal 2009(j) |   |      | Fiscal 2008(h) |   |   | (a)(b)(c)(h) |   |   | Fiscal 2006 |      |
|                                                       |   | (52 Weeks)                                       |      |   | (52 Weeks)     |   |      | (53 Weeks)     |   |   | (52 Weeks)   |   |   | (52 Weeks)  |      |
|                                                       |   | (Dollars in thousands, except per share amounts) |      |
| Operating Results                                          |   |                                             |      |   |           |   |      |           |   |   |         |   |   |        |      |
| Sales                                                      |   | $                                                | 8,078,455 |   |           | $      | 8,813,568 |           |   | $      | 9,516,186    |   |   | $           | 6,401,130 |   |   | $ | 5,369,203 |   |
| Loss from operations                                       |   |                                             | (450,621  | )      |           |   | (600,574  | )              |   |   | (75,063      | )      |   |        | (39,240   | ) |   |   | (27,170 | ) |
| Depreciation and amortization                              |   |                                             | (218,398  | )      |           |   | (245,460  | )              |   |   | (260,991     | )      |   |        | (178,152  | ) |   |   | (148,762 | ) |
| Loss on sale of Canadian operations                        |   |                                             | -         |   |           |   | -         |           |   |   | -            |   |   |        | (436      | ) |   |   | (1,299 | ) |
| Gain on sale of Metro, Inc.                                |   |                                             | -         |   |           |   | -         |           |   |   | -            |   |   |        | 184,451   |   |   |   | - |   |
| Interest expense (d)                                       |   |                                             | (218,409  | )      |           |   | (193,058  | )              |   |   | (157,591     | )      |   |        | (112,218  | ) |   |   | (65,884 | ) |
| (Loss) income from continuing operations                   |   |                                             | (673,400  | )      |           |   | (780,650  | )              |   |   | (117,882     | )      |   |        | 86,578    |   |   |   | 12,751 |   |
| Income (loss) from discontinued operations                 |   |                                             | 74,825    |   |           |   | (95,848   | )              |   |   | (53,730      | )      |   |        | (247,660  | ) |   |   | 14,142 |   |
| Net (loss) income                                          |   |                                             | (598,575  | )      |           |   | (876,498  | )              |   |   | (171,612     | )      |   |        | (161,082  | ) |   |   | 26,893 |   |
|                                                       |   |                                             |      |   |           |   |      |           |   |   |         |   |   |        |      |   |   |   |   |   |
| Per Share Data                                             |   |                                             |      |   |           |   |      |           |   |   |         |   |   |        |      |   |   |   |   |   |
| (Loss) income from continuing operations – basic     |   |                                             | (12.84    | )      |           |   | (14.79    | )              |   |   | (2.31        | )      |   |        | 1.99      |   |   |   | 0.31 |   |
| Income (loss) from discontinued operations – basic   |   |                                             | 1.39      |   |           |   | (1.80     | )              |   |   | (1.05        | )      |   |        | (5.69     | ) |   |   | 0.34 |   |
| Net (loss) income – basic                            |   |                                             | (11.45    | )      |           |   | (16.59    | )              |   |   | (3.36        | )      |   |        | (3.70     | ) |   |   | 0.65 |   |
|                                                       |   |                                             |      |   |           |   |      |           |   |   |         |   |   |        |      |   |   |   |   |   |
| (Loss) income from continuing operations – diluted   |   |                                             | (277.17   | )      |           |   | (26.12    | )              |   |   | (4.90        | )      |   |        | 1.36      |   |   |   | 0.30 |   |
| Income (loss) from discontinued operations – diluted |   |                                             | 29.48     |   |           |   | (3.22     | )              |   |   | (1.06        | )      |   |        | (5.59     | ) |   |   | 0.34 |   |
| Net (loss) income – diluted                          |   |                                             | (247.69   | )      |           |   | (29.34    | )              |   |   | (5.96        | )      |   |        | (4.23     | ) |   |   | 0.64 |   |
|                                                       |   |                                             |      |   |           |   |      |           |   |   |         |   |   |        |      |   |   |   |   |   |
| Cash dividends – common stock (g)                    |   |                                             | -         |   |           |   | -         |           |   |   | -            |   |   |        | -         |   |   |   | 7.25 |   |
| Book value per share (e)                                   |   |                                             | (21.19    | )      |           |   | (9.47     | )              |   |   | 5.03         |   |   |        | 7.78      |   |   |   | 10.36 |   |

----

|                                                |   |                                             |       |   |        |   |       |           |   |   |  Fiscal 2007 |   |   |        |       |
|-----------------------------------------------------|--------|--------------------------------------------------|------------|--------|-------------|--------|------------|----------------|--------|--------|-------------------|--------|--------|-------------|------------|
|                                                |   | Fiscal 2010                                      |       |   | Fiscal 2009 |   |       | Fiscal 2008(h) |   |   | (a)(b)(c)(h)      |   |   | Fiscal 2006 |       |
|                                                |   | (52 Weeks)                                       |       |   | (52 Weeks)  |   |       | (53 Weeks)     |   |   | (52 Weeks)        |   |   | (52 Weeks)  |       |
|                                                |   | (Dollars in thousands, except per share amounts) |       |
| Financial Position                                  |   |                                             |       |   |        |   |       |           |   |   |              |   |   |        |       |
| Current assets                                      |   | $                                                | 1,041,593  |   |        | $      | 940,706    |           |   | $      | 918,522           |   |   | $           | 886,245    |   |   | $ | 748,908 |   |
| Current liabilities                                 |   |                                             | 343,618    |   |        |   | 729,845    |           |   |   | 746,535           |   |   |        | 771,815    |   |   |   | 558,391 |   |
| Working capital (e)                                 |   |                                             | 697,975    |   |        |   | 210,861    |           |   |   | 171,987           |   |   |        | 114,430    |   |   |   | 190,517 |   |
| Current ratio (e)                                   |   |                                             | 3.03       |   |        |   | 1.29       |           |   |   | 1.23              |   |   |        | 1.15       |   |   |   | 1.34 |   |
| Expenditures for property                           |   |                                             | 71,070     |   |        |   | 86,378     |           |   |   | 115,994           |   |   |        | 122,850    |   |   |   | 208,159 |   |
| Total assets                                        |   |                                             | 2,644,849  |   |        |   | 2,836,760  |           |   |   | 3,526,697         |   |   |        | 3,622,633  |   |   |   | 2,111,623 |   |
|                                                |   |                                             |       |   |        |   |       |           |   |   |              |   |   |        |       |   |   |   |   |   |
| Current portion of long-term debt (f)               |   |                                             | -          |   |        |   | 191        |           |   |   | 5,283             |   |   |        | 11,875     |   |   |   | 32,069 |   |
| Current portion of capital lease obligations        |   |                                             | -          |   |        |   | 13,702     |           |   |   | 11,574            |   |   |        | 10,716     |   |   |   | 1,554 |   |
| Long-term debt (d) (i) (k)                          |   |                                             | 350,000    |   |        |   | 990,359    |           |   |   | 919,364           |   |   |        | 732,172    |   |   |   | 284,214 |   |
| Long-term portion of capital lease obligations      |   |                                             | -          |   |        |   | 136,880    |           |   |   | 147,921           |   |   |        | 157,430    |   |   |   | 29,938 |   |
| Liabilities subject to compromise (l)               |   |                                             | 2,874,734  |   |        |   | -          |           |   |   | -                 |   |   |        | -          |   |   |   | - |   |
| Total debt (e)                                      |   |                                             | 1,376,442  |   |        |   | 1,141,132  |           |   |   | 1,084,142         |   |   |        | 912,193    |   |   |   | 347,775 |   |
| Debt to total capitalization (e)                    |   |                                             | 585        | %      |        |   | 186        | %              |   |   | 79                | %      |   |        | 67         | % |   |   | 45 | % |
| Series A redeemable preferred stock (i)             |   |                                             | 143,299    |   |        |   | 132,757    |           |   |   | -                 |   |   |        | -          |   |   |   | - |   |
|                                                |   |                                             |       |   |        |   |       |           |   |   |              |   |   |        |       |   |   |   |   |   |
| Equity                                              |   |                                             |       |   |        |   |       |           |   |   |              |   |   |        |       |   |   |   |   |   |
| Stockholders’ (deficit) equity (g)            |   |                                             | (1,140,964 | )      |        |   | (529,203   | )              |   |   | 289,893           |   |   |        | 444,120    |   |   |   | 430,670 |   |
| Weighted average shares outstanding – basic   |   |                                             | 53,719,700 |   |        |   | 53,203,741 |           |   |   | 50,948,194        |   |   |        | 43,551,459 |   |   |   | 41,430,600 |   |
| Weighted average shares outstanding – diluted |   |                                             | 2,538,236  |   |        |   | 29,771,904 |           |   |   | 50,883,221        |   |   |        | 44,295,214 |   |   |   | 41,902,358 |   |
| Number of registered stockholders (e)               |   |                                             | 5,242      |   |        |   | 5,485      |           |   |   | 5,677             |   |   |        | 5,856      |   |   |   | 4,649 |   |
|                                                |   |                                             |       |   |        |   |       |           |   |   |              |   |   |        |       |   |   |   |   |   |
| Other (e)                                           |   |                                             |       |   |        |   |       |           |   |   |              |   |   |        |       |   |   |   |   |   |
| Number of employees                                 |   |                                             | 39,000     |   |        |   | 45,000     |           |   |   | 48,000            |   |   |        | 51,000     |   |   |   | 38,000 |   |
| New store openings                                  |   |                                             | 1          |   |        |   | 5          |           |   |   | 1                 |   |   |        | 10         |   |   |   | 10 |   |
| Total number of stores at year end                  |   |                                             | 393        |   |        |   | 429        |           |   |   | 436               |   |   |        | 447        |   |   |   | 406 |   |
| Total store area (square feet)                      |   |                                             | 16,512,891 |   |        |   | 18,106,877 |           |   |   | 18,385,645        |   |   |        | 18,813,135 |   |   |   | 16,538,410 |   |

| (a)   | On December 3, 2007, our Company completed the acquisition of Pathmark Stores, Inc. |
|-----------------|-------------------------------------------------------------------------------------|

| (b)   | As of February 23, 2008 our Midwest and Greater New Orleans operations were classified as discontinued operations. |
|-----------------|--------------------------------------------------------------------------------------------------------------------|

| (c)   | In November 2007, our Company completely disposed of our investment in Metro, Inc. |
|-----------------|------------------------------------------------------------------------------------|

| (d)   | In December 2007, we issued $165 million 5.125% convertible notes due June 15, 2011 and $255 million 6.75% convertible notes due December 15, 2012.  These notes are subject to compromise as of February 26, 2011. In addition, in December 2007, we entered into a new $675 million credit agreement, which was later amended in July 2009 to $655 million.  On December 14, 2010, we satisfied all of the conditions to the effectiveness of the DIP Credit Agreement and refinanced the $655 million credit agreement. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | Unaudited. |
|-----------------|------------|

| (f)   | In April 2007, our 7.75% Notes become due and payable in full. |
|-----------------|----------------------------------------------------------------|

| (g)   | On April 25, 2006, our Company paid a special one-time dividend to our stockholders of record on April 17, 2006 equal to $7.25 per share.  This dividend payout totaling $299.1 million was recorded as a reduction of “Additional paid in capital” in our Consolidated Balance Sheets at February 24, 2007. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (h)   | Our 6.750% Convertible Notes are subject to new accounting guidance for convertible debt instruments with cash settlement features, As a result of adopting this guidance during fiscal 2009, we reclassified $26.4 million of debt and deferred financing costs to “Additional paid-in capital”, net of deferred taxes.  We also retrospectively recognized additional non-cash interest expense of $0.4 million for fiscal 2007 and $3.5 million for fiscal 2008. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (i)   | On August 4, 2009, we issued $260.0 million of 11.375% senior secured notes due 2015 and 175,000 shares of 8.0% Cumulative Convertible Preferred Stock for approximately $162.8 million, net of closing and issuance costs. The senior secured notes are subject to compromise as of February 26, 2011. |
|-----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (j)   | During fiscal 2010, we recorded trademark impairment charges of $12.7 million, long-lived asset impairment charges of $45.3 million, resulting from our interim impairment testing and long-lived asset impairment charges of $56.2 million from store closures during third quarter 2010 and first quarter 2011, respectively. During fiscal 2009, we recorded goodwill impairment charges of $345.5 million, trademark impairment charges of $66.4 million and long-lived asset impairment charges of $65.2 million, resulting from our interim and annual impairment testing. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (k)   | As of February 26, 2011, we have a $350.0 million term loan outstanding from the DIP Credit Agreement. |
|-----------------|--------------------------------------------------------------------------------------------------------|

| (l)   | Refer to Note 10 to our Consolidated Financial Statements. |
|-----------------|------------------------------------------------------------|

----

|   |   |   |
|--------|--------|--------|

| ITEM 7 – Management's Discussion and Analysis of Financial Condition and Results of Operation |
|-----------------------------------------------------------------------------------------------------|

| ·  | Basis of Presentation — a description of our Company’s fiscal years. |
|--------------|----------------------------------------------------------------------------------|

| ·  | Overview — a general description of our business. |
|--------------|---------------------------------------------------------|

| ·  | Operating Results — a summary discussion of operating results during fiscal 2010, addressing the value drivers of our business; measurements; opportunities; challenges and risks; and initiatives. |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | Outlook — a discussion of certain trends or business initiatives for the upcoming year that Management wishes to share with the reader to assist in understanding the business. |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | Review of Operations and Liquidity and Capital Resources – a discussion of results for fiscal 2010, fiscal 2009 and fiscal 2008, significant business initiatives, current and expected future liquidity. |
|--------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | Critical Accounting Estimates — a discussion of significant estimates made by Management. |
|--------------|-------------------------------------------------------------------------------------------------|

| ·  | Market Risk — a discussion of the impact of market changes on our consolidated financial statements. |
|--------------|------------------------------------------------------------------------------------------------------------|

----

| ·    | Installing a strong executive management team; |
|--------------------------|------------------------------------------------|

| ·    | Reducing our structural and operating costs; |
|--------------------------|----------------------------------------------|

| ·    | Improving our value proposition for our customers; |
|--------------------------|----------------------------------------------------|

| ·    | Enhancing our customers’ experience in our stores; and |
|--------------------------|--------------------------------------------------------------|

| ·    | Emerging from Chapter 11. |
|--------------------------|---------------------------|

----

----

|                                       |   | Fiscal 2010                                          |    |   | Fiscal 2009 |   |    | Favorable (unfavorable) |   |   | % Change |   |
|--------------------------------------------|--------|------------------------------------------------------|---------|--------|-------------|--------|---------|-------------------------|--------|--------|----------|--------|
|                                       |   | (in millions, except percentages and per share data) |    |
|                                       |   |                                                 |    |   |        |   |    |                    |   |   |     |   |
| Sales                                      |   | $                                                    | 8,078.5 |   |        | $      | 8,813.6 |                    |   | $      | (735.1   | )      |   |   | (8.3 | %) |
| Decrease in comparable store sales         |   |                                                 | (5.3    | %)     |        |   | (4.3    | %)                      |   | NA     |     |   | NA |   |
|                                       |   |                                                 |    |   |        |   |    |                    |   |   |     |   |   |   |   |   |
| Loss from continuing operations            |   | $                                                    | (673.4  | )      |        | $      | (780.7  | )                       |   | $      | 107.3    |   |   |   | 13.7 | % |
| Income (loss) from discontinued operations |   | $                                                    | 74.8    |   |        | $      | (95.8   | )                       |   | $      | 170.6    |   |   | >100 | % |
| Net loss                                   |   | $                                                    | (598.6  | )      |        | $      | (876.5  | )                       |   | $      | 277.9    |   |   |   | 31.7 | % |
| Net loss per share - basic                 |   | $                                                    | (11.45  | )      |        | $      | (16.59  | )                       |   | $      | 5.14     |   |   |   | 31.0 | % |
| Net loss per share - diluted               |   | $                                                    | (247.69 | )      |        | $      | (29.34  | )                       |   | $      | (218.35  | )      |   | >(100 | %) |
|                                       |   |                                                 |    |   |        |   |    |                    |   |   |     |   |   |   |   |   |

|        | Fiscal 2010                  |   | Fiscal 2009                        |
|-------------|------------------------------|--------|------------------------------------|
|        | (in thousands)               |
| Sales       |                         |   |                               |
| Fresh       |  $  4,060,958 |   |  $   4,402,044 |
| Pathmark    |  3,451,876              |   |  3,855,251                    |
| Gourmet     |  266,003                |   |  273,060                      |
| Other       |  299,618                |   |  283,213                      |
| Total Sales |  $  8,078,455 |   |  $  8,813,568       |

----

----

| ·  | As a result of experiencing cash flow losses at certain stores, we determined that triggering events had occurred that required us to test the related long-lived assets for potential impairment.  We recorded impairment charges of $45.3 million during fiscal 2010 to partially write down these stores’ long-lived assets, which consist of favorable leases, capital leases, and land and buildings, with a carrying amount of $114.9 million to their fair value of $69.6 million for fiscal 2010. |
|--------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·  | In August 2010, our Company announced a plan to close 25 stores in five states as we began the implementation and execution phase of our comprehensive turnaround. The affected stores include locations in close proximity to other Company stores, those facing real estate and cost issues, and underperforming non-core stores. In February 2011, our company filed a motion seeking approval to close 32 stores in six states as we continue to fully implement our comprehensive financial and operational restructuring.  These store closures were completed on April 16, 2011.  As a result, we recorded a total impairment charge for closed stores of $56.2 million during fiscal 2010. |
|--------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                        |   | Fiscal 2010    |    |   | Fiscal 2009 |   |
|-----------------------------|--------|----------------|---------|--------|-------------|--------|
|                        |   | (in thousands) |    |
| Segment (loss) income       |   |           |    |   |        |   |
| Fresh                       |   | $              | 41,573  |   |        | $      | 111,582 |   |
| Pathmark*                   |   |           | (84,017 | )      |        |   | (46,326 | ) |
| Gourmet                     |   |           | 20,419  |   |        |   | 25,691 |   |
| Other                       |   |           | 1,822   |   |        |   | 1,472 |   |
| Total Segment (loss) income |   | $              | (20,203 | )      |        | $      | 92,419 |   |

----

----

|                                                     |   |         Fiscal 2009 |    |   |      Fiscal 2008 (1)        |   |    |        Favorable    (unfavorable) |   |   |        % Change |   |
|----------------------------------------------------------|--------|--------------------------------------------------------|---------|--------|------------------------------------------------------|--------|---------|-------------------------------------------------------------------------------------|--------|--------|-----------------------------------------------|--------|
|                                                     |   |                                                   |    |   | (in millions, except percentages and per share data) |   |
|                                                     |   |                                                   |    |   |                                                 |   |    |                                                                                |   |   |                                          |   |
| Sales                                                    |   | $                                                      | 8,813.6 |   |                                                 | $      | 9,516.2 |                                                                                |   | $      | (702.6                                        | )      |   |       (7.4%) |   |
| (Decrease) increase in comparable  store sales |   |                                                   | (4.3    | %)     |                                                 |   | 2.0     | %                                                                                   |   | NA     |                                          |   | NA |   |
| Loss from continuing operations                          |   | $                                                      | (780.7  | )      |                                                 | $      | (117.9  | )                                                                                   |   | $      | (662.8                                        | )      |   | >(100%) |   |
| Loss from discontinued operations                        |   | $                                                      | (95.8   | )      |                                                 | $      | (53.7   | )                                                                                   |   | $      | (42.1                                         | )      |   |         (78.4%) |   |
| Net loss                                                 |   | $                                                      | (876.5  | )      |                                                 | $      | (171.6  | )                                                                                   |   | $      | (704.9                                        | )      |   | >(100%) |   |
| Net loss per share - basic                               |   | $                                                      | (16.59  | )      |                                                 | $      | (3.36   | )                                                                                   |   | $      | (13.23                                        | )      |   | >(100%) |   |
| Net loss per share - diluted                             |   | $                                                      | (29.34  | )      |                                                 | $      | (5.96   | )                                                                                   |   | $      | (23.38                                        | )      |   | >(100%) |   |
|                                                     |   |                                                   |    |   |                                                 |   |    |                                                                                |   |   |                                          |   |   |   |   |

|    (1) |  Fiscal 2008 reflects increased interest expense of $3.5 million for our 6.750% convertible senior notes from the amount recorded in our Form 10-K for fiscal 2008 as a result of the retrospective application of the new accounting guidance relating to convertible debt, which we adopted during the first quarter of fiscal 2009.  Refer to Note 9 to our Consolidated Financial Statements – Indebtedness and Other Financial Liabilities for more information. |
|-----------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|        |     |                                                 | Fiscal 2009                                                                     |                                                             | Fiscal 2008                                                                                 |
|-------------|----------|------------------------------------------------------|---------------------------------------------------------------------------------|------------------------------------------------------------------|---------------------------------------------------------------------------------------------|
| Sales       |     |                                                 | (in thousands)                                                                  |
|        | Fresh    |                                                 |  $      4,402,044                            |                                                             |  $        4,806,467                            |
|        | Pathmark |                                                 |         3,855,251                       |                                                             |    4,173,017                                                                 |
|        | Gourmet  |                                                 |             273,060 |                                                             |               281,767 |
|        | Other    |                                                 |             283,213 |                                                             |               254,935 |
| Total sales |     |  $      8,813,568 |                                                                            |  $        9,516,186 |

----

----

|                 |   | Fiscal 2009          |    |   | Fiscal 2008 |    |
|----------------------|--------|----------------------|---------|--------|-------------|---------|
|                 |   | ( in thousands) |    |
| Segment income       |   |                 |    |   |        |    |
| Fresh                |   | $                    | 111,582 |   |        |  $ | 148,617 |   |
| Pathmark*            |   |                 | (46,326 | )      |        |    | 19,012 |   |
| Gourmet              |   |                 | 25,691  |   |        |    | 24,866 |   |
| Other                |   |                 | 1,472   |   |        |    | 2,184 |   |
| Total segment income |   | $                    | 92,419  |   |        |  $ | 194,679 |   |

----

----

|                                      |   | Fiscal 2010 |    |   | Fiscal 2009 |   |    | Fiscal 2008 |   |
|-------------------------------------------|--------|-------------|---------|--------|-------------|--------|---------|-------------|--------|
| Net cash used in operating activities     |   | $           | (80,970 | )      |        | $      | (41,917 | )           |   | $ | (1,299 | ) |
| Net cash used in investing activities     |   |        | (26,064 | )      |        |   | (62,966 | )           |   |   | (64,530 | ) |
| Net cash provided by financing activities |   |        | 207,215 |   |        |   | 181,934 |        |   |   | 140,549 |   |

----

| ·  | A decline in inventories primarily related to lower sales volume and a reduced number of open locations; and |
|--------------|--------------------------------------------------------------------------------------------------------------|
| ·  | An increase in accounts payable and other accruals, largely attributed to amounts stayed in bankruptcy.      |

| ·  | A decrease in accrued salaries, wages and benefits primarily attributable to payments made for benefits to administrative employees for benefits that were not renewed in fiscal 2010; and |
|--------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ·  | An increase in receivables, primarily related to slower collections from vendors.                                                                                                          |

|                                                                 |   | At            |      |   | At            |   |
|----------------------------------------------------------------------|--------|---------------|-----------|--------|---------------|--------|
|                                                                 |   | Feb. 26, 2011 |      |   | Feb. 27, 2010 |   |
| Debtor-in-Possession Credit Agreement, due June 14, 2012             |   | $             | 350,000   |   |          | $      | - |   |
| Related Party Promissory Note, due August 18, 2011                   |   |          | 10,000    |   |          |   | 10,000 |   |
| 5.125% Convertible Senior Notes, due June 15, 2011 (1)               |   |          | 165,000   |   |          |   | 155,333 |   |
| 9.125% Senior Notes, due December 15, 2011 (1)                       |   |          | 12,840    |   |          |   | 12,840 |   |
| 6.750% Convertible Senior Notes, due December 15, 2012 (1)           |   |          | 255,000   |   |          |   | 223,838 |   |
| 11.375% Senior Secured Notes, due August 4, 2015                     |   |          | 260,000   |   |          |   | 253,668 |   |
| 9.375% Notes, due August 1, 2039 (1)                                 |   |          | 200,000   |   |          |   | 200,000 |   |
| Borrowings under Credit Agreement                                    |   |          | -         |   |          |   | 132,900 |   |
| Other                                                                |   |          | 2,544     |   |          |   | 1,971 |   |
|                                                                 |   |          | 1,255,384 |   |          |   | 990,550 |   |
| Less current portion of long-term debt – subject to compromise |   |          | (159      | )      |          |   | (191 | ) |
| Less long-term debt - subject to compromise                          |   |          | (905,225  | )      |          |   | - |   |
| Long-term debt                                                       |   | $             | 350,000   |   |          | $      | 990,359 |   |

| (1)   | Represents public debt obligations. |
|-----------------|-------------------------------------|

----

|   | ·  |   | the DIP Lenders agreed to lend up to $800.0 million in the form of a $350.0 million term loan and a $450.0 million revolving credit facility with a $250.0 million sublimit for letters of credit, in each case subject to the terms and conditions therein; |
|--------|--------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  |   | our Company’s and the Subsidiary Borrower’s obligations under the DIP Credit Agreement and the other specified loan documents are guaranteed by our Company’s certain other subsidiaries that are Debtors (“Subsidiary Guarantors” and, together with our Company and the Subsidiary Borrowers, the “Loan Parties”); and |
|--------|--------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ·  |   | the Loan Parties’ obligations under the DIP Credit Agreement and such other specified loan documents are secured by a security interest in, and lien upon, substantially all of the Loan Parties’ existing and after-acquired personal and real property, having the priority and subject to the terms therein and in the order(s) entered into by the Bankruptcy Court, as applicable. |
|--------|--------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| Date               | Minimum Cumulative EBITDA                                |
|--------------------|----------------------------------------------------------|
| August 13, 2011    | $         - |
| September 10, 2011 |  10.0                                               |
| October 8, 2011    | 20.0                                                     |
| November 5, 2011   | 35.0                                                     |
| December 3, 2011   | 50.0                                                     |
| December 31, 2011  | 65.0                                                     |
| January 28, 2012   | 90.0                                                     |
| February 25, 2012  | 100.0                                                    |
| March 24, 2012     | 110.0                                                    |
| April 21, 2012     | 125.0                                                    |
| May 19, 2012       |  150.0                                              |
| June 16, 2012      | 175.0                                                    |

----

----

|                                                            |   | Payments Due by Period (in millions) |    |
|-----------------------------------------------------------------|--------|--------------------------------------|---------|
| Contractual                                                     |   |                                 |    |   | Less than |   |   |   |   |   |   |   |   |   |   |
| Obligations                                                     |   | Total                                |    |   | 1 Year |   |   | 1 – 3 Years |   |   | 4 – 5 Years |   |   | Thereafter |   |
|  Debtor-in-Possession Term Loan (1)                        |   | $                                    | 350.0   |   |   | $  | - |   |   | $  | 350.0 |   |   | $  | - |   |   | $  | - |   |
|  Other Debt (2)                                            |   |                                 | 905.5   |   |   |   | 188.2 |   |   |   | 255.6 |   |   |   | 260.7 |   |   |   | 201.0 |   |
|  Capital Leases (3)                                        |   |                                 | 193.3   |   |   |   | 24.0 |   |   |   | 42.7 |   |   |   | 35.4 |   |   |   | 91.2 |   |
|  Operating Leases(3)                                       |   |                                 | 1,428.3 |   |   |   | 180.8 |   |   |   | 336.6 |   |   |   | 283.4 |   |   |   | 627.5 |   |
|  Long-term Real Estate Liabilities (3)                     |   |                                 | 618.5   |   |   |   | 41.1 |   |   |   | 82.8 |   |   |   | 86.2 |   |   |   | 408.4 |   |
|  Pension Obligations (4)                                   |   |                                 | 185.5   |   |   |   | 7.2 |   |   |   | 14.1 |   |   |   | 14.4 |   |   |   | 149.8 |   |
|  Postretirement Obligations (5)                       |   |                                 | 99.4    |   |   |   | 2.1 |   |   |   | 4.7 |   |   |   | 5.3 |   |   |   | 87.3 |   |
|  Occupancy Payments (6)                                    |   |                                 | 137.2   |   |   |   | 18.0 |   |   |   | 36.9 |   |   |   | 29.8 |   |   |   | 52.5 |   |
|  Severance Payments (7)                                    |   |                                 | 8.6     |   |   |   | 8.1 |   |   |   | 0.5 |   |   |   | - |   |   |   | - |   |
|  Pension Withdrawal Payments (8)                           |   |                                 | 139.0   |   |   |   | 13.2 |   |   |   | 37.2 |   |   |   | 20.0 |   |   |   | 68.6 |   |
|  Interest (9)                                              |   |                                 | 738.4   |   |   |   | 100.0 |   |   |   | 119.8 |   |   |   | 79.5 |   |   |   | 439.1 |   |
|  Postemployment Obligations (10)                      |   |                                 | 11.2    |   |   |   | 3.4 |   |   |   | 2.3 |   |   |   | 1.5 |   |   |   | 4.0 |   |
|  Defined Contribution Plans (11)                           |   |                                 | 0.5     |   |   |   | 0.5 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Multi-employer Pension Plans (11)                         |   |                                 | 56.6    |   |   |   | 56.6 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Purchase Commitments (12)                                 |   |                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        Equipment Purchases   |   |                                 | 8.8     |   |   |   | 8.8 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|        Equipment Rentals     |   |                                 | 0.4     |   |   |   | 0.1 |   |   |   | 0.3 |   |   |   | - |   |   |   | - |   |
|        Suppliers             |   |                                 | 789.5   |   |   |   | 468.8 |   |   |   | 93.5 |   |   |   | 97.0 |   |   |   | 130.2 |   |
|        Manufacturers/Vendors |   |                                 | 47.5    |   |   |   | 8.7 |   |   |   | 13.1 |   |   |   | 11.8 |   |   |   | 13.9 |   |
|        Service Contracts     |   |                                 | 47.0    |   |   |   | 32.7 |   |   |   | 14.3 |   |   |   | - |   |   |   | - |   |
|        Marketing Contracts   |   |                                 | 66.6    |   |   |   | 66.5 |   |   |   | 0.1 |   |   |   | - |   |   |   | - |   |
|        Consulting            |   |                                 | 3.6     |   |   |   | 3.6 |   |   |   | - |   |   |   | - |   |   |   | - |   |
|  Total (13)                                                |   | $                                    | 5,835.4 |   |   | $ | 1,232.4 |   |   | $ | 1,404.5 |   |   | $ | 925.0 |   |   | $ | 2,273.5 |   |

|   (1) | Refer to Note 9 to our Consolidated Financial Statements – Indebtedness and Other Financial Liabilities for information regarding debtor-in-possession term loan.  We expect to settle the debtor-in-possession term loan by several methods, including cash flows from operations. |
|------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   (2) | Amounts represent contractual amounts due and do not reflect current balance sheet classification as a result of the Bankruptcy Filing.  Refer to Note 9 to our Consolidated Financial Statements – Indebtedness and Other Financial Liabilities for information regarding long-term debt.  We expect to settle such long-term debt by several methods, including cash flows from operations. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   (3) |  Amounts represent contractual amounts due and do not reflect current balance sheet classification as a result of the Bankruptcy Filing.  Refer to Note 11 to our Consolidated Financial Statements - Lease Obligations for information regarding capital leases, operating leases and long-term real estate liabilities. |
|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   (4) |  Amounts represent expected future cash contributions to our non-qualified defined benefit pension plans and do not reflect current balance sheet classification as a result of the Bankruptcy Filing.  Refer to Note 13 to our Consolidated Financial Statements – Retirement Plans and Benefits for information regarding our defined benefit pension plans. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   (5) | Amounts represent future benefit payments that were actuarially determined for our postretirement benefit obligation and do not reflect current balance sheet classification as a result of the Bankruptcy Filing.  Refer to Note 13 to our Consolidated Financial Statements – Retirement Plans and Benefits for information regarding our postretirement benefits. |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   (6) | Amounts represent our future occupancy payments primarily relating to our asset disposition initiatives (refer to Note 6 to our Consolidated Financial Statements), discontinued operations (refer to Note 5 to our Consolidated Financial Statements) and store closures made during the normal course of business and do not reflect current balance sheet classification as a result of the Bankruptcy Filing. |
|------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   (7) | Amounts primarily represent our severance obligations primarily resulting from store closures and do not reflect current balance sheet classification as a result of the Bankruptcy Filing. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   (8) | Amount represents our pension withdrawal payments from multiemployer plans and do not reflect current balance sheet classification as a result of the Bankruptcy Filing. |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   (9) | Amounts represent contractual amounts due and do not reflect current balance sheet classification as a result of the Bankruptcy Filing.  Refer to Note 9 to our Consolidated Financial Statements for information regarding our interest payments.  Note that amounts presented exclude estimates on current and future variable interest rate payments as these amounts cannot be estimated as of the balance sheet date due to the variability in our expected borrowings. Included within these amounts are interest rate payments for the debtor-in-possession term loan based upon a LIBOR floor. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (10) | Amounts represent our future benefit payments that were actuarially determined for our short and long term disability programs and do not reflect current balance sheet classification as a result of the Bankruptcy Filing.  Refer to Note 13 to our Consolidated Financial Statements – Retirement Plans and Benefits for information regarding our postemployment obligations. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (11) | Amounts represent our best estimate of our immediate funding requirements of defined contribution and multiemployer plans in which we participate and do not reflect current balance sheet classification as a result of the Bankruptcy Filing.  Defined contribution plan requirement primarily relates to our Company’s 4% employer pension contribution relating to calendar 2010 which will be paid in fiscal 2011. Refer to Note 13 to our Consolidated Financial Statements – Retirement Plans and Benefits for information regarding these obligations. |
|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (12) | The purchase commitments include agreements to purchase goods or services that are enforceable and legally binding and that specify all significant terms, including open purchase orders.  We expect to fund these commitments with cash flows from operations. |
|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (13) | The above table detailing our contractual obligations excludes our FIN 48 liability relating to our uncertain tax positions due to the fact that it will be settled with our net operating loss carryforwards and will not require the use of cash.  As of February 26, 2011, we had gross unrecognized tax benefits of $0.6 million.  We currently do not expect that this amount will significantly change in the next 12 months. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

|                                             | Fiscal2010 |   | Fiscal2009 |   | Fiscal2008 |
|--------------------------------------------------|------------|--------|------------|--------|------------|
| Weighted average discount rate                   | 6.25%      |   | 7.25%      |   | 5.75%      |
| Weighted average rate of compensation increase   | 3.00%      |   | 3.00%      |   | 2.75%      |
| Expected long-term rate of return on plan assets | 7.50%      |   | 7.50%      |   | 6.75%      |

----

----

----

----

----

----

|                                                                                              |   | Fiscal 2010 |       |   | Fiscal 2009 |   |       | Fiscal 2008 |   |
|---------------------------------------------------------------------------------------------------|--------|-------------|------------|--------|-------------|--------|------------|-------------|--------|
| Sales                                                                                             |   | $           | 8,078,455  |   |        | $      | 8,813,568  |        |   | $ | 9,516,186 |   |
| Cost of merchandise sold                                                                          |   |        | (5,677,800 | )      |        |   | (6,146,808 | )           |   |   | (6,613,150 | ) |
| Gross margin                                                                                      |   |        | 2,400,655  |   |        |   | 2,666,760  |        |   |   | 2,903,036 |   |
| Store operating, general and administrative expense                                               |   |        | (2,737,093 | )      |        |   | (2,790,154 | )           |   |   | (2,978,099 | ) |
| Goodwill, trademark and long-lived asset impairment                                               |   |        | (114,183   | )      |        |   | (477,180   | )           |   |   | - |   |
| Loss from continuing operations before                                                            |   |        |       |   |        |   |       |        |   |   |   |   |
| nonoperating income (loss), interest                                                              |   |        |       |   |        |   |       |        |   |   |   |   |
| expense, net, and reorganization items, net                                                       |   |        | (450,621   | )      |        |   | (600,574   | )           |   |   | (75,063 | ) |
| Nonoperating income (loss)                                                                        |   |        | 13,777     |   |        |   | (9,181     | )           |   |   | 116,864 |   |
| Interest expense, net                                                                             |   |        | (218,369   | )      |        |   | (192,889   | )           |   |   | (157,000 | ) |
| Reorganization items, net                                                                         |   |        | (21,985    | )      |        |   | -          |        |   |   | - |   |
| Loss from continuing operations before income taxes                                               |   |        | (677,198   | )      |        |   | (802,644   | )           |   |   | (115,199 | ) |
| Benefit from (provision for) income taxes                                                         |   |        | 3,798      |   |        |   | 21,994     |        |   |   | (2,683 | ) |
| Loss from continuing operations                                                                   |   |        | (673,400   | )      |        |   | (780,650   | )           |   |   | (117,882 | ) |
| Discontinued operations:                                                                          |   |        |       |   |        |   |       |        |   |   |   |   |
|     Loss from operations of discontinued                                      |   |        |       |   |        |   |       |        |   |   |   |   |
|           businesses, net of tax benefit of $0  |   |        |       |   |        |   |       |        |   |   |   |   |
|            for fiscal 2010, 2009, and 2008 |   |        | (57,992    | )      |        |   | (95,848    | )           |   |   | (58,383 | ) |
|     Loss (gain) on disposal of discontinued                                   |   |        |       |   |        |   |       |        |   |   |   |   |
|           operations, net of tax benefit of $0  |   |        |       |   |        |   |       |        |   |   |   |   |
|            for fiscal 2010, 2009, and 2008 |   |        | (447       | )      |        |   | -          |        |   |   | 4,653 |   |
|      Reorganization items, net                                           |   |        | 133,264    |   |        |   | -          |        |   |   | - |   |
| Income (loss) from discontinued operations                                                        |   |        | 74,825     |   |        |   | (95,848    | )           |   |   | (53,730 | ) |
| Net loss                                                                                          |   | $           | (598,575   | )      |        | $      | (876,498   | )           |   | $ | (171,612 | ) |
|                                                                                              |   |        |       |   |        |   |       |        |   |   |   |   |
| Net (loss) income per share – basic:                                                        |   |        |       |   |        |   |       |        |   |   |   |   |
| Continuing operations                                                                             |   | $           | (12.84     | )      |        | $      | (14.79     | )           |   | $ | (2.31 | ) |
| Discontinued operations                                                                           |   |        | 1.39       |   |        |   | (1.80      | )           |   |   | (1.05 | ) |
| Net loss per share – basic                                                                  |   | $           | (11.45     | )      |        | $      | (16.59     | )           |   | $ | (3.36 | ) |
|                                                                                              |   |        |       |   |        |   |       |        |   |   |   |   |
| Net (loss) income per share – diluted:                                                      |   |        |       |   |        |   |       |        |   |   |   |   |
| Continuing operations                                                                             |   | $           | (277.17    | )      |        | $      | (26.12     | )           |   | $ | (4.90 | ) |
| Discontinued operations                                                                           |   |        | 29.48      |   |        |   | (3.22      | )           |   |   | (1.06 | ) |
| Net loss per share – diluted                                                                |   | $           | (247.69    | )      |        | $      | (29.34     | )           |   | $ | (5.96 | ) |
|                                                                                              |   |        |       |   |        |   |       |        |   |   |   |   |
| Weighted average common shares outstanding:                                                       |   |        |       |   |        |   |       |        |   |   |   |   |
|       Basic                                                         |   |        | 53,719,700 |   |        |   | 53,203,741 |        |   |   | 50,948,194 |   |
|       Diluted                                                       |   |        | 2,538,236  |   |        |   | 29,771,904 |        |   |   | 50,883,221 |   |
|                                                                                              |   |        |       |   |        |   |       |        |   |   |   |   |
| See Notes to Consolidated Financial Statements.                                                   |   |

----

|                                               |                                                                                                                |   |                                                                                                                |   | Additional Paid-in Capital                                                                                    |   | Accumulated Other Comprehensive Loss                                                                                            |   | Retained Earnings (Accumulated Deficit)                                                                                                                       |   | Total Stockholders' Equity (Deficit)                                                                |
|----------------------------------------------------|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------|
|                                               | Common Stock                                                                                                        |   |                                                                                                                |   |                                                                                                          |
|                                               | Shares                                                                                                              |   | Amount                                                                                                              |   |                                                                                                          |   |                                                                                                                            |
| Balance at 2/23/2008                               |  57,100,955                                                                                                    |   |  $       57,101                                                             |   |  $    399,973                                                                        |   |  $        (28,975)                                                                 |   |  $           16,021                                                                               |   |  $       444,120                                            |
| Adoption of accounting guidance for share lending  |                                                                                                                |   |                                                                                                                |   |                                                                                                          |   |                                                                                                                            |   |                                                                                                                                                          |   |                                                                                                |
|     agreements                 | -                                                                                                              |   |  -                                                                                                             |   | 28,277                                                                                                   |   | -                                                                                                                               |   | -                                                                                                                                                             |   | 28,277                                                                                         |
| Net loss                                           |  -                                                                                                             |   |  -                                                                                                             |   | -                                                                                                             |   |  -                                                                                                                         |   |  (171,612)                                                                                                                                               |   |  (171,612)                                                                                     |
| Stock options exercised                            |  107,891                                                                                                       |   |  108                                                                                                           |   |  2,105                                                                                                   |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  2,213                                                                                         |
| Other share based awards                           |  465,953                                                                                                       |   |  466                                                                                                           |   |  5,228                                                                                                   |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  5,694                                                                                         |
| Financing warrants and conversion                  |                                                                                                                |   |                                                                                                                |   |                                                                                                          |   |                                                                                                                            |   |                                                                                                                                                          |   |                                                                                                |
| features relating to convertible debt              |  -                                                                                                             |   |  -                                                                                                             |   |  57,373                                                                                                  |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  57,373                                                                                        |
| Other comprehensive loss                           |                    - |   |                   -       |   |                  -       |   |                (76,172)                              |   |                          -       |   |          (76,172)                                      |
| Balance at 2/28/2009                               |  57,674,799                                                                                                    |   |      $   57,675                                                             |   | $   492,956                                                                                    |   | $      (105,147)                                                                                  |   | $      (155,591)                                                                                                                |   | $     289,893                                                              |
| Net loss                                           |  -                                                                                                             |   |  -                                                                                                             |   |  -                                                                                                       |   |  -                                                                                                                         |   |  (876,498)                                                                                                                                               |   |  (876,498)                                                                                     |
| Beneficial conversion feature related to           |                                                                                                                |   |                                                                                                                |   |                                                                                                          |   |                                                                                                                            |   |                                                                                                                                                          |   |                                                                                                |
| preferred stock, net of accretion                  |  -                                                                                                             |   |  -                                                                                                             |   |  31,036                                                                                                  |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  31,036                                                                                        |
| Dividends on preferred stock                       |  -                                                                                                             |   |  -                                                                                                             |   |  (4,572)                                                                                                 |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  (4,572)                                                                                       |
| Preferred stock financing fees amortization        |  -                                                                                                             |   |  -                                                                                                             |   |  (562)                                                                                                   |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  (562)                                                                                         |
| Returned shares under the share lending agreement  |  (2,500,000)                                                                                                   |   |  (2,500)                                                                                                       |   |  2,500                                                                                                   |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  -                                                                                             |
| Stock options exercised                            |  19,396                                                                                                        |   |  19                                                                                                            |   |  70                                                                                                      |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  89                                                                                            |
| Other share based awards                           |  673,934                                                                                                       |   |  674                                                                                                           |   |  4,993                                                                                                   |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  5,667                                                                                         |
| Other comprehensive loss                           |                    - |   |                    - |   |                   - |   |                  25,744                    |   |                           - |   |             25,744                      |
| Balance at 2/27/2010                               |  55,868,129                                                                                                    |   |  $     55,868                                                                         |   |  $  526,421                                                                                    |   |  $       (79,403)                                                                       |   |  $   (1,032,089)                                                                                                                          |   |  $    (529,203)                                                            |
| Net loss                                           |                                                                                                                |   |                                                                                                                |   |                                                                                                          |   |  -                                                                                                                         |   |  (598,575)                                                                                                                                               |   |  (598,575)                                                                                     |
| Beneficial conversion feature related to preferred |                                                                                                                |   |                                                                                                                |   |                                                                                                          |   |                                                                                                                            |   |                                                                                                                                                          |   |                                                                                                |
| stock, net of accretion                            |  -                                                                                                             |   |  -                                                                                                             |   |  (4,813)                                                                                                 |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  (4,813)                                                                                       |
| Dividends on preferred stock                       |  -                                                                                                             |   |  -                                                                                                             |   |  (7,517)                                                                                                 |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  (7,517)                                                                                       |
| Preferred stock financing fees amortization        |  -                                                                                                             |   |  -                                                                                                             |   | (1,739)                                                                                                       |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  (1,739)                                                                                       |
| Payment-in-kind dividends                          |  -                                                                                                             |   |  -                                                                                                             |   |  (4,020)                                                                                                 |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  (4,020)                                                                                       |
| Other comprehensive income                         |  -                                                                                                             |   |  -                                                                                                             |   |  -                                                                                                       |   |  4,094                                                                                                                     |   |  -                                                                                                                                                       |   |  4,094                                                                                         |
| Returned shares under the share lending agreement  |  (2,427,944)                                                                                                   |   |  (2,428)                                                                                                       |   |  2,428                                                                                                   |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  -                                                                                             |
| Stock options exercised                            |  4,834                                                                                                         |   |  5                                                                                                             |   |  23                                                                                                      |   |  -                                                                                                                         |   |  -                                                                                                                                                       |   |  28                                                                                            |
| Other share based awards                           |      407,451                                                                               |   |             407                                         |   |             374                                   |   |                      - |   |                       -                         |   |                 781 |
| Balance at 2/26/2011                               |  53,852,470                                                                                                    |   |  $     53,852                                                                         |   |  $  511,157                                                                                    |   |  $      (75,309)                                                                             |   |  $  (1,630,664)                                                                                                                                |   |  $ (1,140,964)                                                                                 |
|                                               |                                                                                                                |   |                                                                                                                |   |                                                                                                          |   |                                                                                                                            |   |                                                                                                                                                          |   |                                                                                                |
| See Notes to Consolidated Financial Statements.    |

----

|                                                        |   | Pension and Other Postretirement Benefits |   | Accumulated Other Comprehensive Loss |   |                               |
|-------------------------------------------------------------|--------|-------------------------------------------|--------|--------------------------------------|--------|------------------------------------|
|                                                        |   |                                      |   |                                 |
|                                                        |   |                                      |   |                                 |
|                                                        |   |                                      |   |                                 |
| Balance at February 23, 2008                                |   |  $   (28,975)         |   |  $   (28,975)         |   |                               |
| Current period change                                       |   |  (76,172)                            |   |  (76,172)                       |   |                               |
| Balance at February 28, 2009                                |   |  (105,147)                           |   |  (105,147)                      |   |                               |
| Current period change                                       |   |  25,744                              |   |  25,744                         |   |                               |
| Balance at February 27, 2010                                |   |  (79,403)                            |   |  (79,403)                       |   |                               |
| Current period change                                       |   |  4,094                               |   |  4,094                          |   |                               |
| Balance at February 26, 2011                                |   |  $   (75,309)         |   |  $   (75,309)         |   |                               |
|                                                        |   |                                      |   |                                 |   |                               |
|                                                        |   |                                      |   |                                 |   |                               |
|                                                        |   |                                      |   |                                 |   |                               |
| Comprehensive Loss                                          |   |                                      |   |                                 |   |                               |
|                                                        |   | Fiscal 2010                               |   | Fiscal 2009                          |   | Fiscal 2008                        |
| Net loss                                                    |   |  $   (598,575)        |   |  $   (876,498)        |   |  $   (171,612)      |
| Pension and other postretirement benefits, net of tax of $0 |   |  4,094                               |   |  25,744                         |   |  (76,172)                     |
| Other comprehensive income (loss), net of tax of $0         |   |  4,094                               |   |  25,744                         |   |  (76,172)                     |
| Total comprehensive loss                                    |   |  $   (594,481)        |   | $   (850,754)         |   |  $   (247,784) |
|                                                        |   |                                      |   |                                 |   |                               |
| See Notes to Consolidated Financial Statements.             |

----

| Assets                                                                                                        |   | February 26, 2011 |       |   | February 27, 2010 |   |
|---------------------------------------------------------------------------------------------------------------|--------|-------------------|------------|--------|-------------------|--------|
| Current assets:                                                                                               |   |              |       |   |              |   |
| Cash and cash equivalents                                                                                     |   | $                 | 352,607    |   |              | $      | 252,426 |   |
| Restricted cash                                                                                               |   |              | 1,731      |   |              |   | 1,993 |   |
| Accounts receivable, net of allowance for doubtful accounts of $5,554 and                                     |   |              |       |   |              |   |   |   |
| $8,728 at February 26, 2011 and February 27, 2010, respectively                                               |   |              | 209,966    |   |              |   | 175,686 |   |
| Inventories, net                                                                                              |   |              | 440,960    |   |              |   | 467,227 |   |
| Prepaid expenses and other current assets                                                                     |   |              | 36,329     |   |              |   | 43,374 |   |
| Total current assets                                                                                          |   |              | 1,041,593  |   |              |   | 940,706 |   |
| Non-current assets:                                                                                           |   |              |       |   |              |   |   |   |
| Property:                                                                                                     |   |              |       |   |              |   |   |   |
| Land                                                                                                          |   |              | 98,078     |   |              |   | 107,062 |   |
| Buildings                                                                                                     |   |              | 349,165    |   |              |   | 371,605 |   |
| Equipment                                                                                                     |   |              | 1,116,044  |   |              |   | 1,245,079 |   |
| Leasehold improvements                                                                                        |   |              | 1,227,679  |   |              |   | 1,325,236 |   |
| Total – at cost                                                                                         |   |              | 2,790,966  |   |              |   | 3,048,982 |   |
| Less accumulated depreciation and amortization                                                                |   |              | (1,627,113 | )      |              |   | (1,651,011 | ) |
| Property owned, net                                                                                           |   |              | 1,163,853  |   |              |   | 1,397,971 |   |
| Property under capital leases, net                                                                            |   |              | 63,346     |   |              |   | 89,599 |   |
| Property, net                                                                                                 |   |              | 1,227,199  |   |              |   | 1,487,570 |   |
| Goodwill                                                                                                      |   |              | 110,412    |   |              |   | 115,197 |   |
| Intangible assets, net                                                                                        |   |              | 124,288    |   |              |   | 147,713 |   |
| Other assets                                                                                                  |   |              | 141,357    |   |              |   | 145,574 |   |
| Total assets                                                                                                  |   | $                 | 2,644,849  |   |              | $      | 2,836,760 |   |
|                                                                                                          |   |              |       |   |              |   |   |   |
| Liabilities and Stockholders’ Deficit                                                                   |   |              |       |   |              |   |   |   |
| Current liabilities:                                                                                          |   |              |       |   |              |   |   |   |
| Current portion of long-term debt                                                                             |   | $                 | -          |   |              | $      | 191 |   |
| Current portion of obligations under capital leases                                                           |   |              | -          |   |              |   | 13,702 |   |
| Current portion of real estate liabilities                                                                    |   |              | -          |   |              |   | 4,220 |   |
| Accounts payable                                                                                              |   |              | 119,245    |   |              |   | 227,779 |   |
| Book overdrafts                                                                                               |   |              | 23,722     |   |              |   | 60,465 |   |
| Accrued salaries, wages and benefits                                                                          |   |              | 109,428    |   |              |   | 145,170 |   |
| Accrued taxes                                                                                                 |   |              | 26,175     |   |              |   | 31,802 |   |
| Other accruals                                                                                                |   |              | 65,048     |   |              |   | 246,516 |   |
| Total current liabilities                                                                                     |   |              | 343,618    |   |              |   | 729,845 |   |
| Non-current liabilities:                                                                                      |   |              |       |   |              |   |   |   |
| Long-term debt                                                                                                |   |              | 350,000    |   |              |   | 990,359 |   |
| Long-term obligations under capital leases                                                                    |   |              | -          |   |              |   | 136,880 |   |
| Long-term real estate liabilities                                                                             |   |              | -          |   |              |   | 329,363 |   |
| Deferred real estate income                                                                                   |   |              | -          |   |              |   | 87,061 |   |
| Other financial liabilities                                                                                   |   |              | -          |   |              |   | 13,946 |   |
| Other non-current liabilities                                                                                 |   |              | 74,162     |   |              |   | 945,752 |   |
| Total liabilities not subject to compromise                                                                   |   |              | 767,780    |   |              |   | 3,233,206 |   |
| Liabilities subject to compromise (Refer to Note 10)                                                          |   |              | 2,874,734  |   |              |   | - |   |
| Total liabilities                                                                                             |   |              | 3,642,514  |   |              |   | 3,233,206 |   |
|                                                                                                          |   |              |       |   |              |   |   |   |
| Series A redeemable preferred stock – no par value, $1,000 redemption value; authorized – 700,000 |   |              |       |   |              |   |   |   |
| shares; issued – 179,020 and 175,000 at February 26, 2011 and February 27, 2010, respectively           |   |              | 143,299    |   |              |   | 132,757 |   |
|                                                                                                          |   |              |       |   |              |   |   |   |
| Commitments and contingencies  (Refer to Note 22)                                                   |   |              |       |   |              |   |   |   |
| Stockholders’ deficit:                                                                                  |   |              |       |   |              |   |   |   |
| Common stock – $1 par value; authorized – 160,000,000 shares; issued and outstanding –      |   |              |       |   |              |   |   |   |
| 53,852,470 and 55,868,129 shares at February 26, 2011 and February 27, 2010, respectively                     |   |              | 53,852     |   |              |   | 55,868 |   |
| Additional paid-in capital                                                                                    |   |              | 511,157    |   |              |   | 498,144 |   |
| Accumulated other comprehensive loss                                                                          |   |              | (75,309    | )      |              |   | (79,403 | ) |
| Accumulated deficit                                                                                           |   |              | (1,630,664 | )      |              |   | (1,003,812 | ) |
| Total stockholders’ deficit                                                                             |   |              | (1,140,964 | )      |              |   | (529,203 | ) |
| Total liabilities and stockholders’ deficit                                                             |   | $                 | 2,644,849  |   |              | $      | 2,836,760 |   |

----

|                                                                                              |   | Fiscal 2010 |     |    | Fiscal 2009 |   |     | Fiscal 2008 |   |
|---------------------------------------------------------------------------------------------------|--------|-------------|----------|---------|-------------|--------|----------|-------------|--------|
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                             |   |        |     |    |        |   |     |        |   |
| Net loss                                                                                          |   | $           | (598,575 | )       |        | $      | (876,498 | )           |   | $ | (171,612 | ) |
| Adjustments to reconcile net loss to net cash used in                                             |   |        |     |    |        |   |     |        |   |   |   |   |
|        operating activities (see next page)                    |   |        | 476,202  |    |        |   | 939,370  |        |   |   | 307,410 |   |
| Other changes in assets and liabilities, net of acquisitions:                                     |   |        |     |    |        |   |     |        |   |   |   |   |
|       (Increase) decrease in receivables                            |   |        | (34,280  | )       |        |   | 21,295   |        |   |   | (28,625 | ) |
|       Decrease in inventories                                       |   |        | 24,223   |    |        |   | 7,617    |        |   |   | 21,889 |   |
|       Increase in prepaid expenses and other current assets         |   |        | (3,911   | )       |        |   | (24,638  | )           |   |   | (8,081 | ) |
|       Increase in other assets                                      |   |        | (16,944  | )       |        |   | (11,968  | )           |   |   | (16,017 | ) |
|       Increase in accounts payable                                  |   |        | 90,757   |    |        |   | 6,189    |        |   |   | 5,850 |   |
|       Decrease in accrued salaries, wages and benefits, and taxes   |   |        | (41,736  | )       |        |   | (38,118  | )           |   |   | (21,177 | ) |
|       Increase (decrease) in other accruals                         |   |        | 67,761   |    |        |   | (2,919   | )           |   |   | (6,996 | ) |
|       Decrease in other non-current liabilities                     |   |        | (37,397  | )  |        |   | (61,701  | )           |   |   | (85,944 | ) |
|       Other operating activities, net                               |   |        | 369      |    |        |   | (546     | )           |   |   | 2,004 |   |
| Payments for reorganization items                                                                 |   |        | (7,439   | )       |        |   | -        |        |   |   | - |   |
| Net cash used in operating activities                                                             |   |        | (80,970  | )       |        |   | (41,917  | )           |   |   | (1,299 | ) |
|                                                                                              |   |        |     |    |        |   |     |        |   |   |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                             |   |        |     |    |        |   |     |        |   |   |   |   |
|       Expenditures for property                                     |   |        | (71,070  | )       |        |   | (86,378  | )           |   |   | (115,994 | ) |
|       Proceeds from disposal of property                            |   |        | 38,334   |    |        |   | 11,651   |        |   |   | 37,616 |   |
|       Proceeds from flood insurance                                 |   |        | 6,410    |    |        |   | -        |        |   |   | - |   |
|       Proceeds from sale of joint venture                           |   |        | -        |    |        |   | 5,914    |        |   |   | - |   |
|       Decrease in restricted cash                                   |   |        | 262      |    |        |   | 221      |        |   |   | 1,499 |   |
|       Proceeds from maturities of marketable securities             |   |        | -        |    |        |   | 5,626    |        |   |   | 12,349 |   |
| Net cash used in investing activities                                                             |   |        | (26,064  | )       |        |   | (62,966  | )           |   |   | (64,530 | ) |
|                                                                                              |   |        |     |    |        |   |     |        |   |   |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                             |   |        |     |    |        |   |     |        |   |   |   |   |
|       Proceeds from debtor-in-possession financing                  |   |        | 350,000  |    |        |   | -        |        |   |   | - |   |
|       Proceeds from issuance of long-term debt                      |   |        | 800      |    |        |   | 253,201  |        |   |   | - |   |
|       Principal payments on long-term debt                          |   |        | (225     | )       |        |   | (283     | )           |   |   | (274 | ) |
|       Proceeds under revolving lines of credit                      |   |        | 663,400  |    |        |   | 39,450   |        |   |   | 1,683,823 |   |
|       Principal payments on revolving lines of credit               |   |        | (796,300 | )       |        |   | (238,333 | )           |   |   | (1,521,940 | ) |
|       Proceeds under line of credit                                 |   |        | -        |    |        |   | 378      |        |   |   | 54,973 |   |
|       Principal payments on line of credit                          |   |        | -        |    |        |   | (5,378   | )           |   |   | (61,573 | ) |
|       Proceeds from issuance of preferred stock                     |   |        | -        |    |        |   | 175,000  |        |   |   | - |   |
|       Proceeds from promissory note                                 |   |        | -        |    |        |   | -        |        |   |   | 10,000 |   |
|       Settlement of Series A warrants                               |   |        | -        |    |        |   | -        |        |   |   | (45,735 | ) |
|       Proceeds from long-term real estate liabilities               |   |        | -        |    |        |   | 170      |        |   |   | 3,150 |   |
|       Principal payments on long-term real estate liabilities       |   |        | (1,156   | )       |        |   | (1,081   | )           |   |   | (1,147 | ) |
|       Proceeds from sale-leaseback transaction                      |   |        | 89,830   |    |        |   | 3,000    |        |   |   | - |   |
|       Principal payments on capital leases                          |   |        | (11,947  | )       |        |   | (11,198  | )           |   |   | (9,015 | ) |
|       (Decrease) increase in book overdrafts                        |   |        | (36,743  | )       |        |   | (370     | )           |   |   | 24,400 |   |
|       Payments of financing fees for debtor-in-possession financing |   |        | (34,771  | )       |        |   | -        |        |   |   | - |   |
|       Payment of financing fees for revolving line of credit        |   |        | (2,995   | )       |        |   | -        |        |   |   | - |   |
|       Deferred financing fees                                       |   |        | (2,206   | )       |        |   | (27,617  | )           |   |   | 1,674 |   |
|       Dividends paid on preferred stock                             |   |        | (10,500  | )       |        |   | (5,094   | )           |   |   | - |   |
|       Proceeds from exercises of stock options                      |   |        | 28       |    |        |   | 89       |        |   |   | 2,213 |   |
| Net cash provided by financing activities                                                         |   |        | 207,215  |    |        |   | 181,934  |        |   |   | 140,549 |   |
|       Effect of exchange rate changes on cash and                   |   |        |     |    |        |   |     |        |   |   |   |   |
|       cash equivalents                                              |   |        | -        |    |        |   | -        |        |   |   | (78 | ) |
| Net increase in cash and cash equivalents                                                         |   |        | 100,181  |    |        |   | 77,051   |        |   |   | 74,642 |   |
| Cash and cash equivalents at beginning of year                                                    |   |        | 252,426  |    |        |   | 175,375  |        |   |   | 100,733 |   |
| Cash and cash equivalents at end of year                                                          |   | $           | 352,607  |    |        | $      | 252,426  |        |   | $ | 175,375 |   |
|                                                                                              |   |        |     |    |        |   |     |        |   |   |   |   |
| SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                |   |        |     |    |        |   |     |        |   |   |   |   |
| Cash paid during the year for interest                                                            |   | $           | 129,677  |    |        | $      | 146,174  |        |   | $ | 131,286 |   |
| Cash paid during the year for income taxes                                                        |   | $           | 243      |    |        | $      | 6,789    |        |   | $ | 4,650 |   |

----

|                                                                          |   | Fiscal 2010 |     |   | Fiscal 2009 |   |    | Fiscal 2008 |   |
|-------------------------------------------------------------------------------|--------|-------------|----------|--------|-------------|--------|---------|-------------|--------|
| Depreciation and amortization                                                 |   | $           | 218,398  |   |        | $      | 245,460 |        |   | $ | 260,991 |   |
| Impairment of goodwill and trademark                                          |   |        | 12,700   |   |        |   | 411,945 |        |   |   | - |   |
| Impairment of long-lived assets                                               |   |        | 109,175  |   |        |   | 71,704  |        |   |   | 14,069 |   |
| Nonoperating (income)/loss                                                    |   |        | (13,777  | )      |        |   | 9,181   |        |   |   | (116,864 | ) |
| Non-cash interest expense                                                     |   |        | 29,305   |   |        |   | 43,032  |        |   |   | 26,651 |   |
| Stock compensation expense                                                    |   |        | 1,267    |   |        |   | 5,667   |        |   |   | 5,694 |   |
| Pension withdrawal costs                                                      |   |        | -        |   |        |   | 2,445   |        |   |   | 28,911 |   |
| Employee benefit related costs                                                |   |        | 16,289   |   |        |   | 18,219  |        |   |   | - |   |
| LIFO adjustment                                                               |   |        | 2,044    |   |        |   | (842    | )           |   |   | 7,817 |   |
| Self-insurance reserve                                                        |   |        | 106,680  |   |        |   | 53,452  |        |   |   | - |   |
| Provision for deferred income taxes                                           |   |        | (3,058   | )      |        |   | (15,985 | )           |   |   | - |   |
| Asset disposition initiatives in the normal course of business                |   |        | -        |   |        |   | (2,167  | )           |   |   | 5,898 |   |
| Asset disposition initiatives relating to discontinued operations             |   |        | 13,407   |   |        |   | 57,842  |        |   |   | 32,319 |   |
| Non-cash occupancy charges for stores closed in the normal course of business |   |        | 63,276   |   |        |   | 43,746  |        |   |   | 21,711 |   |
| (Gains)/losses on disposal of owned property and write-down of property, net  |   |        | (4,094   | )      |        |   | 153     |        |   |   | 1,086 |   |
| Amortization of deferred real estate income                                   |   |        | (4,992   | )      |        |   | (4,482  | )           |   |   | (4,497 | ) |
| Gain on disposal of discontinued operations                                   |   |        | (79      | )      |        |   | -       |        |   |   | (4,653 | ) |
| Adoption of accounting guidance for share lending agreements                  |   |        | -        |   |        |   | -       |        |   |   | 28,277 |   |
| Reorganization items, net relating to discontinued operations                 |   |        | (133,264 | )      |        |   | -       |        |   |   | - |   |
| Reorganization items, net relating to continuing operations                   |   |        | 21,985   |   |        |   | -       |        |   |   | - |   |
| Financing fees                                                                |   |        | 40,940   |   |        |   | -       |        |   |   | - |   |
| Total adjustments to net loss                                                 |   | $           | 476,202  |   |        | $      | 939,370 |        |   | $ | 307,410 |   |

----

----

----

----

----

----

----

|                                                        |   | Fresh  |    |   | Gourmet |   |   | Other  |   |   | Total  |   |
|-------------------------------------------------------------|--------|--------|---------|--------|---------|--------|--------|--------|--------|--------|--------|--------|
| Balance as of February 27, 2010:                            |   |   |    |   |    |   |   |   |   |   |   |   |
|      Goodwill                      |   | $      | 120,817 |   |    | $      | 12,110 |   |   | $      | 5,974  |   |   | $ | 138,901 |   |
|      Accumulated impairment losses |   |   | (23,704 | )      |    |   | -      |   |   |   | -      |   |   |   | (23,704 | ) |
|                                                        |   |   | 97,113  |   |    |   | 12,110 |   |   |   | 5,974  |   |   |   | 115,197 |   |
|                                                        |   |   |    |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Dispositions of Assets*                                     |   |   | (4,785  | )      |    |   | -      |   |   |   | -      |   |   |   | (4,785 | ) |
|                                                        |   |   |    |   |    |   |   |   |   |   |   |   |   |   |   |   |
| Balance as of February 26, 2011:                            |   |   |    |   |    |   |   |   |   |   |   |   |   |   |   |   |
|      Goodwill                      |   |   | 116,032 |   |    |   | 12,110 |   |   |   | 5,974  |   |   |   | 134,116 |   |
|      Accumulated impairment losses |   |   | (23,704 | )      |    |   | -      |   |   |   | -      |   |   |   | (23,704 | ) |
|                                                        |   | $      | 92,328  |   |    | $      | 12,110 |   |   | $      | 5,974  |   |   | $ | 110,412 |   |

| * | Relates to the sale of seven stores in Connecticut. Refer to Note 6 – Asset Disposition Initiatives. |
|---|------------------------------------------------------------------------------------------------------------|

----

|                                | At February 26, 2011 |   | At February 27, 2010      |
|-------------------------------------|----------------------|--------|---------------------------|
|                                | Weighted Avg.        |   |  Gross               |   |   |   |  Gross |   |   |
|                                | Amortization         |   | Carrying                  |   | Accumulated |   | Carrying |   | Accumulated |
|                                | Period (years)       |   | Amount                    |   | Amortization |   | Amount |   | Amortization |
| Loyalty card customer relationships |  5              |   |  $  19,200 |   |  $  11,815 |   |  $  19,200 |   |  $   7,595 |
| In-store advertiser relationships   |  20             |   |  14,720              |   |  2,378 |   |  14,720 |   |  1,642 |
| Pharmacy payor relationships        |  13             |   |  75,000              |   |  18,639 |   |  75,000 |   |  12,870 |
| Pathmark trademark                  |  Indefinite     |   |  48,200              |   |  - |   |  60,900 |   |  - |
| Total                               |                 |   |  $157,120            |   |  $  32,832 |   |  $169,820 |   |  $ 22,107 |

----

|             |   |           |    |   | Fair Value Measurements at Feb. 26, 2011 Using |                                           |
|------------------|--------|----------------|---------|--------|------------------------------------------------|------------------------------------------------|
|             |   |           |    |   | Quoted Prices                                  |                                           |   | Significant Other |   |   | Significant |   |
|             |   | Total Carrying |    |   | in Active                                      |                                           |   | Observable |   |   | Unobservable |   |
|             |   | Value at       |    |   | Markets                                        |                                           |   | Inputs |   |   | Inputs |   |
|             |   | Feb. 26, 2011  |    |   | (Level 1)                                      |                                           |   | (Level 2) |   |   | (Level 3) |   |
| Assets:          |   |           |    |   |                                           |                                           |   |   |   |   |   |   |
| Cash equivalents |   | $              | 1,553   |   |                                           | $                                              | - |   |   | $ | 1,553 |   |   | $ | - |   |
|             |   |           |    |   |                                           |                                           |   |   |   |   |   |   |   |   |   |   |
| Liabilities:     |   |           |    |   |                                           |                                           |   |   |   |   |   |   |   |   |   |   |
| Series B Warrant |   | $              | 170     |   |                                           | $                                              | - |   |   | $ | 170 |   |   | $ | - |   |
|             |   |           |    |   |                                           |                                           |   |   |   |   |   |   |   |   |   |   |
|             |   |           |    |   |                                           | Fair Value Measurements at Feb. 27, 2010 Using |   |
|             |   |           |    |   |                                           | Quoted Prices                                  |   |   | Significant Other |   |   | Significant |   |
|             |   | Total Carrying |    |   | in Active                                      |                                           |   | Observable |   |   | Unobservable |   |
|             |   | Value at       |    |   | Markets                                        |                                           |   | Inputs |   |   | Inputs |   |
|             |   | Feb. 27, 2010  |    |   | (Level 1)                                      |                                           |   | (Level 2) |   |   | (Level 3) |   |
| Assets:          |   |           |    |   |                                           |                                           |   |   |   |   |   |   |   |   |   |   |
| Cash equivalents |   | $              | 158,695 |   |                                           | $                                              | - |   |   | $ | 158,695 |   |   | $ | - |   |
|             |   |           |    |   |                                           |                                           |   |   |   |   |   |   |   |   |   |   |
| Liabilities:     |   |           |    |   |                                           |                                           |   |   |   |   |   |   |   |   |   |   |
| Series B Warrant |   | $              | 13,946  |   |                                           | $                                              | - |   |   | $ | 13,946 |   |   | $ | - |   |

----

|                                    |   | As of February 26, 2011 |      |   | As of February 27, 2010 |   |
|-----------------------------------------|--------|-------------------------|-----------|--------|-------------------------|--------|
|                                    |   | Carrying Amount         |      |   | FairValue               |   |   | Carrying Amount |   |   | FairValue |   |
| Current portion of long-term debt       |   | $                       | 159       |   |                    | $      | 159 |   |   | $ | 191 |   |   | $ | 191 |   |
| Long-term debt, net of related discount |   |                    | 1,255,225 |   |                    |   | 765,577 |   |   |   | 990,359 |   |   |   | 962,040 |   |

----

|                        |   | Fiscal 2010 |    |   | Fiscal 2009 |   |   | Fiscal 2008 |   |
|-----------------------------|--------|-------------|---------|--------|-------------|--------|--------|-------------|--------|
|                        |   | CO(1)       |    |   | DO(1)       |   |   | Total       |   |   | CO(1) |   |   | DO(1) |   |   | Total |   |   | CO(1) |   |   | DO(1) |   |   | Total |   |
| Impairments due to closure/ |   |        |    |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| conversion in the normal    |   |        |    |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| course of business (2)      |   | $           | 7,166   |   |        | $      | 526    |        |   | $ | 7,692 |   |   | $ | 6,469 |   |   | $ | - |   |   | $ | 6,469 |   |   | $ | 14,069 |   |   | $ | - |   |   | $ | 14,069 |   |
| Impairments due to store    |   |        |    |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| closures                    |   |        | 56,165  |   |        |   | -      |        |   |   | 56,165 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Impairments due to          |   |        |    |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  unrecoverable assets  |   |        | 45,318  |   |        |   | -      |        |   |   | 45,318 |   |   |   | 65 ,235 |   |   |   | - |   |   |   | 65,235 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Subtotal                    |   |        | 108,649 |   |        |   | 526    |        |   |   | 109,175 |   |   |   | 71,704 |   |   |   | - |   |   |   | 71,704 |   |   |   | 14,069 |   |   |   | - |   |   |   | 14,069 |   |
| Less amounts subject        |   |        |    |   |        |   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| to compromise               |   |        | -       |   |        |   | -      |        |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Total                       |   | $           | 108,649 |   |        | $      | 526    |        |   | $ | 109,175 |   |   | $ | 71,704 |   |   | $ | - |   |   | $ | 71,704 |   |   | $ | 14,069 |   |   | $ | - |   |   | $ | 14,069 |   |

|  (1) | The headings in the tables included above have been indexed with the following abbreviations: Continuing Operations (CO) and Discontinued Operations (DO). |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2) | We review assets in stores planned for closure or conversion in the normal course of business for impairment upon determination that such assets will not be used for their intended useful lives.  Impairment losses on the related property and equipment are recorded within “Store operating, general and administrative expense” in our Consolidated Statements of Operations. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                           |   | Fiscal 2010 |    |    | Fiscal 2009 |   |    | Fiscal 2008 |   |
|----------------------------------------------------------------|--------|-------------|---------|---------|-------------|--------|---------|-------------|--------|
|                                                           |   |        |    |    |        |   |    |        |   |
| Loss from operations of discontinued businesses                |   |        |    |    |        |   |    |        |   |
| Sales                                                          |   | $           | -       |    |        | $      | -       |        |   | $ | - |   |
|                                                           |   |        |    |    |        |   |    |        |   |   |   |   |
| Loss from operations of discontinued businesses, before tax    |   |        | (57,992 | )  |        |   | (95,848 | )           |   |   | (58,383 | ) |
| Tax benefit                                                    |   |        | -       |    |        |   | -       |        |   |   | - |   |
| Loss from operations of discontinued businesses, net of tax    |   | $           | (57,992 | )       |        | $      | (95,848 | )           |   | $ | (58,383 | ) |
|                                                           |   |        |    |    |        |   |    |        |   |   |   |   |
| (Loss) Gain on disposal of discontinued businesses             |   |        |    |    |        |   |    |        |   |   |   |   |
| Property impairments                                           |   | $           | (526    | )       |        | $      | -       |        |   | $ | - |   |
| Gain on sale of fixed assets                                   |   |        | 79      |    |        |   | -       |        |   |   | 4,653 |   |
| (Loss) Gain on disposal of discontinued operations, before tax |   |        | (447    | )       |        |   | -       |        |   |   | 4,653 |   |
| Tax benefit                                                    |   |        | -       |    |        |   | -       |        |   |   | - |   |
| (Loss) Gain on disposal of discontinued operations, net of tax |   | $           | (447    | )       |        | $      | -       |        |   | $ | 4,653 |   |
|                                                           |   |        |    |    |        |   |    |        |   |   |   |   |
| Reorganization items                                           |   |        |    |    |        |   |    |        |   |   |   |   |
| Reorganization items                                           |   | $           | 133,264 |    |        | $      | -       |        |   | $ | - |   |
| Provision for income taxes                                     |   |        | -       |    |        |   | -       |        |   |   | - |   |
| Reorganization items                                           |   | $           | 133,264 |    |        | $      | -       |        |   | $ | - |   |

----

|                                                  |   | Fiscal 2010 |    |
|-------------------------------------------------------|--------|-------------|---------|
|                                                  |   | Balance at  |    |   | Interest |   |   |   |   |   |   |   |   | Balance at |   |
|                                                  |   | 2/27/2010   |    |   | Accretion (1) |   |   | Adjustments(2) |   |   | Utilization(3) |   |   | 2/26/2011 |   |
| 2007 Events                                           |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                             |   | $           | 96,909  |   |   | $ | 6,176 |   |   | $ | (42,208 | ) |   | $ | (11,560 | ) |   | $ | 49,317 |   |
| Pension withdrawal                                    |   |        | 58,015  |   |   |   | 3,568 |   |   |   | - |   |   |   | (4,002 | ) |   |   | 57,581 |   |
|      2007 events total       |   |        | 154,924 |   |   |   | 9,744 |   |   |   | (42,208 | ) |   |   | (15,562 | ) |   |   | 106,898 |   |
|                                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2005 Event                                            |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                             |   |        | 58,974  |   |   |   | 2,552 |   |   |   | (36,481 | ) |   |   | (3,655 | ) |   |   | 21,390 |   |
|                                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2003 Events                                           |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                             |   |        | 22,494  |   |   |   | 1,098 |   |   |   | (13,804 | ) |   |   | (1,337 | ) |   |   | 8,451 |   |
|      Fiscal 2010 total       |   | $           | 236,392 |   |   | $ | 13,394 |   |   | $ | (92,493 | ) |   | $ | (20,554 | ) |   | $ | 136,739 |   |
|                                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   | Fiscal 2009 |    |
|                                                  |   | Balance at  |    |   | Interest |   |   |   |   |   |   |   |   |   |   | Balance at |   |
|                                                  |   | 2/28/2009   |    |   | Accretion (1) |   |   | Adjustments(2) |   |   | Utilization(3) |   |   | 2/27/2010 |   |
| 2007 Events                                           |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                             |   | $           | 70,583  |   |   | $ | 8,974 |   |   | $ | 46,075 |   |   | $ | (28,723 | ) |   | $ | 96,909 |   |
| Pension withdrawal                                    |   |        | 59,239  |   |   |   | 3,674 |   |   |   | 37 |   |   |   | (4,935 | ) |   |   | 58,015 |   |
|      2007 events total       |   |        | 129,822 |   |   |   | 12,648 |   |   |   | 46,112 |   |   |   | (33,658 | ) |   |   | 154,924 |   |
|                                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2005 Event                                            |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                             |   |        | 60,327  |   |   |   | 3,291 |   |   |   | 5,916 |   |   |   | (10,560 | ) |   |   | 58,974 |   |
|                                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2003 Events                                           |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                             |   |        | 18,712  |   |   |   | 1,194 |   |   |   | 5,814 |   |   |   | (3,226 | ) |   |   | 22,494 |   |
|      Fiscal 2009 total       |   | $           | 208,861 |   |   | $ | 17,133 |   |   | $ | 57,842 |   |   | $ | (47,444 | ) |   | $ | 236,392 |   |
|                                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                  |   | Fiscal 2008 |    |
|                                                  |   | Balance at  |    |   | Interest |   |   |   |   |   |   |   |   |   |   | Balance at |   |
|                                                  |   | 2/23/2008   |    |   | Accretion (1) |   |   | Adjustments(2) |   |   | Utilization(3) |   |   | 2/28/2009 |   |
| 2007 Events                                           |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                             |   | $           | 62,873  |   |   | $ | 9,382 |   |   | $ | 28,959 |   |   | $ | (30,631 | ) |   | $ | 70,583 |   |
| Severance and pension withdrawal                      |   |        | 58,520  |   |   |   | 2,019 |   |   |   | 3,730 |   |   |   | (5,030 | ) |   |   | 59,239 |   |
|       2007 events total |   |        | 121,393 |   |   |   | 11,401 |   |   |   | 32,689 |   |   |   | (35,661 | ) |   |   | 129,822 |   |
|                                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2005 Event                                            |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                             |   |        | 66,882  |   |   |   | 3,324 |   |   |   | 600 |   |   |   | (10,479 | ) |   |   | 60,327 |   |
|                                                  |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2003 Events                                           |   |        |    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                                             |   |        | 21,579  |   |   |   | 1,230 |   |   |   | (902 | ) |   |   | (3,195 | ) |   |   | 18,712 |   |
|       Fiscal 2008 total |   | $           | 209,854 |   |   | $ | 15,955 |   |   | $ | 32,387 |   |   | $ | (49,335 | ) |   | $ | 208,861 |   |

|   | (1) | The additions to occupancy and severance represents the interest accretion on future occupancy costs and future obligations for early withdrawal from multi-employer union pension plans which were recorded at present value at the time of the original charge.   Interest accretion is recorded as a component of “Loss from operations of discontinued businesses” on the Consolidated Statements of Operations. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (2) | At each balance sheet date, we assess the adequacy of the balance of the remaining liability to determine if any adjustments are required as a result of changes in circumstances and/or estimates.   Adjustments are recorded as a component of “Loss from operations of discontinued businesses” on the Consolidated Statements of Operations. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fiscal 2010 |
|--------|-------------|

|   | During fiscal 2010, we recorded adjustments for the 2007, 2005, and 2003 events to reduce occupancy liabilities by $42.2 million, $36.5 million and $13.8 million, respectively, primarily due to an estimated allowable claim amount for property leases that were rejected in bankruptcy court during the fourth quarter. |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fiscal 2009 |
|--------|-------------|

|   | The charge to occupancy for the 2007, 2005 and 2003 events represents adjustments for additional occupancy related costs of $46.1 million, $5.9 million and $5.8 million, respectively, due to changes in our estimation of such future costs due to the continuing deteriorating economic conditions in the Midwest real estate market including the recent bankruptcies in the auto industry.  We now expect our occupancy costs to be higher as the current economic conditions affecting the Midwest real estate market are expected to persist for some time and subleased properties in the area have been occurring at heavily discounted rates as compared to the related contractual agreements. |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | Fiscal 2008 |
|--------|-------------|

|   | The charge to occupancy for the 2007 and 2005 events represents adjustments for additional occupancy related costs for our properties of $29.0 million and $0.6 million, respectively, due to changes in our estimation of such future costs due to continuing deteriorating conditions in the Midwest real estate market.  The charge to severance for the 2007 events represents an adjustment of $3.7 million for future obligations for early withdrawal from multi-employer union pension plans.  We also recorded an adjustment of $0.9 million to reduce occupancy related costs for the 2003 events due to changes in our estimation of such future costs. |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Occupancy utilization represents payments made during those periods for rent.  Severance utilization represents payments made to terminated employees during the period. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                                                |   | 2007   |    |   | 2005   |   |   | 2003   |   |   |   |   |
|-------------------------------------------------------------------------------------|--------|--------|---------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
|                                                                                |   | Events |    |   | Event  |   |   | Event  |   |   | Total  |   |
| Total severance payments made to date                                               |   | $      | 37,089  |   |   | $      | 2,650  |   |   | $      | 22,528 |   |   | $ | 62,267 |   |
| Expected future pension withdrawal payments                                         |   |   | 57,581  |   |   |   | -      |   |   |   | -      |   |   |   | 57,581 |   |
|       Total severance and pension withdrawal payments |   | $      | 94,670  |   |   | $      | 2,650  |   |   | $      | 22,528 |   |   | $ | 119,848 |   |
| expected to be incurred                                                             |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total occupancy payments made to date                                               |   | $      | 92,140  |   |   | $      | 60,866 |   |   | $      | 34,084 |   |   | $ | 187,090 |   |
| Expected future occupancy payments,                                                 |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| excluding interest accretion                                                        |   |   | 49,317  |   |   |   | 21,390 |   |   |   | 8,451  |   |   |   | 79,158 |   |
| Total occupancy payments expected to be incurred,                                   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| excluding interest accretion                                                        |   | $      | 141,457 |   |   | $      | 82,256 |   |   | $      | 42,535 |   |   | $ | 266,248 |   |
|                                                                                |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total severance and occupancy payments made to date                                 |   | $      | 129,229 |   |   | $      | 63,516 |   |   | $      | 56,612 |   |   | $ | 249,357 |   |
| Expected future pension withdrawal and occupancy payments                           |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| expected to be incurred, excluding interest accretion                               |   |   | 106,898 |   |   |   | 21,390 |   |   |   | 8,451  |   |   |   | 136,739 |   |
| Total severance, pension withdrawal and occupancy payments                          |   |   |    |   |   |   |   |   |   |   |   |   |   |
| expected to be incurred, excluding interest accretion                               |   | $      | 236,127 |   |   | $      | 84,906 |   |   | $      | 65,063 |   |   | $ | 386,096 |   |

|                              |   | February 26, 2011 |    |
|-----------------------------------|--------|-------------------|---------|
|                              |   | 2007              |    |   | 2005 |   |   | 2003 |   |   |   |   |
|                              |   | Events            |    |   | Event |   |   | Event |   |   | Total |   |
| Other accruals                    |   | $                 | -       |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Other non-current liabilities     |   | $                 | -       |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Liabilities Subject to compromise |   | $                 | 106,898 |   |   | $ | 21,390 |   |   | $ | 8,451 |   |   | $ | 136,739 |   |
|                              |   |              |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | February 27, 2010 |    |
|                              |   |              | 2007    |   |   |   | 2005 |   |   |   | 2003 |   |   |   |   |   |
|                              |   |   Events     |    |   |   Event |   |   |   Event |   |   |   Total |   |
| Other accruals                    |   | $                 | 28,528  |   |   | $ | 10,773 |   |   | $ | 3,490 |   |   | $ | 42,791 |   |
| Other non-current liabilities     |   | $                 | 126,396 |   |   | $ | 48,201 |   |   | $ | 19,004 |   |   | $ | 193,601 |   |

----

|                                    |   | Fiscal 2010 |   |
|-----------------------------------------|--------|-------------|--------|
|                                    |   | Balance at  |   |   | Interest |   |   |   |   |   |   |   |   | Balance at |   |
|                                    |   | 2/27/2010   |   |   | Accretion (1) |   |   | Adjustments(2) |   |   | Utilization(3) |   |   | 2/26/2011 |   |
| 2010 Event                              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations                   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                               |   | $           | -      |   |   | $ | 356 |   |   | $ | 29,786 |   |   | $ | (789 | ) |   | $ | 29,353 |   |
| Health benefits                         |   |        | -      |   |   |   | - |   |   |   | 772 |   |   |   | (533 | ) |   |   | 239 |   |
| 2010 event total                        |   |        | -      |   |   |   | 356 |   |   |   | 30,558 |   |   |   | (1,322 | ) |   |   | 29,592 |   |
|                                    |   |        |   |   |   |   |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2005 Event                              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations                   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Health benefits                         |   |        | 687    |   |   |   | - |   |   |   | - |   |   |   | (242 | ) |   |   | 445 |   |
| 2005 event total                        |   |        | 687    |   |   |   | - |   |   |   | - |   |   |   | (242 | ) |   |   | 445 |   |
|                                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2001 Event                              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations                   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                               |   |        | 6,324  |   |   |   | 308 |   |   |   | (4,126 | ) |   |   | (379 | ) |   |   | 2,127 |   |
|                                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued Operations                 |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                               |   |        | 10,009 |   |   |   | 435 |   |   |   | (7,548 | ) |   |   | (1,122 | ) |   |   | 1,774 |   |
| 2001 event total                        |   |        | 16,333 |   |   |   | 743 |   |   |   | (11,674 | ) |   |   | (1,501 | ) |   |   | 3,901 |   |
|                                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1998 Event                              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations                   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                               |   |        | 4,098  |   |   |   | 69 |   |   |   | - |   |   |   | (767 | ) |   |   | 3,400 |   |
| Pension withdrawals and health benefits |   |        | 666    |   |   |   | - |   |   |   | - |   |   |   | (142 | ) |   |   | 524 |   |
|                                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued Operations                 |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy                               |   |        | 13     |   |   |   | - |   |   |   | - |   |   |   | (13 | ) |   |   | - |   |
| 1998 event total                        |   |        | 4,777  |   |   |   | 69 |   |   |   | - |   |   |   | (922 | ) |   |   | 3,924 |   |
|                                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal 2010 total                       |   | $           | 21,797 |   |   | $ | 1,168 |   |   | $ | 18,884 |   |   | $ | (3,987 | ) |   | $ | 37,862 |   |

----

|                    |   | Fiscal 2009 |   |
|-------------------------|--------|-------------|--------|
|                    |   | Balance at  |   |   | Interest |   |   |   |   |   |   |   |   | Balance at |   |
|                    |   | 2/28/2009   |   |   | Accretion (1) |   |   | Adjustments(2) |   |   | Utilization(3) |   |   | 2/27/2010 |   |
| 2005 Event              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   | $           | 1,114  |   |   | $ | 11 |   |   | $ | (1,120 | ) |   | $ | (5 | ) |   | $ | - |   |
| Health benefits         |   |        | 904    |   |   |   | - |   |   |   | 63 |   |   |   | (280 | ) |   |   | 687 |   |
| 2005 event total        |   |        | 2,018  |   |   |   | 11 |   |   |   | (1,057 | ) |   |   | (285 | ) |   |   | 687 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2001 Event              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   |        | 7,080  |   |   |   | 452 |   |   |   | 284 |   |   |   | (1,492 | ) |   |   | 6,324 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued Operations |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   |        | 11,307 |   |   |   | 618 |   |   |   | 4 |   |   |   | (1,920 | ) |   |   | 10,009 |   |
| 2001 event total        |   |        | 18,387 |   |   |   | 1,070 |   |   |   | 288 |   |   |   | (3,412 | ) |   |   | 16,333 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1998 Event              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   |        | 8,696  |   |   |   | 221 |   |   |   | (1,398 | ) |   |   | (3,421 | ) |   |   | 4,098 |   |
| Health benefits         |   |        | 824    |   |   |   | - |   |   |   | - |   |   |   | (158 | ) |   |   | 666 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued Operations |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   |        | 543    |   |   |   | 16 |   |   |   | - |   |   |   | (546 | ) |   |   | 13 |   |
| 1998 event total        |   |        | 10,063 |   |   |   | 237 |   |   |   | (1,398 | ) |   |   | (4,125 | ) |   |   | 4,777 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal 2009 total       |   | $           | 30,468 |   |   | $ | 1,318 |   |   | $ | (2,167 | ) |   | $ | (7,822 | ) |   | $ | 21,797 |   |

|                    |   | Fiscal 2008 |   |
|-------------------------|--------|-------------|--------|
|                    |   | Balance at  |   |   | Interest |   |   |   |   |   |   |   |   | Balance at |   |
|                    |   | 2/23/2008   |   |   | Accretion (1) |   |   | Adjustments(2) |   |   | Utilization(3) |   |   | 2/28/2009 |   |
| 2005 Event              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   | $           | 1,231  |   |   | $ | 48 |   |   | $ | (91 | ) |   | $ | (74 | ) |   | $ | 1,114 |   |
| Health benefits         |   |        | 1,686  |   |   |   | - |   |   |   | - |   |   |   | (782 | ) |   |   | 904 |   |
| 2005 event total        |   |        | 2,917  |   |   |   | 48 |   |   |   | (91 | ) |   |   | (856 | ) |   |   | 2,018 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 2001 Event              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   |        | 6,755  |   |   |   | 385 |   |   |   | 1,794 |   |   |   | (1,854 | ) |   |   | 7,080 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued Operations |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   |        | 12,281 |   |   |   | 688 |   |   |   | (166 | ) |   |   | (1,496 | ) |   |   | 11,307 |   |
| 2001 event total        |   |        | 19,036 |   |   |   | 1,073 |   |   |   | 1,628 |   |   |   | (3,350 | ) |   |   | 18,387 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| 1998 Event              |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Continuing Operations   |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   |        | 6,958  |   |   |   | 316 |   |   |   | 4,111 |   |   |   | (2,689 | ) |   |   | 8,696 |   |
| Health benefits         |   |        | 1,000  |   |   |   | - |   |   |   | - |   |   |   | (176 | ) |   |   | 824 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discontinued Operations |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Occupancy               |   |        | 1,093  |   |   |   | 49 |   |   |   | (8 | ) |   |   | (591 | ) |   |   | 543 |   |
| 1998 event total        |   |        | 9,051  |   |   |   | 365 |   |   |   | 4,103 |   |   |   | (3,456 | ) |   |   | 10,063 |   |
|                    |   |        |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fiscal 2008 total       |   | $           | 31,004 |   |   | $ | 1,486 |   |   | $ | 5,640 |   |   | $ | (7,662 | ) |   | $ | 30,468 |   |

| (1)   | Represents the interest accretion on future occupancy costs which were recorded at present value at the time of the original charge.   These adjustments are recorded in “Store operating, general and administrative expense” for continuing operations and “Gain (loss) from operations of discontinued businesses” for discontinued businesses on our Consolidated Statements of Operations. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | At each balance sheet date, we assess the adequacy of the balance to determine if any adjustments are required as a result of changes in circumstances and/or estimates.   These adjustments are recorded in “Store operating, general and administrative expense” for continuing operations and “Gain (loss) from operations of discontinued businesses” as noted for discontinued operations on our Consolidated Statements of Operations. |
|-----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (3) | Occupancy utilization represents payments made during those periods for rent.  Severance and benefits utilization represents payments made to terminated employees during the period. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                                                         |   | 2010   |   |   | 2005   |   |   | 2001   |   |   | 1998   |   |   |   |    |
|------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|--------|---------|
|                                                                         |   | Event  |   |   | Event  |   |   | Event  |   |   | Event  |   |   | Total  |    |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |
| Total severance payments made to date                                        |   | $      | 533    |   |   | $      | 49,237 |   |   | $      | 28,205 |   |   | $      | 30,940  |   |   | $ | 108,915 |   |
| Expected future severance payments                                           |   |   | 239    |   |   |   | 445    |   |   |   | -      |   |   |   | 524     |   |   |   | 1,208 |   |
| Total severance payments expected                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
|        to be incurred                     |   | $      | 772    |   |   | $      | 49,682 |   |   | $      | 28,205 |   |   | $      | 31,464  |   |   | $ | 110,123 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Total occupancy payments made to date                                        |   | $      | 789    |   |   | $      | 13,856 |   |   | $      | 67,283 |   |   | $      | 119,972 |   |   | $ | 201,900 |   |
| Expected future occupancy payments,                                          |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
|        excluding interest accretion       |   |   | 29,353 |   |   |   | -      |   |   |   | 3,901  |   |   |   | 3,400   |   |   |   | 36,654 |   |
| Total occupancy payments expected                                            |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
|        to be incurred, excluding interest |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
|        accretion                          |   | $      | 30,142 |   |   | $      | 13,856 |   |   | $      | 71,184 |   |   | $      | 123,372 |   |   | $ | 238,554 |   |
|                                                                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
| Total severance and occupancy                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
|        payments made to date              |   | $      | 1,322  |   |   | $      | 63,093 |   |   | $      | 95,488 |   |   | $      | 150,912 |   |   | $ | 310,815 |   |
| Expected future severance and                                                |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
|        occupancy payments, excluding      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
|        interest accretion                 |   |   | 29,592 |   |   |   | 445    |   |   |   | 3,901  |   |   |   | 3,924   |   |   |   | 37,862 |   |
| Total severance and occupancy payments                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
|       expected to be incurred, excluding       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |    |   |   |   |   |   |
|       interest accretion                       |   | $      | 30,914 |   |   | $      | 63,538 |   |   | $      | 99,389 |   |   | $      | 154,836 |   |   | $ | 348,677 |   |

|                              |   |              |                                     |   | February 26, 2011 |   |
|-----------------------------------|--------|-------------------|------------------------------------------|--------|-------------------|--------|
|                              |   | 2010              |                                     |   | 2005              |   |   | 2001 |   |   | 1998 |   |   |   |   |
|                              |   | Event             |                                     |   | Event             |   |   | Event |   |   | Event |   |   | Total |   |
| Other accruals                    |   | $                 | -                                        |   |              | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Other non-current liabilities     |   | $                 | -                                        |   |              | $      | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |
| Liabilities subject to compromise |   | $                 | 29,592                                   |   |              | $      | 445 |   |   | $ | 3,901 |   |   | $ | 3,924 |   |   | $ | 37,862 |   |
|                              |   |              |                                     |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   |              |                                     |   |              |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                              |   | February 27, 2010 |                                     |   |              |   |   |
|                              |   |              |       2005 |   |              |   |       2001 |   |   |   |       1998 |   |   |   |   |   |   |   |   |   |
|                              |   | Event             |                                     |   | Event             |   |   | Event |   |   | Total |   |   |   |   |   |
| Other accruals                    |   | $                 | 336                                      |   |              | $      | 2,992 |   |   | $ | 2,235 |   |   | $ | 5,563 |   |   |   |   |   |
| Other non-current liabilities     |   | $                 | 351                                      |   |              | $      | 13,341 |   |   | $ | 2,542 |   |   | $ | 16,234 |   |   |   |   |   |

----

|                                             |   | AtFeb. 26, 2011                                         |    |   | At Feb. 27, 2010                             |   |
|--------------------------------------------------|--------|---------------------------------------------------------|---------|--------|----------------------------------------------|--------|
|                                             |   | Other AccrualsPrior toFinancial StatementClassification |    |   | AmountsClassified as Subject toCompromise(1) |   |   | OtherAccruals |   |   | OtherAccruals |   |
| Self-insurance reserves                          |   | $                                                       | 47,792  |   |                                         | $      | (45,466 | ) |   | $ | 2,326 |   |   | $ | 74,221 |   |
| Deferred taxes                                   |   |                                                    | 28,335  |   |                                         |   | - |   |   |   | 28,335 |   |   |   | 3,295 |   |
| Closed store and warehouse reserves              |   |                                                    | 118,000 |   |                                         |   | (118,000 | ) |   |   | - |   |   |   | 62,189 |   |
| Pension withdrawal liabilities                   |   |                                                    | 10,461  |   |                                         |   | (10,461 | ) |   |   | - |   |   |   | 10,461 |   |
| GHI contractual liability for employee benefits  |   |                                                    | 7,776   |   |                                         |   | (7,776 | ) |   |   | - |   |   |   | 8,066 |   |
| Accrued occupancy related costs for open stores  |   |                                                    | 48,742  |   |                                         |   | (24,523 | ) |   |   | 24,219 |   |   |   | 26,952 |   |
| Deferred income                                  |   |                                                    | 23,299  |   |                                         |   | (21,363 | ) |   |   | 1,936 |   |   |   | 26,534 |   |
| Deferred real estate income                      |   |                                                    | 2,508   |   |                                         |   | (2,508 | ) |   |   | - |   |   |   | 2,775 |   |
| Accrued audit, legal and other                   |   |                                                    | 11,777  |   |                                         |   | (8,118 | ) |   |   | 3,659 |   |   |   | 8,758 |   |
| Accrued interest                                 |   |                                                    | 35,600  |   |                                         |   | (33,921 | ) |   |   | 1,679 |   |   |   | 12,509 |   |
| Other postretirement and postemployment benefits |   |                                                    | 2,918   |   |                                         |   | (2,918 | ) |   |   | - |   |   |   | 2,674 |   |
| Accrued advertising                              |   |                                                    | 718     |   |                                         |   | - |   |   |   | 718 |   |   |   | 1,911 |   |
| Dividends payable on preferred stock             |   |                                                    | -       |   |                                         |   | - |   |   |   | - |   |   |   | 2,982 |   |
| Other                                            |   |                                                    | 10,181  |   |                                         |   | (8,005 | ) |   |   | 2,176 |   |   |   | 3,189 |   |
| Total                                            |   | $                                                       | 348,107 |   |                                         | $      | (283,059 | ) |   | $ | 65,048 |   |   | $ | 246,516 |   |

----

|                                             |   | At                                                 |    |   | At                             |   |
|--------------------------------------------------|--------|----------------------------------------------------|---------|--------|--------------------------------|--------|
|                                             |   | Feb. 26, 2011                                      |    |   | Feb. 27, 2010                  |   |
|                                             |   | Non-CurrentLiabilities Prior toFinancial Statement |    |   | AmountsClassified asSubject to |   |   | Other Non-Current |   |   | Other Non-Current |   |
|                                             |   | Classification                                     |    |   | Compromise(1)                  |   |   | Liabilities |   |   | Liabilities |   |
| Deferred taxes                                   |   | $                                                  | -       |   |                           | $      | - |   |   | $ | - |   |   | $ | 11,367 |   |
| Self-insurance reserves                          |   |                                               | 366,891 |   |                           |   | (354,704 | ) |   |   | 12,187 |   |   |   | 217,962 |   |
| Closed store and warehouse reserves              |   |                                               | 39,192  |   |                           |   | (39,192 | ) |   |   | - |   |   |   | 187,911 |   |
| Pension withdrawal liabilities                   |   |                                               | 86,735  |   |                           |   | (86,735 | ) |   |   | - |   |   |   | 89,495 |   |
| GHI contractual liability for employee benefits  |   |                                               | 86,505  |   |                           |   | (86,505 | ) |   |   | - |   |   |   | 87,703 |   |
| Pension plan benefits                            |   |                                               | 125,000 |   |                           |   | (125,000 | ) |   |   | - |   |   |   | 109,549 |   |
| Other postretirement and postemployment benefits |   |                                               | 38,737  |   |                           |   | (38,737 | ) |   |   | - |   |   |   | 36,091 |   |
| Loans on life insurance policies                 |   |                                               | 61,943  |   |                           |   | - |   |   |   | 61,943 |   |   |   | 60,436 |   |
| Deferred rent liabilities                        |   |                                               | 56,287  |   |                           |   | (56,287 | ) |   |   | - |   |   |   | 57,963 |   |
| Deferred income                                  |   |                                               | 53,031  |   |                           |   | (53,031 | ) |   |   | - |   |   |   | 68,250 |   |
| Unfavorable lease liabilities                    |   |                                               | 4,201   |   |                           |   | (4,201 | ) |   |   | - |   |   |   | 5,391 |   |
| Other                                            |   |                                               | 11,348  |   |                           |   | (11,316 | ) |   |   | 32 |   |   |   | 13,634 |   |
| Total                                            |   | $                                                  | 929,870 |   |                           | $      | (855,708 | ) |   | $ | 74,162 |   |   | $ | 945,752 |   |

|                                                     |   | At                     |      |   | At                       |   |
|----------------------------------------------------------|--------|------------------------|-----------|--------|--------------------------|--------|
|                                                     |   | Feb. 26, 2011          |      |   | Feb. 27, 2010            |   |
|                                                     |   | Indebtedness and       |      |   |                     |   |   |   |   |   |   |   |
|                                                     |   | Other Financial        |      |   |                     |   |   |   |   |   |   |   |
|                                                     |   | Liabilities Prior      |      |   | Amounts                  |   |   | Indebtedness |   |   | Indebtedness |   |
|                                                     |   | to Financial Statement |      |   | Classified as Subject to |   |   | and Other Financial |   |   | and Other Financial |   |
|                                                     |   | Classification         |      |   | Compromise(1)            |   |   | Liabilities |   |   | Liabilities |   |
| Debtor-in-Possession Credit Agreement, due June 14, 2012 |   | $                      | 350,000   |   |                     | $      | - |   |   | $ | 350,000 |   |   | $ | - |   |
| Related Party Promissory Note, due August 18, 2011       |   |                   | 10,000    |   |                     |   | (10,000 | ) |   |   | - |   |   |   | 10,000 |   |
| 5.125% Convertible Senior Notes, due June 15, 2011       |   |                   | 165,000   |   |                     |   | (165,000 | ) |   |   | - |   |   |   | 155,333 |   |
| 9.125% Senior Notes, due December 15, 2011               |   |                   | 12,840    |   |                     |   | (12,840 | ) |   |   | - |   |   |   | 12,840 |   |
| 6.750% Convertible Senior Notes, due December 15, 2012   |   |                   | 255,000   |   |                     |   | (255,000 | ) |   |   | - |   |   |   | 223,838 |   |
| 11.375% Senior Secured Notes, due August 4, 2015         |   |                   | 260,000   |   |                     |   | (260,000 | ) |   |   | - |   |   |   | 253,668 |   |
| 9.375% Notes, due August 1, 2039                         |   |                   | 200,000   |   |                     |   | (200,000 | ) |   |   | - |   |   |   | 200,000 |   |
| Borrowings under Credit Agreement                        |   |                   | -         |   |                     |   | - |   |   |   | - |   |   |   | 132,900 |   |
| Other                                                    |   |                   | 2,544     |   |                     |   | (2,544 | ) |   |   | - |   |   |   | 1,971 |   |
| Subtotal                                                 |   |                   | 1,255,384 |   |                     |   | (905,384 | ) |   |   | 350,000 |   |   |   | 990,550 |   |
| Less current portion of long-term debt                   |   |                   | (159      | )      |                     |   | 159 |   |   |   | - |   |   |   | (191 | ) |
| Long-term debt                                           |   | $                      | 1,255,225 |   |                     | $      | (905,225 | ) |   | $ | 350,000 |   |   | $ | 990,359 |   |

----

|   | ● |   | the DIP Lenders agreed to lend up to $800.0 million in the form of a $350.0 million term loan and a $450.0 million revolving credit facility with a $250.0 million sublimit for letters of credit, in each case subject to the terms and conditions therein; |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● |   | our Company’s and the Subsidiary Borrower’s obligations under the DIP Credit Agreement and the other specified loan documents are guaranteed by our Company’s certain other subsidiaries that are Debtors (“Subsidiary Guarantors” and, together with our Company and the Subsidiary Borrowers, the “Loan Parties”); and |
|--------|---------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | ● |   | the Loan Parties’ obligations under the DIP Credit Agreement and such other specified loan documents are secured by a security interest in, and lien upon, substantially all of the Loan Parties’ existing and after-acquired personal and real property, having the priority and subject to the terms therein and in the order(s) entered into by the Bankruptcy Court, as applicable. |
|--------|---------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| Date               | Minimum Cumulative EBITDA                                |
|--------------------|----------------------------------------------------------|
| August 13, 2011    | $         - |
| September 10, 2011 |  10.0                                               |
| October 8, 2011    | 20.0                                                     |
| November 5, 2011   | 35.0                                                     |
| December 3, 2011   | 50.0                                                     |
| December 31, 2011  | 65.0                                                     |
| January 28, 2012   | 90.0                                                     |
| February 25, 2012  | 100.0                                                    |
| March 24, 2012     | 110.0                                                    |
| April 21, 2012     | 125.0                                                    |
| May 19, 2012       |  150.0                                              |
| June 16, 2012      | 175.0                                                    |

----

|                                               |   |        |   |   |        |   |   |        |   |
|----------------------------------------------------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
|                                               |   | Fiscal 2010 |   |   | Fiscal 2009 |   |   | Fiscal 2008 |   |
| Series A warrants (1)                              |   | $           | -      |   |        | $      | -      |        |   | $ | (1,197 | ) |
| Series B warrants (2)                              |   |        | 13,777 |   |        |   | (9,181 | )           |   |   | 101,336 |   |
| 5.125% convertible senior notes (3)                |   |        | -      |   |        |   | -      |        |   |   | 9,342 |   |
| 6.750% convertible senior notes (3)                |   |        | -      |   |        |   | -      |        |   |   | 5,129 |   |
| Financing warrants on convertible senior notes (4) |   |        | -      |   |        |   | -      |        |   |   | 2,254 |   |
| Total                                              |   | $           | 13,777 |   |        | $      | (9,181 | )           |   | $ | 116,864 |   |

|    (1) |  Series A warrants were exercised by Yucaipa Corporate Initiatives Fund I, L.P., Yucaipa American Alliance Fund I, L.P. and Yucaipa American Alliance (Parallel) Fund I, L.P. on May 7, 2008 for $45.7 million in cash.  These warrants were recorded as liabilities and marked to market each reporting period using our Company’s common stock price. |
|-----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    (2) |  Refer to the preceding Series B Warrants discussion. |
|-----------------------|------------------------------------------------------------|

|    (3) |  The portion of the conversion features relating to our 5.125% and 6.750% convertible senior notes for which our Company did not have sufficient authorized shares to provide for all potential issuances of common stock was recorded as a long-term liability and marked to market until stockholder approval authorizing the issuance of sufficient shares was obtained on June 26, 2008. |
|-----------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|    (4)   | Our Company did not have sufficient authorized shares to provide for all potential issuances of common stock relating to our financing warrants issued in conjunction with our convertible senior notes.  As such, these financing warrants were recorded as a liability and marked to market until stockholder approval authorizing the issuance of more shares was obtained on June 26, 2008. |
|-----------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                   |   | At          |      |
|--------------------------------------------------------|--------|-------------|-----------|
|                                                   |   | Feb 26,2011 |      |
| Accounts payable                                       |   | $           | 212,135   |   |
| Accrued salaries, wages, and benefits                  |   |        | 10,939    |   |
| Self-insurance reserves                                |   |        | 400,170   |   |
| Closed store and warehouse reserves                    |   |        | 157,192   |   |
| Pension withdrawal liabilities                         |   |        | 97,196    |   |
| GHI Contractual Liability for Employee Benefits        |   |        | 94,281    |   |
| Accrued occupancy related costs for open stores        |   |        | 24,523    |   |
| Deferred income                                        |   |        | 74,394    |   |
| Deferred real estate income                            |   |        | 89,309    |   |
| Accrued audit, legal and other                         |   |        | 8,118     |   |
| Accrued interest                                       |   |        | 33,921    |   |
| Other postretirement and postemployment benefits       |   |        | 41,655    |   |
| Other accruals                                         |   |        | 8,005     |   |
| Pension plan benefits                                  |   |        | 125,000   |   |
| Deferred Rent Liabilities                              |   |        | 56,287    |   |
| Unfavorable lease liabilities                          |   |        | 4,201     |   |
| Other noncurrent liabilities                           |   |        | 11,316    |   |
| 5.125% Convertible Senior Notes, due June 15, 2011     |   |        | 165,000   |   |
| Related Party Promissory Note, due August 18, 2011     |   |        | 10,000    |   |
| 9.125% Senior Notes, due December 15, 2011             |   |        | 12,840    |   |
| 6.750% Convertible Senior Notes, due December 15, 2012 |   |        | 255,000   |   |
| 11.375% Senior Secured Notes, due August 4, 2015       |   |        | 260,000   |   |
| 9.375% Notes, due August 1, 2039                       |   |        | 200,000   |   |
| Other Debt                                             |   |        | 2,714     |   |
| Obligations under capital leases                       |   |        | 121,058   |   |
| Real estate liabilities                                |   |        | 399,480   |   |
| Total liabilities subject to compromise                |   | $           | 2,874,734 |   |

|                               |   | At           |    |   | At           |   |
|------------------------------------|--------|--------------|---------|--------|--------------|--------|
|                               |   | February 26, |    |   | February 27, |   |
|                               |   | 2011         |    |   | 2010         |   |
| Real property under capital leases |   | $            | 92,355  |   |         | $      | 114,137 |   |
| Equipment under capital leases     |   |         | 17,014  |   |         |   | 17,267 |   |
|                               |   |         | 109,369 |   |         |   | 131,404 |   |
| Accumulated amortization           |   |         | (46,023 | )      |         |   | (41,805 | ) |
| Net property under capital leases  |   | $            | 63,346  |   |         | $      | 89,599 |   |

|               |   | Fiscal 2010 |    |   | Fiscal 2009 |   |    | Fiscal 2008 |   |
|--------------------|--------|-------------|---------|--------|-------------|--------|---------|-------------|--------|
| Minimum rentals    |   | $           | 166,625 |   |        | $      | 171,937 |        |   | $ | 174,232 |   |
| Contingent rentals |   |        | 1,573   |   |        |   | 2,736   |        |   |   | 2,753 |   |
| Total rent expense |   | $           | 168,198 |   |        | $      | 174,673 |        |   | $ | 176,985 |   |

----

|                                    |   |    |    |   | Operating Leases               |   |
|-----------------------------------------|--------|---------|---------|--------|--------------------------------|--------|
|                                    |   |    |    |   |                           |   |   |   |   |   |   |   |   | Future |   |   | Net Future |   |
|                                    |   |    |    |   | Future Minimum Rental Payments |   |   | Minimum |   |   | Minimum |   |
|                                    |   | Capital |    |   | Open                           |   |   | Closed |   |   |   |   |   | Sublease |   |   | Rental |   |
| Fiscal                                  |   | Leases  |    |   | Sites                          |   |   | Sites |   |   | Total |   |   | Rentals |   |   | Payments |   |
| 2011                                    |   | $       | 24,021  |   |                           | $      | 180,808 |   |   | $ | 17,960 |   |   | $ | 198,768 |   |   | $ | 26,799 |   |   | $ | 171,969 |   |
| 2012                                    |   |    | 23,028  |   |                           |   | 175,970 |   |   |   | 17,957 |   |   |   | 193,927 |   |   |   | 24,032 |   |   |   | 169,895 |   |
| 2013                                    |   |    | 19,656  |   |                           |   | 160,592 |   |   |   | 18,952 |   |   |   | 179,544 |   |   |   | 21,014 |   |   |   | 158,530 |   |
| 2014                                    |   |    | 17,836  |   |                           |   | 147,510 |   |   |   | 17,592 |   |   |   | 165,102 |   |   |   | 17,086 |   |   |   | 148,016 |   |
| 2015                                    |   |    | 17,583  |   |                           |   | 135,934 |   |   |   | 12,174 |   |   |   | 148,108 |   |   |   | 13,172 |   |   |   | 134,936 |   |
| 2016 and thereafter                     |   |    | 91,187  |   |                           |   | 627,447 |   |   |   | 52,552 |   |   |   | 679,999 |   |   |   | 40,211 |   |   |   | 639,788 |   |
| Net minimum rentals                     |   |    | 193,311 |   |                           | $      | 1,428,261 |   |   | $ | 137,187 |   |   | $ | 1,565,448 |   |   | $ | 142,314 |   |   | $ | 1,423,134 |   |
| Less interest portion                   |   |    | (73,334 | )      |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Present value of future                 |   |    |    |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     minimum rentals |   | $       | 119,977 |   |                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

----

----

|                                                            |   | Pension       |     |   | Postretirement |   |
|-----------------------------------------------------------------|--------|---------------|----------|--------|----------------|--------|
|                                                            |   | Feb. 26, 2011 |     |   | Feb. 27, 2010  |   |   | Feb. 26, 2011 |   |   | Feb. 27, 2010 |   |
| Change in Benefit Obligation                                    |   |          |     |   |           |   |   |   |   |   |   |   |
|  Benefit obligation – beginning of year              |   | $             | 476,920  |   |           | $      | 408,139 |   |   | $ | 31,849 |   |   | $ | 27,765 |   |
|  Benefit obligations assumed(1)                            |   |          | -        |   |           |   | 13,357 |   |   |   | - |   |   |   | - |   |
|  Service cost                                              |   |          | 6,620    |   |           |   | 6,675 |   |   |   | 653 |   |   |   | 506 |   |
|  Interest cost                                             |   |          | 28,955   |   |           |   | 29,147 |   |   |   | 1,856 |   |   |   | 1,947 |   |
|  Actuarial loss                                            |   |          | 24,398   |   |           |   | 57,513 |   |   |   | 2,480 |   |   |   | 3,508 |   |
|  Benefits paid                                             |   |          | (23,298  | )      |           |   | (25,459 | ) |   |   | (1,984 | ) |   |   | (1,993 | ) |
|  Amendments (6)                                            |   |          | (1,567   | )      |           |   | - |   |   |   | - |   |   |   | - |   |
|  Settlement payments (2)                                   |   |          | -        |   |           |   | (14,179 | ) |   |   | - |   |   |   | - |   |
|  Curtailment payments(3)                                   |   |          | -        |   |           |   | (1,457 | ) |   |   | - |   |   |   | - |   |
|  Special termination benefits (4)                          |   |          | 600      |   |           |   | 3,184 |   |   |   | - |   |   |   | - |   |
|  Retiree drug subsidy received                             |   |          | -        |   |           |   | - |   |   |   | 107 |   |   |   | 116 |   |
|  Benefit obligation – end of year(5)                 |   | $             | 512,628  |   |           | $      | 476,920 |   |   | $ | 34,961 |   |   | $ | 31,849 |   |
|                                                            |   |          |     |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Change in Plan Assets                                           |   |          |     |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   Fair value of plan assets – beginning of year |   | $             | 397,192  |   |           | $      | 339,550 |   |   | $ | - |   |   | $ | - |   |
|   Actual return on plan assets                        |   |          | 57,473   |   |           |   | 105,427 |   |   |   | - |   |   |   | - |   |
|   Company contributions                               |   |          | 6,927    |   |           |   | 6,873 |   |   |   | 1,984 |   |   |   | 1,993 |   |
|   Trust reverting to A&P                          |   |          | -        |   |           |   | (577 | ) |   |   | - |   |   |   | - |   |
|   Settlements (2)                                     |   |          | -        |   |           |   | (14,179 | ) |   |   | - |   |   |   | - |   |
|   Benefits paid to GHI employees (5)                  |   |          | (10,078  | )      |           |   | (14,442 | ) |   |   | - |   |   |   | - |   |
|   Benefits paid to our employees                      |   |          | (23,298  | )      |           |   | (25,460 | ) |   |   | (1,984 | ) |   |   | (1,993 | ) |
| Fair value of plan assets – end of year (5)               |   | $             | 428,216  |   |           | $      | 397,192 |   |   | $ | - |   |   | $ | - |   |
|                                                            |   |          |     |   |           |   |   |   |   |   |   |   |   |   |   |   |
| Funded status at end of year(5)                                 |   | $             | (84,412  | )      |           | $      | (79,728 | ) |   | $ | (34,961 | ) |   | $ | (31,849 | ) |
|                                                            |   |          |     |   |           |   |   |   |   |   |   |   |   |   |   |   |
|   Noncurrent assets                                   |   | $             | 43,099   |   |           | $      | 34,876 |   |   | $ | - |   |   | $ | - |   |
|   Current liabilities                                 |   |          | (5,079   | )      |           |   | (5,055 | ) |   |   | (1,996 | ) |   |   | (1,823 | ) |
|   Non-current liabilities                             |   |          | (122,432 | )      |           |   | (109,549 | ) |   |   | (32,965 | ) |   |   | (30,026 | ) |
| Net liability recognized(5)                                     |   | $             | (84,412  | )      |           | $      | (79,728 | ) |   | $ | (34,961 | ) |   | $ | (31,849 | ) |

|   (1) |  On June 30, 2007, the UFCW Local 174 Retail Pension Fund (“UFCW”) experienced a mass withdrawal termination, which caused our Company to incur a mass withdrawal liability.  On July 14, 2009, we signed a Transfer Agreement to settle our mass withdrawal liability owed to UFCW, pursuant to which we agreed to pay UFCW $0.7 million and to transfer the existing pension benefit liabilities relating to our employees and retirees from UFCW to the A&P pension plan.  On July 29, 2009, our A&P Pension Plan was amended for the transfer of the UFCW pension benefit obligation effective July 1, 2009. |
|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (3) |  Effective January 31, 2010, we froze our Supplemental Executive Retirement Plan, resulting in curtailment. |
|-----------|------------------------------------------------------------------------------------------------------------------|

| (4) | During fiscal 2009, we recorded a $2.0 million loss based on the terms of the settlement agreement with one of the participants in our non-qualified pension plan.  In addition, during fiscal 2010 and fiscal 2009 we recorded special termination benefits of $0.6 million and $1.2 million, respectively, to recognize retirement supplement payments to certain eligible union participants. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                | Pension   |   | Postretirement |
|-------------------------------------|-----------|--------|----------------|
|                                | Fiscal    |   | Fiscal         |   | Fiscal |   | Fiscal |
|                                | 2010      |   | 2009           |   | 2010 |   | 2009 |
| Discount rate                       | 5.75%     |   | 6.25%          |   | 5.50% |   | 6.0% |
| Compensation increase               | 3.00%     |   | 3.00%          |   |  N/A |   |  N/A |
| Healthcare cost rate for next year  |  N/A |   |  N/A      |   | 9.00% |   | 9.50% |
| Ultimate healthcare cost trend rate |  N/A |   |  N/A      |   | 5.00% |   | 5.0% |
| Year ultimate trend is reached      |  N/A |   |  N/A      |   | 2019 |   | 2019 |

|                        |   | Pension       |    |   | Postretirement |   |
|-----------------------------|--------|---------------|---------|--------|----------------|--------|
|                        |   | Feb. 26, 2011 |    |   | Feb. 27, 2010  |   |   | Feb. 26, 2011 |   |   | Feb. 27, 2010 |   |
|                        |   |          |    |   |           |   |   |   |   |   |   |   |
| Net actuarial (loss) gain   |   | $             | (82,838 | )      |           | $      | (89,040 | ) |   | $ | 7,302 |   |   | $ | 10,269 |   |
| Prior service credit (cost) |   |          | 228     |   |           |   | (1,490 | ) |   |   | - |   |   |   | 858 |   |
| Total                       |   | $             | (82,610 | )      |           | $      | (90,530 | ) |   | $ | 7,302 |   |   | $ | 11,127 |   |

|                           |   | Fiscal |    |   | Fiscal |   |
|--------------------------------|--------|--------|---------|--------|--------|--------|
|                           |   | 2010   |    |   | 2009   |   |
| Accumulated benefit obligation |   | $      | 274,532 |   |   | $      | 252,139 |   |
| Projected benefit obligation   |   | $      | 280,201 |   |   | $      | 259,918 |   |
| Fair value of plan assets      |   | $      | 152,690 |   |   | $      | 145,314 |   |

----

|                                                |   | Pension |    |   | Postretirement |   |
|-----------------------------------------------------|--------|---------|---------|--------|----------------|--------|
|                                                |   | Fiscal  |    |   | Fiscal         |   |   | Fiscal |   |   | Fiscal |   |   | Fiscal |   |   | Fiscal |   |
|                                                |   | 2010    |    |   | 2009           |   |   | 2008 |   |   | 2010 |   |   | 2009 |   |   | 2008 |   |
| Net Periodic Benefit Cost:                          |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Service cost                                        |   | $       | 6,620   |   |           | $      | 6,675 |   |   | $ | 7,428 |   |   | $ | 653 |   |   | $ | 506 |   |   | $ | 1,013 |   |
| Interest cost                                       |   |    | 28,955  |   |           |   | 29,147 |   |   |   | 25,868 |   |   |   | 1,855 |   |   |   | 1,947 |   |   |   | 2,291 |   |
| Expected return on plan                             |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     assets                      |   |    | (28,773 | )      |           |   | (24,575 | ) |   |   | (31,307 | ) |   |   | - |   |   |   | - |   |   |   | - |   |
| Amortization of:                                    |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     Prior service cost (credit) |   |    | 150     |   |           |   | 291 |   |   |   | 274 |   |   |   | (858 | ) |   |   | (1,347 | ) |   |   | (1,347 | ) |
|     Actuarial loss (gain)       |   |    | 1,901   |   |           |   | 4,716 |   |   |   | 117 |   |   |   | (487 | ) |   |   | (820 | ) |   |   | - |   |
| Special termination benefits (1)                    |   |    | 600     |   |           |   | 3,184 |   |   |   | 800 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Curtailment loss (2)                                |   |    | -       |   |           |   | 908 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Settlement loss (2)                                 |   |    | -       |   |           |   | 708 |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
|                                                |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net periodic benefit cost (3)                       |   | $       | 9,453   |   |           | $      | 21,054 |   |   | $ | 3,180 |   |   | $ | 1,163 |   |   | $ | 286 |   |   | $ | 1,957 |   |
|                                                |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Changes in Plan Assets and                    |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Benefit Obligations Recognized in                   |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Other Comprehensive Loss:                           |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net actuarial (gain) loss                           |   | $       | (4,302  | )      |           | $      | (24,796 | ) |   | $ | 88,990 |   |   | $ | 2,480 |   |   | $ | 3,508 |   |   | $ | (14,120 | ) |
| Prior service (credit) cost (4)                     |   |    | (1,567  | )      |           |   | - |   |   |   | 346 |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Amortization of prior                               |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     service (cost) credit       |   |    | (150    | )      |           |   | (291 | ) |   |   | (274 | ) |   |   | 858 |   |   |   | 1,347 |   |   |   | 1,347 |   |
| Recognized prior service                            |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    cost due to curtailments (2)      |   |    | -       |   |           |   | (908 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Recognized actuarial                                |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    loss due to settlements (2)       |   |    | -       |   |           |   | (708 | ) |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |
| Amortization of net (loss) income                   |   |    | (1,901  | )      |           |   | (4,716 | ) |   |   | (117 | ) |   |   | 487 |   |   |   | 820 |   |   |   | - |   |
| Total recognized in                                 |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|   Comprehensive (income) loss             |   | $       | (7,920  | )      |           | $      | (31,419 | ) |   | $ | 88,945 |   |   | $ | 3,825 |   |   | $ | 5,675 |   |   | $ | (12,773 | ) |
|                                                |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Recognized in total                                 |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|     comprehensive loss (income) |   | $       | 1,533   |   |           | $      | (10,365 | ) |   | $ | 92,125 |   |   | $ | 4,988 |   |   | $ | 5,961 |   |   | $ | (10,816 | ) |
|                                                |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Discount rate                                       |   |    | 6.25    | %      |           |   | 7.25 | % |   |   | 5.75 | % |   |   | 6.00 | % |   |   | 7.25 | % |   |   | 5.75 | % |
| Compensation increase                               |   |    | 3.00    | %      |           |   | 3.00 | % |   |   | 2.75 | % |   |   | N/A |   |   |   | N/A |   |   |   | N/A |   |
| Expected long-term rate of                          |   |    |    |   |           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|    return on plan assets             |   |    | 7.50    | %      |           |   | 7.50 | % |   |   | 6.75 | % |   |   | N/A |   |   |   | N/A |   |   |   | N/A |   |

|  (1) | During fiscal 2009, we recorded a $2.0 million loss based on the terms of the settlement agreement with one of the participants in our non-qualified pension plan.  In addition, during fiscal 2009 and fiscal 2008, we recorded special termination benefits of $1.2 million and $0.8 million, respectively, to recognize retirement supplement payments to certain eligible union participants. |
|-----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (2)  |  In fiscal 2009, we recorded a curtailment loss of $0.9 million to immediately recognize the unrecognized prior service cost relating to our non-qualified Supplemental Executive Retirement Plan, which has been frozen effective January 31, 2010.  In addition, we recorded a settlement loss of $0.7 million to immediately recognize the unrecognized losses for one of our non-qualified pension plans due to a settlement agreement with the associated participant. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |   |
|--------|--------|

|                    | Pension                   |   | Postretirement                 |
|-------------------------|---------------------------|--------|--------------------------------|
| 2011                    |  $  25,838 |   |  $   2,051 |
| 2012                    |  26,958              |   | 2,231                          |
| 2013                    |  27,736              |   |  2,456                    |
| 2014                    |  28,773              |   |  2,600                    |
| 2015                    |  30,044              |   |  2,660                    |
| Years 2016 – 2020 |  165,412             |   |  13,770                   |

----

|                                                                                  |   |    |    |   | Fair Value Measurements at Feb. 26, 2011 Using |    |
|---------------------------------------------------------------------------------------|--------|---------|---------|--------|------------------------------------------------|---------|
|                                                                                  |   |    |    |   | Quoted Prices                                  |    |   | Significant Other |   |   | Significant |   |
|                                                                                  |   |    |    |   | in Active                                      |    |   | Observable |   |   | Unobservable |   |
|                                                                                  |   |    |    |   | Markets                                        |    |   | Inputs |   |   | Inputs |   |
| Asset Class:                                                                          |   | Total   |    |   | (Level 1)                                      |    |   | (Level 2) |   |   | (Level 3) |   |
|   Cash and cash equivalents                                                 |   | $       | 1,957   |   |                                           | $       | - |   |   | $ | 1,957 |   |   | $ | - |   |
|   Short-term investment collective trust                                    |   |    | 6,289   |   |                                           |    | - |   |   |   | 6,289 |   |   |   | - |   |
| Total cash and cash equivalents                                                       |   |    | 8,246   |   |                                           |    | - |   |   |   | 8,246 |   |   |   | - |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Equity securities                                                                     |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
|         Common stock                          |   |    | 97,129  |   |                                           |    | 97,129 |   |   |   | - |   |   |   | - |   |
|         Mutual equity funds                   |   |    | 157,923 |   |                                           |    | 157,923 |   |   |   | - |   |   |   | - |   |
| Total equity securities                                                               |   |    | 255,052 |   |                                           |    | 255,052 |   |   |   | - |   |   |   | - |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Fixed income securities:                                                              |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
|         Corporate bonds                       |   |    | 16,664  |   |                                           |    | - |   |   |   | 16,664 |   |   |   | - |   |
|         U.S. government and agency securities |   |    | 33,721  |   |                                           |    | 13,264 |   |   |   | 20,457 |   |   |   | - |   |
|         Mutual fixed income funds             |   |    | 95,141  |   |                                           |    | 95,141 |   |   |   | - |   |   |   | - |   |
| Total fixed income securities                                                         |   |    | 145,526 |   |                                           |    | 108,405 |   |   |   | 37,121 |   |   |   |   |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Hedge Funds - Common Collective Trusts                                                |   |    | 25,838  |   |                                           |    | - |   |   |   | - |   |   |   | 25,838 |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Other                                                                                 |   |    | 2,105   |   |                                           |    | - |   |   |   | 2,105 |   |   |   | - |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Fair value of investment securities                                                   |   |    | 436,767 |   |                                           |  $ | 363,457 |   |   |  $ | 47,472 |   |   |  $ | 25,838 |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Receivables                                                                           |   |    | 234     |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Payables                                                                              |   |    | (4,562  | )      |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Other                                                                                 |   |    | (4,223  | )      |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Total fair value of Plan Assets                                                       |   |  $ | 428,216 |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                  |   |    |    |   | Fair Value Measurements at Feb. 27, 2010 Using |    |
|---------------------------------------------------------------------------------------|--------|---------|---------|--------|------------------------------------------------|---------|
|                                                                                  |   |    |    |   | Quoted Prices                                  |    |   | Significant Other |   |   | Significant |   |
|                                                                                  |   |    |    |   | in Active                                      |    |   | Observable |   |   | Unobservable |   |
|                                                                                  |   |    |    |   | Markets                                        |    |   | Inputs |   |   | Inputs |   |
| Asset Class:                                                                          |   | Total   |    |   | (Level 1)                                      |    |   | (Level 2) |   |   | (Level 3) |   |
|   Cash and cash equivalents                                                 |   | $       | 1,056   |   |                                           | $       | - |   |   | $ | 1,056 |   |   | $ | - |   |
|   Short-term investment collective trust                                    |   |    | 2,560   |   |                                           |    | - |   |   |   | 2,560 |   |   |   | - |   |
| Total cash and cash equivalents                                                       |   |    | 3,616   |   |                                           |    | - |   |   |   | 3,616 |   |   |   | - |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Equity securities                                                                     |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
|         Common stock                          |   |    | 83,174  |   |                                           |    | 83,174 |   |   |   | - |   |   |   | - |   |
|         Mutual equity funds                   |   |    | 133,101 |   |                                           |    | 133,101 |   |   |   | - |   |   |   | - |   |
| Total equity securities                                                               |   |    | 216,275 |   |                                           |    | 216,275 |   |   |   | - |   |   |   | - |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Fixed income securities:                                                              |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
|         Corporate bonds                       |   |    | 17,244  |   |                                           |    | - |   |   |   | 17,244 |   |   |   | - |   |
|         U.S. government and agency securities |   |    | 27,344  |   |                                           |    | 16,592 |   |   |   | 10,752 |   |   |   | - |   |
|         Mutual fixed income funds             |   |    | 97,568  |   |                                           |    | 97,568 |   |   |   | - |   |   |   | - |   |
|         Agency mortgage backed securities     |   |    | 8,555   |   |                                           |    | - |   |   |   | 8,555 |   |   |   | - |   |
| Total fixed income securities                                                         |   |    | 150,711 |   |                                           |    | 114,160 |   |   |   | 36,551 |   |   |   | - |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Hedge Funds - Common Collective Trusts                                                |   |    | 24,525  |   |                                           |    | - |   |   |   | - |   |   |   | 24,525 |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Other                                                                                 |   |    | 2,030   |   |                                           |    | - |   |   |   | 2,030 |   |   |   | - |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Fair value of investment securities                                                   |   |    | 397,157 |   |                                           |  $ | 330,435 |   |   |  $ | 42,197 |   |   |  $ | 24,525 |   |
|                                                                                  |   |    |    |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Receivables                                                                           |   |    | 7,818   |   |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Payables                                                                              |   |    | (7,783  | )      |                                           |    |   |   |   |   |   |   |   |   |   |   |
| Total fair value of Plan Assets                                                       |   |  $ | 397,192 |   |                                           |    |   |   |   |   |   |   |   |   |   |   |

----

|                                                                                                                                        | Fair Value Measurements Using   |   |
|---------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------|--------|
|                                                                                                                                        | Significant Unobservable Inputs |   |
|                                                                                                                                        | (Level 3)                       |   |
|                                                                                                                                        | Hedge Funds-                    |   |
|                                                                                                                                        | Common Collective Trusts        |   |
|                                                                                                                                        |                            |   |   |
| Beginning Balance as of 2/27/2010                           |                            | $      | 24,525 |   |
| Realized gains (losses)                                                                                                                     |                            |   | - |   |
| Unrealized gains (losses)                                                                                                                   |                            |   | 1,313 |   |
| Transfers in/out of Level 3                                                                                                                 |                            |   | - |   |
| Net purchases, sales and settlements                             |                            |   | - |   |
| Ending Balance as of 2/26/2011                    |                            | $      | 25,838 |   |
|                                                                                                                                        |                            |   |   |   |
|                                                                                                                                        | Fair Value Measurements Using   |   |
|                                                                                                                                        | Significant Unobservable Inputs |   |
|                                                                                                                                        | (Level 3)                       |   |
|                                                                                                                                        | Hedge Funds-                    |   |
|                                                                                                                                        | Common Collective Trusts        |   |
|                                                                                                                                        |                            |   |   |   |
| Beginning Balance as of 2/28/2009                                                                                                           |                            | $      | 24,200 |   |
| Realized gains (losses)                                                                                                                     |                            |   | - |   |
| Unrealized gains (losses)                                                                                                                   |                            |   | 325 |   |
| Transfers in/out of Level 3                                                                                                                 |                            |   | - |   |
| Net purchases, sales and settlements                             |                            |   | - |   |
| Ending Balance as of 2/27/2010                                                                                                              |                            | $      | 24,525 |   |

|                               |   | Fiscal 2010 |   |   | Fiscal 2009 |   |   | Fiscal 2008 |   |
|------------------------------------|--------|-------------|--------|--------|-------------|--------|--------|-------------|--------|
| Stock options                      |   | $           | 874    |   |        | $      | 1,492  |        |   | $ | 1,283 |   |
| Restricted stock units             |   |        | 591    |   |        |   | 1,076  |        |   |   | - |   |
| Performance restricted stock units |   |        | (550   | )      |        |   | 2,358  |        |   |   | 3,781 |   |
| Common stock granted to Directors  |   |        | 352    |   |        |   | 741    |        |   |   | 630 |   |
| Total stock-based compensation     |   | $           | 1,267  |   |        | $      | 5,667  |        |   | $ | 5,694 |   |

| I. | 2008 Plan:  This plan provides for the grant of awards in the form of options, SAR’s, restricted shares, restricted share units, performance shares, performance units, dividend equivalent, or other share based awards to our Company’s officers and key employees.  The total number of shares available for issuance under this plan is 4,750,000, subject to anti-dilution provisions. |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                              |   |   |       |   |           |   |   | Weighted Avg. |   |
|---------------------------------------------------|--------|--------|------------|--------|----------------|--------|--------|---------------|--------|
|                                              |   |   |       |   | Weighted       |   |   | Remaining     |   |
|                                              |   |   |       |   | Avg.           |   |   | Contractual   |   |
|                                              |   | Shares |       |   | Exercise Price |   |   | Term (years)  |   |
| Outstanding at February 23, 2008                  |   |   | 1,827,529  |   |           | $      | 24.21  |          |   |   |   |
|      Granted             |   |   | 128,434    |   |           |   | 27.08  |          |   |   |   |
|      Canceled or expired |   |   | (296,138   | )      |           |   | 29.14  |          |   |   |   |
|      Exercised           |   |   | (107,891   | )      |           |   | 20.46  |          |   |   |   |
| Outstanding at February 28, 2009                  |   |   | 1,551,934  |   |           |   | 23.77  |          |   |   |   |
|      Granted             |   |   | 1,316,829  |   |           |   | 4.58   |          |   |   |   |
|      Canceled or expired |   |   | (772,899   | )      |           |   | 17.28  |          |   |   |   |
|      Exercised           |   |   | (19,396    | )      |           |   | 4.63   |          |   |   |   |
| Outstanding at February 27, 2010                  |   |   | 2,076,468  |   |           |   | 14.18  |          |   |   |   |
|      Granted             |   |   | 6,473,047  |   |           |   | 3.13   |          |   |   |   |
|      Canceled or expired |   |   | (3,314,344 | )      |           |   | 7.21   |          |   |   |   |
|      Exercised           |   |   | (4,834     | )      |           |   | 5.72   |          |   |   |   |
| Outstanding at February 26, 2011                  |   |   | 5,230,337  |   |           |   | 4.93   |          |   |   | 8.6 |   |
|                                              |   |   |       |   |           |   |   |          |   |   |   |   |
| Exercisable at:                                   |   |   |       |   |           |   |   |          |   |   |   |   |
| February 26, 2011                                 |   |   | 850,332    |   |           |   | 14.51  |          |   |   | 3.7 |   |
| Nonvested at:                                     |   |   |       |   |           |   |   |          |   |   |   |   |
| February 26, 2011                                 |   |   | 4,425,005  |   |           |   | 3.18   |          |   |   | 9.5 |   |

|                                                    |   |   |      |   | Weighted Avg. |   |
|---------------------------------------------------------|--------|--------|-----------|--------|---------------|--------|
|                                                    |   |   |      |   | Grant Date    |   |
|                                                    |   | Shares |      |   | Fair Value    |   |
| Nonvested at February 28, 2009                          |   |   | -         |   |          | $      | - |   |
|       Granted             |   |   | 1,573,755 |   |          |   | 4.29 |   |
|       Canceled or expired |   |   | (326,237  | )      |          |   | 4.01 |   |
|       Vested              |   |   | -         |   |          |   | - |   |
| Nonvested at February 27, 2010                          |   |   | 1,247,518 |   |          |   | 4.37 |   |
|       Granted             |   |   | 390,000   |   |          |   | 3.36 |   |
|       Canceled or expired |   |   | (657,760  | )      |          |   | 4.65 |   |
|       Vested              |   |   | (250,838  | )      |          |   | 4.02 |   |
| Nonvested at February 26, 2011                          |   |   | 728,920   |   |          |   | 3.70 |   |

|                                              |   |   |       |   | Weighted Avg. |   |
|---------------------------------------------------|--------|--------|------------|--------|---------------|--------|
|                                              |   |   |       |   | Grant Date    |   |
|                                              |   | Shares |       |   | Fair Value    |   |
| Nonvested at February 23, 2008                    |   |   | 1,905,427  |   |          | $      | 22.60 |   |
|      Granted             |   |   | 471,731    |   |          |   | 26.60 |   |
|      Canceled or expired |   |   | (121,021   | )      |          |   | 20.63 |   |
|      Vested              |   |   | (440,600   | )      |          |   | 12.72 |   |
| Nonvested at February 28, 2009                    |   |   | 1,815,537  |   |          |   | 26.17 |   |
|      Granted             |   |   | 1,440,968  |   |          |   | 4.01 |   |
|      Canceled or expired |   |   | (795,242   | )      |          |   | 18.94 |   |
|      Vested              |   |   | (590,795   | )      |          |   | 17.97 |   |
| Nonvested at February 27, 2010                    |   |   | 1,870,468  |   |          |   | 14.53 |   |
|      Granted             |   |   | -          |   |          |   | - |   |
|      Canceled or expired |   |   | (1,764,421 | )      |          |   | 13.31 |   |
|      Vested              |   |   | (54,085    | )      |          |   | 31.41 |   |
| Nonvested at February 26, 2011                    |   |   | 51,962     |   |          |   | 38.67 |   |

| II.   | 2004 Non-Employee Director Compensation Plan:  This plan provides for the annual grant of Company common stock equivalent of $90,000 to members of our Board of Directors.  The $90,000 grant of common stock shall be made on the first business day following the Annual Meeting of Stockholders.  The number of shares of our Company’s common stock granted annually to each non-employee Director will be based on the closing price of the common stock on the New York Stock Exchange, as reported in the Wall Street Journal on the date of grant.  Only whole shares will be granted; any remaining amounts will be paid in cash as promptly as practicable following the date of grant.  Although this plan is still in effect, at this time our Company does not anticipate issuing to the non-employee Directors an annual grant of common stock or common stock equivalent in 2011. As of February 26, 2011, approximately $2.0 million of Non-Employee Director Compensation has been deferred at the election of members or our Board of Directors. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | Fiscal 2010 |    |   | Fiscal 2009 |   |    | Fiscal 2008 |   |
|---------------------------------------------------------|--------|-------------|---------|--------|-------------|--------|---------|-------------|--------|
| $655 million Credit Agreement                           |   | $           | 11,873  |   |        | $      | 15,411  |        |   | $ | 21,139 |   |
| $800 million Debtor-in-Possession Credit Agreement      |   |        | 7,804   |   |        |   | -       |        |   |   | - |   |
| Related Party Promissory Note, due Aug. 18, 2011        |   |        | 480     |   |        |   | 607     |        |   |   | 300 |   |
| 11.375% Senior Secured Notes, due Aug. 1, 2015          |   |        | 29,493  |   |        |   | 16,665  |        |   |   | - |   |
| 9.125% Senior Notes, due Dec. 15, 2011                  |   |        | 924     |   |        |   | 1,168   |        |   |   | 1,188 |   |
| 5.125% Convertible Senior Notes, due June 15, 2011      |   |        | 6,668   |   |        |   | 8,433   |        |   |   | 8,553 |   |
| 6.750% Convertible Senior Notes, due Dec. 15, 2012      |   |        | 13,572  |   |        |   | 17,165  |        |   |   | 17,409 |   |
| 9.375% Notes, due August 1, 2039                        |   |        | 14,782  |   |        |   | 18,729  |        |   |   | 19,011 |   |
| Capital lease obligations and Real estate liabilities   |   |        | 50,795  |   |        |   | 52,552  |        |   |   | 53,970 |   |
| Dividends on Preferred Stock Liability                  |   |        | -       |   |        |   | 3,505   |        |   |   | - |   |
| Self-insurance and GHI interest                         |   |        | 17,148  |   |        |   | 14,792  |        |   |   | 10,859 |   |
| GHI discount rate adjustment and COLI non-cash interest |   |        | 6,070   |   |        |   | 15,906  |        |   |   | 1,375 |   |
| Amortization of deferred financing fees and discounts   |   |        | 58,471  |   |        |   | 26,619  |        |   |   | 23,030 |   |
| Other                                                   |   |        | 329     |   |        |   | 1,506   |        |   |   | 757 |   |
| Subtotal                                                |   |        | 218,409 |   |        |   | 193,058 |        |   |   | 157,591 |   |
| Interest and dividend income                            |   |        | (40     | )      |        |   | (169    | )           |   |   | (591 | ) |
| Interest Expense, net                                   |   | $           | 218,369 |   |        | $      | 192,889 |        |   | $ | 157,000 |   |

----

|                                                                |   | Fiscal 2010    |    |
|---------------------------------------------------------------------|--------|----------------|---------|
|                                                                |   | (in thousands) |    |
| Adjustments to unsecured debt - subject to compromise               |   | $              | (35,829 | ) |
| Adjustments to secured debt - subject to compromise                 |   |           | (15,602 | ) |
| Professional fees                                                   |   |           | (15,062 | ) |
| Write-off of capitalized financing fees                             |   |           | (10,684 | ) |
| Other financing fees                                                |   |           | (3,826  | ) |
| US Trustee Fees                                                     |   |           | (427    | ) |
| Reduction of closed store reserve – continuing operations     |   |           | 59,445  |   |
| Reorganization items, net – continuing operations             |   |           | (21,985 | ) |
| Reduction of store closures reserve – discontinued operations |   |           | 133,264 |   |
| Total reorganization items, net                                     |   | $              | 111,279 |   |

|                                                                  |   | Fiscal 2010 |     |   | Fiscal 2009 |   |     | Fiscal 2008 |   |
|-----------------------------------------------------------------------|--------|-------------|----------|--------|-------------|--------|----------|-------------|--------|
| Income tax benefit from continuing operations                         |   |        |     |   |        |   |     |        |   |
|     computed at federal statutory income tax rate |   | $           | 237,019  |   |        | $      | 280,925  |        |   | $ | 40,318 |   |
| State and local income taxes, net of federal tax                      |   |        |     |   |        |   |     |        |   |   |   |   |
|     benefit and valuation allowance               |   |        | (296     | )      |        |   | 3,975    |        |   |   | (2,924 | ) |
| Permanent difference relating to the sale of                          |   |        |     |   |        |   |     |        |   |   |   |   |
|     canadian assets                               |   |        | -        |   |        |   | 153,841  |        |   |   | - |   |
| Permanent differences relating to Pathmark financing                  |   |        |     |   |        |   |     |        |   |   |   |   |
|     and impairments                               |   |        | 7,880    |   |        |   | (108,168 | )           |   |   | 40,902 |   |
| Permanent item relating to Share Lending Agreement                    |   |        | -        |   |        |   | -        |        |   |   | (9,897 | ) |
| Valuation allowance                                                   |   |        | (239,401 | )      |        |   | (307,784 | )           |   |   | (69,377 | ) |
| Other                                                                 |   |        | (1,404   | )      |        |   | (795     | )           |   |   | (1,705 | ) |
| Income tax benefit (provision), as reported                           |   | $           | 3,798    |   |        | $      | 21,994   |        |   | $ | (2,683 | ) |

|                                      |   | Fiscal 2010 |   |   | Fiscal 2009 |   |     | Fiscal 2008 |   |
|-------------------------------------------|--------|-------------|--------|--------|-------------|--------|----------|-------------|--------|
| Current:                                  |   |        |   |   |        |   |     |        |   |
| Federal                                   |   | $           | 1,183  |   |        | $      | 156,196  |        |   | $ | 2,397 |   |
| State and local                           |   |        | (455   | )      |        |   | 6,116    |        |   |   | (4,498 | ) |
| Foreign taxes                             |   |        | 12     |   |        |   | (36      | )           |   |   | (582 | ) |
|                                      |   |        | 740    |   |        |   | 162,276  |        |   |   | (2,683 | ) |
| Deferred:                                 |   |        |   |   |        |   |     |        |   |   |   |   |
| Federal                                   |   |        | 3,058  |   |        |   | (140,282 | )           |   |   | - |   |
| Benefit from (provision for) income taxes |   | $           | 3,798  |   |        | $      | 21,994   |        |   | $ | (2,683 | ) |

----

|                                                                                                       |   | Feb. 26, 2011 |      |   | Feb. 27, 2010 |   |
|------------------------------------------------------------------------------------------------------------|--------|---------------|-----------|--------|---------------|--------|
| Current assets:                                                                                            |   |          |      |   |          |   |
|      Insurance reserves                                                           |   | $             | 14,728    |   |          | $      | 33,403 |   |
|      Other reserves and accrued benefits                                          |   |          | 24,217    |   |          |   | 52,988 |   |
|      Accrued postretirement and postemployment benefits                           |   |          | 1,033     |   |          |   | 959 |   |
|      Pension obligations                                                          |   |          | 14,944    |   |          |   | 16,111 |   |
|      Other                                                                        |   |          | 6,747     |   |          |   | 6,648 |   |
|                                                                                                       |   |          | 61,669    |   |          |   | 110,109 |   |
| Current liabilities:                                                                                       |   |          |      |   |          |   |   |   |
|      Inventories                                                                  |   |          | (37,012   | )      |          |   | (39,589 | ) |
|      Health and welfare                                                           |   |          | (1,616    | )      |          |   | (1,777 | ) |
|      Other                                                                        |   |          | (4,131    | )      |          |   | (6,101 | ) |
|                                                                                                       |   |          | (42,759   | )      |          |   | (47,467 | ) |
| Valuation allowance                                                                                        |   |          | (47,245   | )      |          |   | (65,937 | ) |
|                                                                                                       |   |          |      |   |          |   |   |   |
| Net current deferred income taxes included in “Other accruals” and                             |   |          |      |   |          |   |   |   |
|      “Prepaid expenses and other current assets,” respectively        |   | $             | (28,335   | )      |          | $      | (3,295 | ) |
|                                                                                                       |   |          |      |   |          |   |   |   |
| Non-current assets:                                                                                        |   |          |      |   |          |   |   |   |
|      Net operating losses                                                         |   | $             | 390,870   |   |          | $      | 282,688 |   |
|      Foreign tax credits                                                          |   |          | 69,261    |   |          |   | 69,261 |   |
|      Alternative minimum tax credits and general business credits                 |   |          | 51,306    |   |          |   | 51,661 |   |
|      Other reserves including asset disposition charges                           |   |          | 131,859   |   |          |   | 147,971 |   |
|      Lease obligations                                                            |   |          | 4,053     |   |          |   | 9,480 |   |
|      Insurance reserves                                                           |   |          | 153,941   |   |          |   | 87,536 |   |
|      Accrued postretirement and postemployment benefits                           |   |          | 16,747    |   |          |   | 15,696 |   |
|      Pension obligations                                                          |   |          | 111,377   |   |          |   | 114,552 |   |
|      Step rents                                                                   |   |          | 23,640    |   |          |   | 24,344 |   |
|      State tax credits                                                            |   |          | 22,789    |   |          |   | 22,789 |   |
|      Pathmark financing                                                           |   |          | 20,148    |   |          |   | 9,084 |   |
|      Debtor in possession financing fee                                           |   |          | 15,010    |   |          |   | - |   |
|      Other                                                                        |   |          | 3,249     |   |          |   | 2,765 |   |
|                                                                                                       |   |          | 1,014,250 |   |          |   | 837,827 |   |
| Non-current liabilities:                                                                                   |   |          |      |   |          |   |   |   |
|      Depreciation                                                                 |   |          | (143,887  | )      |          |   | (261,842 | ) |
|      Pension obligations                                                          |   |          | -         |   |          |   | - |   |
|      Intangibles                                                                  |   |          | (52,201   | )      |          |   | (62,039 | ) |
|      Pathmark financing                                                           |   |          | (9,460    | )      |          |   | (9,460 | ) |
|      Other                                                                        |   |          | (14,951   | )      |          |   | (14,137 | ) |
|                                                                                                       |   |          | (220,499  | )      |          |   | (347,478 | ) |
| Valuation allowance                                                                                        |   |          | (777,021  | )      |          |   | (501,716 | ) |
| Net non-current deferred income tax asset in                                                               |   |          |      |   |          |   |   |   |
|    “Other non-current liabilities” and “Other assets,” respectively |   | $             | 16,730    |   |          | $      | (11,367 | ) |

----

|                                              |   | Tax    |     |   | Interest |   |   | Total  |   |
|---------------------------------------------------|--------|--------|----------|--------|----------|--------|--------|--------|--------|
| Balance at February 23, 2008                      |   | $      | 163,238  |   |     | $      | 1,046  |   |   | $ | 164,284 |   |
| Decrease related to prior period                  |   |   |     |   |     |   |   |   |   |   |   |   |
|       tax positions |   |   | -        |   |     |   | (82    | )      |   |   | (82 | ) |
| Settlements                                       |   |   | (297     | )      |     |   | -      |   |   |   | (297 | ) |
| Lapse of statute of limitations                   |   |   | (1,127   | )      |     |   | -      |   |   |   | (1,127 | ) |
| Balance at February 28, 2009                      |   |   | 161,814  |   |     |   | 964    |   |   |   | 162,778 |   |
| Decrease related to prior period                  |   |   |     |   |     |   |   |   |   |   |   |   |
|                                              |   |   | (156,773 | )      |     |   | -      |   |   |   | (156,773 | ) |
| Settlements                                       |   |   | 534      |   |     |   | -      |   |   |   | 534 |   |
| Lapse of statute of limitations                   |   |   | (4,171   | )      |     |   | (958   | )      |   |   | (5,129 | ) |
| Balance at February 27, 2010                      |   |   | 1,404    |   |     |   | 6      |   |   |   | 1,410 |   |
| Decrease related to prior period                  |   |   |     |   |     |   |   |   |   |   |   |   |
|       tax positions |   |   | (208     | )      |     |   | (4     | )      |   |   | (212 | ) |
| Settlements                                       |   |   | 154      |   |     |   | -      |   |   |   | 154 |   |
| Lapse of statute of limitations                   |   |   | (752     | )      |     |   | -      |   |   |   | (752 | ) |
| Balance at February 26, 2011                      |   | $      | 598      |   |     | $      | 2      |   |   | $ | 600 |   |

----

|                                            |   | Fiscal 2010 |        |    | Fiscal 2009 |    |        | Fiscal 2008 |   |
|-------------------------------------------------|--------|-------------|-------------|---------|-------------|---------|-------------|-------------|--------|
| Loss from continuing operations                 |   | $           | (673,400    | )       |        | $       | (780,650    | )           |   | $ | (117,882 | ) |
| Preferred stock dividends                       |   |        | (11,538     | )       |        |    | (4,572      | )           |   |   | - |   |
| Beneficial conversion feature amortization      |   |        | (4,813      | )       |        |    | (1,552      | )           |   |   | - |   |
| Loss from continuing operations – basic   |   |        | (689,751    | )       |        |    | (786,774    | )           |   |   | (117,882 | ) |
|                                            |   |        |        |    |        |    |        |        |   |   |   |   |
| Adjustments for convertible debt (1)            |   |        | -           |    |        |    | -           |        |   |   | (30,621 | ) |
| Adjustments on Other financial liabilities (2)  |   |        | (13,777     | )       |        |    | 9,181       |        |   |   | (101,336 | ) |
| Loss from continuing operations – diluted |   |  $     | (703,528    | )       |        |  $ | (777,593    | )           |   |  $ | (249,839 | ) |
|                                            |   |        |        |    |        |    |        |        |   |   |   |   |
| Weighted average common shares outstanding      |   |        | 55,733,883  |    |        |    | 57,646,795  |        |   |   | 57,647,679 |   |
| Share lending agreement (3)                     |   |        | (2,014,183  | )  |        |    | (4,443,054  | )           |   |   | (6,699,485 | ) |
| Common shares outstanding – basic         |   |        | 53,719,700  |    |        |    | 53,203,741  |        |   |   | 50,948,194 |   |
|                                            |   |        |        |    |        |    |        |        |   |   |   |   |
| Effect of dilutive securities:                  |   |        |        |    |        |    |        |        |   |   |   |   |
| Convertible debt (1)                            |   |        | -           |    |        |    | -           |        |   |   | 7,725,182 |   |
| Convertible financial liabilities (2)           |   |        | (51,181,464 | )       |        |    | (23,431,837 | )           |   |   | (7,790,155 | ) |
| Common shares outstanding–diluted         |   |        | 2,538,236   |    |        |    | 29,771,904  |        |   |   | 50,883,221 |   |
|                                            |   |        |        |    |        |    |        |        |   |   |   |   |

|  (1) |   We have debt instruments with a bifurcated conversion feature that were recorded at a significant discount.  (Refer to Note 9 – Indebtedness and Other Financial Liabilities).  For purposes of determining if an application of the “if-converted method” to these convertible instruments produces a dilutive result, we consider the combined impact of the numerator and denominator adjustments, including a numerator adjustment for gains and losses, which would have been incurred had the instruments been converted on the first day of the period presented. |
|-----------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (2) |  Our Series B Warrants are classified as a liability because a third party has the right to determine their cash or share settlement.    (Refer to Note 9 – Indebtedness and Other Financial Liabilities).  These warrants are marked-to-market on our Consolidated Statements of Operations.  For example, in periods when the market price of our common stock decreases, our income from continuing operations is increased.   For purposes of determining if an application of the treasury stock method produces a dilutive result, we assume proceeds are used to repurchase common stock and we adjust the numerator similar to the adjustments required under the “if-converted” method.  We consider the combined impact of the numerator and denominator adjustments, including a denominator adjustment to reduce shares, even when the average market price of our common stock for the period is below the warrant’s strike price. The significant increase in dilutive securities during fiscal 2010 was the result of a significant decline in the price of our common stock during fiscal 2010. |
|-----------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  (3) |     As of February 27, 2010, we had 5,634,002 of loaned shares under our share lending agreements, which were considered issued and outstanding.  The obligation of the financial institutions to return the borrowed shares has been accounted for as prepaid forward contract and, accordingly, shares underlying this contract are removed from the computation of basic and diluted earnings per share, unless the borrower defaults on returning the related shares.  On September 15, 2008, Lehman Europe, who is a party to a 3,206,058 share lending agreement with our Company filed under Chapter 11 of the U.S. Bankruptcy Code with the United States Bankruptcy Court and/or commenced equivalent proceedings in jurisdictions outside of the United States (collectively, the “Lehman Bankruptcy”).  As such, we have included these loaned shares as issued and outstanding effective September 15, 2008 for purposes of computing our basic and diluted weighted average shares and (loss) income per share (Refer to Note 19 - Capital Stock).  During fiscal 2009, Bank of America, N.A., who is a party to our share lending agreement, returned 2,500,000 shares, eliminating our obligation to lend additional shares to them in the future.  The returned shares were immediately retired, reducing our issued and outstanding shares. As of February 26, 2011, there were no shares outstanding with Bank of America, N.A.  During fiscal 2010, fiscal 2009 and fiscal 2008, weighted average common shares relating to share lending agreement of 2,014,183, 4,443,054, and 6,699,485, respectively, were excluded from the computation of earnings per share. |
|-----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                               |   | Fiscal 2010 |   | Fiscal 2009 |   | Fiscal 2008 |
|------------------------------------|--------|-------------|--------|-------------|--------|-------------|
| Stock options                      |   | 6,545,887   |   | 2,258,431   |   | 1,785,583   |
| Warrants                           |   | 686,277     |   | 686,277     |   | 686,277     |
| Performance restricted stock units |   | 150,666     |   | 482,579     |   | 514,031     |
| Restricted stock units             |   | 982,469     |   | 1,016,272   |   | -           |
| Convertible debt                   |   | 11,278,988  |   | 11,278,988  |   | 3,553,806   |
| Financing warrant                  |   | 11,278,988  |   | 11,278,988  |   | 11,278,988  |
| Preferred stock                    |   | 35,804,000  |   | 35,000,000  |   | -           |
|                               |   |        |   |        |   |        |

----

----

| OPERATING DATA                                                                                                |   | Fiscal 2010 |      |   | Fiscal 2009 |   |      | Fiscal 2008 |   |
|---------------------------------------------------------------------------------------------------------------|--------|-------------|-----------|--------|-------------|--------|-----------|-------------|--------|
| Sales by category                                                                                             |   |        |      |   |        |   |      |        |   |
|      Grocery (1)                                                                     |   | $           | 5,575,449 |   |        | $      | 6,151,413 |        |   | $ | 6,663,157 |   |
|      Meat (2)                                                                        |   |        | 1,562,599 |   |        |   | 1,664,226 |        |   |   | 1,792,311 |   |
|      Produce (3)                                                                     |   |        | 940,407   |   |        |   | 997,929   |        |   |   | 1,060,718 |   |
|                 Total Company |   | $           | 8,078,455 |   |        | $      | 8,813,568 |        |   | $ | 9,516,186 |   |

| (1)   | The grocery category includes grocery, frozen foods; dairy; general merchandise/health and beauty aids; wine, beer & spirits and pharmacy. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | The meat category includes meat, deli, bakery and seafood. |
|-----------------|------------------------------------------------------------|

| (3)   | The produce category includes produce and floral. |
|-----------------|---------------------------------------------------|

----

|                                                     |   | Fiscal 2010 |      |   | Fiscal 2009 |   |      | Fiscal 2008 |   |
|----------------------------------------------------------|--------|-------------|-----------|--------|-------------|--------|-----------|-------------|--------|
| Sales                                                    |   |        |      |   |        |   |      |        |   |
|      Fresh                      |   | $           | 4,060,958 |   |        | $      | 4,402,044 |        |   | $ | 4,806,467 |   |
|      Pathmark (4)               |   |        | 3,451,876 |   |        |   | 3,855,251 |        |   |   | 4,173,017 |   |
|      Gourmet                    |   |        | 266,003   |   |        |   | 273,060   |        |   |   | 281,767 |   |
|      Other                      |   |        | 299,618   |   |        |   | 283,213   |        |   |   | 254,935 |   |
| Total sales                                              |   | $           | 8,078,455 |   |        | $      | 8,813,568 |        |   | $ | 9,516,186 |   |
|                                                     |   |        |      |   |        |   |      |        |   |   |   |   |
| Segment income (loss)                                    |   |        |      |   |        |   |      |        |   |   |   |   |
|      Fresh                      |   | $           | 41,573    |   |        | $      | 111,582   |        |   | $ | 148,617 |   |
|      Pathmark (4)               |   |        | (84,017   | )      |        |   | (46,326   | )           |   |   | 19,012 |   |
|      Gourmet                    |   |        | 20,419    |   |        |   | 25,691    |        |   |   | 24,866 |   |
|      Other                      |   |        | 1,822     |   |        |   | 1,472     |        |   |   | 2,184 |   |
| Total segment (loss) income                              |   |        | (20,203   | )      |        |   | 92,419    |        |   |   | 194,679 |   |
|      Corporate                  |   |        | (145,005  | )      |        |   | (114,335  | )           |   |   | (123,016 | ) |
|      Reconciling items (5)      |   |        | (285,413  | )      |        |   | (578,658  | )           |   |   | (146,726 | ) |
| Loss from operations                                     |   |        | (450,621  | )      |        |   | (600,574  | )           |   |   | (75,063 | ) |
|      Nonoperating income (loss) |   |        | 13,777    |   |        |   | (9,181    | )           |   |   | 116,864 |   |
|      Interest expense, net      |   |        | (218,369  | )      |        |   | (192,889  | )           |   |   | (157,000 | ) |
|      Reorganization items, net  |   |        | (21,985   | )      |        |   | -         |        |   |   | - |   |
| Loss from continuing operations before income taxes      |   | $           | (677,198  | )      |        | $      | (802,644  | )           |   | $ | (115,199 | ) |

|                                                                      |   | Fiscal 2010 |    |   | Fiscal 2009 |   |    | Fiscal 2008 |   |
|---------------------------------------------------------------------------|--------|-------------|---------|--------|-------------|--------|---------|-------------|--------|
| Segment depreciation and amortization – continuing operations       |   |        |    |   |        |   |    |        |   |
|      Fresh                                       |   | $           | 73,043  |   |        | $      | 83,080  |        |   | $ | 91,327 |   |
|      Pathmark (4)                                |   |        | 82,943  |   |        |   | 95,029  |        |   |   | 99,061 |   |
|      Gourmet                                     |   |        | 8,309   |   |        |   | 9,386   |        |   |   | 10,119 |   |
|      Other                                       |   |        | 5,474   |   |        |   | 4,661   |        |   |   | 3,722 |   |
| Total segment depreciation and amortization – continuing operations |   |        | 169,769 |   |        |   | 192,156 |        |   |   | 204,229 |   |
|      Corporate                                   |   |        | 48,629  |   |        |   | 53,304  |        |   |   | 56,762 |   |
| Total company depreciation and amortization                               |   | $           | 218,398 |   |        | $      | 245,460 |        |   | $ | 260,991 |   |

| (4)   | Includes results from A&P stores that have been subsequently converted to Pathmark stores. |
|-----------------|------------------------------------------------------------------------------------------------|

| (5)   | Reconciling items, which are not included in segment income, consist of the following: |
|-----------------|----------------------------------------------------------------------------------------|

|                                                  |   | Fiscal 2010 |     |   | Fiscal 2009 |   |     | Fiscal 2008 |   |
|-------------------------------------------------------|--------|-------------|----------|--------|-------------|--------|----------|-------------|--------|
|                                                  |   |        |     |   |        |   |     |        |   |
| Goodwill, trademark and long-lived asset impairment   |   | $           | (114,183 | )      |        | $      | (477,180 | )           |   | $ | - |   |
| Net restructuring and other                           |   |        | (27,843  | )      |        |   | (16,670  | )           |   |   | (35,866 | ) |
| Real estate related activity                          |   |        | (58,338  | )      |        |   | (37,093  | )           |   |   | (40,161 | ) |
| Stock-based compensation                              |   |        | (1,267   | )      |        |   | (5,667   | )           |   |   | (5,694 | ) |
| Pension withdrawal costs                              |   |        | -        |   |        |   | (2,445   | )           |   |   | (28,911 | ) |
| Insurance reserve adjustment                          |   |        | (81,739  | )      |        |   | (40,445  | )           |   |   | - |   |
| Share lending accounting restatement                  |   |        | -        |   |        |   | -        |        |   |   | (28,277 | ) |
| LIFO adjustment                                       |   |        | (2,043   | )      |        |   | 842      |        |   |   | (7,817 | ) |
|      Total reconciling items |   | $           | (285,413 | )      |        | $      | (578,658 | )           |   | $ | (146,726 | ) |

----

----

|   | The following table summarizes our results of operations by quarter for fiscal 2010 and fiscal 2009.  The first quarter of each fiscal year contains sixteen weeks, while the second, third and fourth quarters each contain twelve weeks. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                    |   | First                                            |      |   | Second  |   |      | Third      |   |   | Fourth    |   |   | Total  |      |
|---------------------------------------------------------|--------|--------------------------------------------------|-----------|--------|---------|--------|-----------|------------|--------|--------|-----------|--------|--------|--------|-----------|
|                                                    |   | Quarter                                          |      |   | Quarter |   |      | Quarter(a) |   |   | Quarter   |   |   | Year   |      |
| 2010 (unaudited)                                        |   | (Dollars in thousands, except per share amounts) |      |
|                                                    |   |                                             |      |   |    |   |      |       |   |   |      |   |   |   |      |
| Sales                                                   |   | $                                                | 2,564,930 |   |    | $      | 1,918,279 |       |   | $      | 1,793,805 |   |   | $      | 1,801,441 |   |   |   | $ | 8,078,455 |   |
| Gross margin                                            |   |                                             | 763,812   |   |    |   | 562,707   |       |   |   | 534,237   |   |   |   | 539,899   |   |   |   |   | 2,400,655 |   |
| Depreciation and amortization                           |   |                                             | (70,379   | )      |    |   | (51,518   | )          |   |   | (49,944   | )      |   |   | (46,557   | ) |   |   |   | (218,398 | ) |
| Loss from operations                                    |   |                                             | (62,602   | )      |    |   | (98,767   | )          |   |   | (143,385  | )      |   |   | (145,867  | ) |   |   |   | (450,621 | ) |
| Nonoperating income (loss) (d)                          |   |                                             | 8,277     |   |    |   | 2,177     |       |   |   | (213      | )      |   |   | 3,536     |   |   |   |   | 13,777 |   |
| Interest expense, net                                   |   |                                             | (61,142   | )      |    |   | (46,126   | )          |   |   | (40,038   | )      |   |   | (71,063   | ) |   |   |   | (218,369 | ) |
| Reorganization items, net(b)                            |   |                                             | -         |   |    |   | -         |       |   |   | -         |   |   |   | (21,985   | ) |   |   |   | (21,985 | ) |
| Loss from continuing operations                         |   |                                             | (115,607  | )      |    |   | (142,821  | )          |   |   | (180,683  | )      |   |   | (234,289  | ) |   |   |   | (673,400 | ) |
| (Loss) income from discontinued operations              |   |                                             | (7,036    | )      |    |   | (10,853   | )          |   |   | (18,687   | )      |   |   | 111,401   |   |   |   |   | 74,825 |   |
| Net loss                                                |   |                                             | (122,643  | )      |    |   | (153,674  | )          |   |   | (199,370  | )      |   |   | (122,888  | ) |   |   |   | (598,575 | ) |
|                                                    |   |                                             |      |   |    |   |      |       |   |   |      |   |   |   |      |   |   |   |   |   |
| Per share data(e)                                       |   |                                             |      |   |    |   |      |       |   |   |      |   |   |   |      |   |   |   |   |   |
| Loss from continuing operations – basic      |   |                                             | (2.27     | )      |    |   | (2.73     | )          |   |   | (3.44     | )      |   |   | (4.39     | ) |   |   |   | (12.84 | ) |
| (Loss) income from discontinued operations - basic |   |                                             | (0.13     | )      |    |   | (0.21     | )          |   |   | (0.34     | )      |   |   | 2.07      |   |   |   |   | 1.39 |   |
| Net loss – basic                                  |   |                                             | (2.40     | )      |    |   | (2.94     | )          |   |   | (3.78     | )      |   |   | (2.32     | ) |   |   |   | (11.45 | ) |
|                                                    |   |                                             |      |   |    |   |      |       |   |   |      |   |   |   |      |   |   |   |   |   |   |
| Loss from continuing operations - diluted               |   |                                             | (4.60     | )      |    |   | (2.76     | )          |   |   | (3.44     | )      |   |   | (4.39     | ) |   |   |   | (277.17 | ) |
| (Loss) income from discontinued operations - diluted    |   |                                             | (0.23     | )      |    |   | (0.19     | )          |   |   | (0.34     | )      |   |   | 2.07      |   |   |   |   | 29.48 |   |
| Net loss – diluted                                |   |                                             | (4.83     | )      |    |   | (2.95     | )          |   |   | (3.78     | )      |   |   | (2.32     | ) |   |   |   | (247.69 | ) |
|                                                    |   |                                             |      |   |    |   |      |       |   |   |      |   |   |   |      |   |   |   |   |   |   |
| Number of stores at end of period                       |   |                                             | 429       |   |    |   | 428       |       |   |   | 395       |   |   |   | 393       |   |   |   |   |   |   |

|                                          |   | First                                            |      |   | Second  |   |      | Third   |   |   | Fourth     |   |   | Total  |      |
|-----------------------------------------------|--------|--------------------------------------------------|-----------|--------|---------|--------|-----------|---------|--------|--------|------------|--------|--------|--------|-----------|
|                                          |   | Quarter                                          |      |   | Quarter |   |      | Quarter |   |   | Quarter(c) |   |   | Year   |      |
| 2009 (unaudited)                              |   | (Dollars in thousands, except per share amounts) |      |
|                                          |   |                                             |      |   |    |   |      |    |   |   |       |   |   |   |      |
| Sales                                         |   | $                                                | 2,790,243 |   |    | $      | 2,065,061 |    |   | $      | 1,962,692  |   |   | $      | 1,995,572 |   |   | $ | 8,813,568 |   |
| Gross margin                                  |   |                                             | 844,869   |   |    |   | 623,358   |    |   |   | 590,584    |   |   |   | 607,949   |   |   |   | 2,666,760 |   |
| Depreciation and amortization                 |   |                                             | (77,788   | )      |    |   | (57,784   | )       |   |   | (55,813    | )      |   |   | (54,075   | ) |   |   | (245,460 | ) |
| Loss from operations                          |   |                                             | (1,836    | )      |    |   | (8,566    | )       |   |   | (453,151   | )      |   |   | (137,021  | ) |   |   | (600,574 | ) |
| Nonoperating (loss) income(d)                 |   |                                             | (1,875    | )      |    |   | (7,079    | )       |   |   | (15,944    | )      |   |   | 15,717    |   |   |   | (9,181 | ) |
| Interest expense, net                         |   |                                             | (54,207   | )      |    |   | (48,508   | )       |   |   | (45,718    | )      |   |   | (44,456   | ) |   |   | (192,889 | ) |
| Loss from continuing operations               |   |                                             | (58,304   | )      |    |   | (62,159   | )       |   |   | (502,438   | )      |   |   | (157,749  | ) |   |   | (780,650 | ) |
| Loss from discontinued operations             |   |                                             | (6,856    | )      |    |   | (18,150   | )       |   |   | (57,148    | )      |   |   | (13,694   | ) |   |   | (95,848 | ) |
| Net loss                                      |   |                                             | (65,160   | )      |    |   | (80,309   | )       |   |   | (559,586   | )      |   |   | (171,443  | ) |   |   | (876,498 | ) |
|                                          |   |                                             |      |   |    |   |      |    |   |   |       |   |   |   |      |   |   |   |   |   |
| Per share data(e)                             |   |                                             |      |   |    |   |      |    |   |   |       |   |   |   |      |   |   |   |   |   |
| Loss from continuing operations – basic |   |                                             | (1.10     | )      |    |   | (1.18     | )       |   |   | (9.43      | )      |   |   | (3.03     | ) |   |   | (14.79 | ) |
| Loss from discontinued operations - basic     |   |                                             | (0.13     | )      |    |   | (0.34     | )       |   |   | (1.07      | )      |   |   | (0.25     | ) |   |   | (1.80 | ) |
| Net loss – basic                        |   |                                             | (1.23     | )      |    |   | (1.52     | )       |   |   | (10.50     | )      |   |   | (3.28     | ) |   |   | (16.59 | ) |
|                                          |   |                                             |      |   |    |   |      |    |   |   |       |   |   |   |      |   |   |   |   |   |
| Loss from continuing operations - diluted     |   |                                             | (3.36     | )      |    |   | (3.06     | )       |   |   | (12.85     | )      |   |   | (4.73     | ) |   |   | (26.12 | ) |
| Loss from discontinued operations - diluted   |   |                                             | (0.28     | )      |    |   | (0.68     | )       |   |   | (1.50      | )      |   |   | (0.34     | ) |   |   | (3.22 | ) |
| Net loss – diluted                      |   |                                             | (3.64     | )      |    |   | (3.74     | )       |   |   | (14.35     | )      |   |   | (5.07     | ) |   |   | (29.34 | ) |
|                                          |   |                                             |      |   |    |   |      |    |   |   |       |   |   |   |      |   |   |   |   |   |
| Number of stores at end of period             |   |                                             | 435       |   |    |   | 432       |    |   |   | 433        |   |   |   | 429       |   |   |   |   |   |

| (a)   | During the third quarter of fiscal 2010, we sold seven stores in Connecticut, closed 25 stores as part of our restructuring effort, and closed one store in the normal course of business. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b)   | Reorganization items, net were incurred as a result of the Bankruptcy Filing. |
|-----------------|-------------------------------------------------------------------------------|

| (c)   | During the fourth quarter of fiscal 2009, we recorded $7.3 million of impairment charges for capital lease assets, which related to the third quarter of fiscal 2009. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d)   | Our nonoperating income reflects the mark-to-market adjustments related to the conversion features, financing warrants, and Series A and B warrants, which fluctuate based on our stock price. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e)   | The sum of quarterly basic and diluted (loss) income per share differs from full year amounts because the number of weighted average common shares outstanding has changed each quarter. |
|-----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

----

----

|  /s/ Samuel Martin                                 |  /s/ Frederic F. Brace                                                                                                           |   |
|---------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------|--------|
|  Samuel Martin                                |  Frederic F. Brace                                                                                                               |   |
|  President and   Chief Executive Officer |  Chief Administrative Officer,    Chief Restructuring Officer and     Chief Financial Officer |   |

----

|   | ITEM 10 – Directors, Executive Officers and Corporate Governance |
|--------|------------------------------------------------------------------------|

|  Name                                                                                                                                                                                                                    |  Age                                                       |  Current Position                                            |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------|-------------------------------------------------------------------|
| Sam Martin                                     |  55                                                             |  President and Chief Executive Officer                       |
| Frederic F. Brace                                                                                                                                                                                                             |  53                                                             |  Chief Administrative Officer, Chief Restructuring Officer   |
|                                                                                                                                                                                                                          |                                                                 |    and Chief Financial Officer                          |
|  Paul Hertz                                                                                                                                                                                                              | 41                                                                   |  Executive Vice President, Operations                        |
| Thomas O’Boyle                                                                                                                                                                                                          | 41            |  Executive Vice President, Merchandising & Marketing     |
| Christopher W. McGarry                                                                                                                                                                                                        | 44                                                                   |  Senior Vice President, General Counsel & Secretary      |
| Carter Knox                                    | 61            |  Senior Vice President, Human Resources & Communications |

| ITEM 11 – Executive Compensation |
|----------------------------------------|

|                                                    |   | As of February 26, 2011                                                          |      |
|---------------------------------------------------------|--------|----------------------------------------------------------------------------------|-----------|
|                                                    |   | Number of securities to be issued upon exercise of outstandingoptions and rights |      |   | Weighted average exercise price of outstandingoptions and rights |   |   | Number of securities remaining available for future issuance under equity compensation plans(excluding securitiesreflected in first column) |   |
| Equity compensation plans approved by security holders: |   |                                                                             |      |   |   |   |   |   |   |
| 1994 Stock Option Plan for officers and key employees*  |   |                                                                             | 44,137    |   |   | $ | 4.34 |   |   |   | - |   |
| 1994 Stock Option Plan for Board of Directors**         |   |                                                                             | 14,341    |   |   |   | 8.70 |   |   |   | - |   |
| 1998 Long Term Incentive and Share Award Plan***        |   |                                                                             | 433,865   |   |   |   | 17.19 |   |   |   | - |   |
| 2008 Long Term Incentive and Share Award Plan           |   |                                                                             | 5,367,571 |   |   |   | 3.25 |   |   |   | 1,067,825 |   |
| Pathmark Rollover Options                               |   |                                                                             | 151,305   |   |   |   | 32.06 |   |   |   | - |   |
| Total Outstanding as of February 26, 2011               |   |                                                                             | 6,011,219 |   |   | $ | 5.00 |   |   |   | 1,067,825 |   |

----

----

| 1)   | Financial Statements: The following Consolidated Financial Statements, related Notes and Report of Independent Registered Public Accounting Firm are included in Item 8 of Part II of this Annual Report on Form 10-K.: |
|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2)   | Financial Statement Schedule: |
|----------------|-------------------------------|

| 3)   | Exhibits: |
|----------------|-----------|

|   | 10.1* | Third Amended and Restated Superpriority Debtor-in-Possession Credit Agreement dated as of January 13, 2011 among the Great Atlantic & Pacific Tea Company, Inc. and the other Borrowers party thereto, as Borrowers and the Lenders party thereto, and JPMorgan Chase Bank, N.A., as Administrative Agent and Collateral Agent (incorporated herein by reference to Exhibit 10.1 to Form 8-K Filed on May 10, 2011) |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 18 | Preferability Letter Issued by PricewaterhouseCoopers LLP (incorporated herein by reference to Exhibit 18 to Form 10-Q filed on July 29, 2004) |
|--------|----|------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 21* | Subsidiaries of Registrant |
|--------|-----|----------------------------|

|   | 23.1* | Consent of Independent Registered Public Accounting Firm from PricewaterhouseCoopers LLP |
|--------|-------|------------------------------------------------------------------------------------------|

|   | 31.1* | Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|--------|-------|--------------------------------------------------------------------------------------------------------|

|   | 31.2* | Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|--------|-------|--------------------------------------------------------------------------------------------------------|

|   | 32* | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|--------|-----|------------------------------------------------------------------------------------------------------------------------|

|   | * | Filed with this 10-K |
|--------|---|----------------------|

|   | ** | Information required to be presented in Exhibit 11 is included in Exhibit 13 under Note 18 – Earnings per Share, prepared in accordance with the accounting guidance for earnings per share. |
|--------|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | *** | Portions of this exhibit have been omitted pursuant to a request for confidential treatment. |
|--------|-----|----------------------------------------------------------------------------------------------|

----

|              |   |      |    |   | Additions   |       |    | Additions  |       |    |           |   |   |        |   |   |    |    |
|-------------------|--------|-----------|---------|--------|-------------|------------|---------|------------|------------|---------|----------------|--------|--------|-------------|--------|--------|---------|---------|
| Allowance for     |   |      |    |   | Charged to  |       |    | Charged to |       |    |           |   |   |        |   |   |    |    |
| Bad Debts for     |   | Beginning |    |   | Costs & |       |    | Other      |       |    |           |   |   |        |   |   | Ending  |    |
| Year Ended        |   | Balance   |    |   | Expenses    |       |    | Accounts   |       |    | Deductions (1) |   |   | Adjustments |   |   | Balance |    |
| Feb. 28, 2009     |   |  $   | 5,864   |   |        |  $    | 1,263   |       |       |  $ | 2,910          | (2)    |   |  $     | (1,574 | )      |    |  $ | - |   |   |  $ | 8,463 |   |
| Feb. 27, 2010     |   |      | 8,463   |   |        |       | 1,433   |       |       |    | -              |   |   |        | (1,168 | )      |    |    | - |   |   |   | 8,728 |   |
| Feb. 26, 2011     |   |      | 8,728   |   |        |       | 1,793   |       |       |    | -              |   |   |        | (4,967 | )      |    |    | - |   |   |   | 5,554 |   |
|              |   |      |    |   |        |       |    |       |       |    |           |   |   |        |   |   |    |    |   |   |   |   |   |   |
|              |   |      |    |   |        | Additions  |    |       | Additions  |    |           |   |   |        |   |   |    |    |   |   |   |   |
| Stock Loss        |   |      |    |   |        | Charged to |    |       | Charged to |    |           |   |   |        |   |   |    |    |   |   |   |   |
| Reserve for       |   | Beginning |    |   | Costs & |       |    | Other      |       |    |           |   |   |        |   |   |    |    | Ending |   |
| Year Ended        |   | Balance   |    |   | Expenses    |       |    | Accounts   |       |    | Deductions     |   |   | Adjustments |   |   | Balance |    |
| Feb. 28, 2009     |   |  $   | 15,717  |   |        |  $    | 8,525   |       |       |  $ | -              |   |   |  $     | -      |   |    |  $ | - |   |   |  $ | 24,242 |   |
| Feb. 27, 2010     |   |      | 24,242  |   |        |       | (5,293  | )          |       |    | -              |   |   |        | -      |   |    |    | - |   |   |   | 18,949 |   |
| Feb. 26, 2011     |   |      | 18,949  |   |        |       | (244    | )          |       |    | -              |   |   |        | -      |   |    |    | - |   |   |   | 18,705 |   |
|              |   |      |    |   |        |       |    |       |       |    |           |   |   |        |   |   |    |    |   |   |   |   |   |   |
|              |   |      |    |   |        | Additions  |    |       | Additions  |    |           |   |   |        |   |   |    |    |   |   |   |   |
| LIFO              |   |      |    |   |        | Charged to |    |       | Charged to |    |           |   |   |        |   |   |    |    |   |   |   |   |
| Reserve for       |   | Beginning |    |   | Costs & |       |    | Other      |       |    |           |   |   |        |   |   |    |    | Ending |   |
| Year Ended        |   | Balance   |    |   | Expenses    |       |    | Accounts   |       |    | Deductions     |   |   | Adjustments |   |   | Balance |    |
| Feb. 28, 2009     |   |  $   | 2,310   |   |        |  $    | 7,817   |       |       |  $ | -              |   |   |  $     | -      |   |    |  $ | - |   |   |  $ | 10,127 |   |
| Feb. 27, 2010     |   |      | 10,127  |   |        |       | (842    | )          |       |    | -              |   |   |        | -      |   |    |    | - |   |   |   | 9,285 |   |
| Feb. 26, 2011     |   |      | 9,285   |   |        |       | 2,044   |       |       |    | -              |   |   |        | -      |   |    |    | - |   |   |   | 11,329 |   |
|              |   |      |    |   |        |       |    |       |       |    |           |   |   |        |   |   |    |    |   |   |   |   |   |   |
| Deferred Tax      |   |      |    |   |        | Additions  |    |       | Additions  |    |           |   |   |        |   |   |    |    |   |   |   |   |
| Valuation         |   |      |    |   |        | Charged to |    |       | Charged to |    |           |   |   |        |   |   |    |    |   |   |   |   |
| Allowance for     |   | Beginning |    |   | Costs & |       |    | Other      |       |    |           |   |   |        |   |   |    |    | Ending |   |
| Year Ended        |   | Balance   |    |   | Expenses    |       |    | Accounts   |       |    | Deductions     |   |   | Adjustments |   |   | Balance |    |
| Feb. 28, 2009 (3) |   |  $   | 43,646  |   |        |  $    | 71,240  |       |       |  $ | 91,622         | (4)    |   |  $     | -      |   |    |  $ | - |   |   |  $ | 206,508 |   |
| Feb. 27, 2010 (3) |   |      | 206,508 |   |        |       | 327,796 |       |       |    | 33,349         | (5)    |   |        | -      |   |    |    | - |   |   |   | 567,653 |   |
| Feb. 26, 2011 (3) |   |      | 567,653 |   |        |       | 258,333 |       |       |    | -              |   |   |        | (1,720 | ) (5)  |    |    | - |   |   |   | 824,266 |   |

| (1)   | Deductions to Allowance for Bad Debts represent write-offs of accounts receivable balances.  |
|-----------------|---------------------------------------------------------------------------------------------------|

| (2)   | Primarily represents additional reserves recorded as part of purchase accounting for Pathmark Stores, Inc. |
|-----------------|------------------------------------------------------------------------------------------------------------|

| (3)   | Prior period amounts were adjusted due to our retrospective adoption of the new accounting guidance for convertible debt with cash settlement features during fiscal 2009. |
|-----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (4)   | Primarily relates to purchase accounting adjustments relating to our acquisition of Pathmark, and pension and postretirement charges to “Other comprehensive income.” |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (5)   | Primarily relates to pension and postretirement charges to “Other comprehensive income.” |
|-----------------|------------------------------------------------------------------------------------------------------|

----